Economic Themes (2025) 63 (3) 2, 279-295
Ivan Pavlović, Ivana Kostadinović
Abstract: The aim of this paper is to examine the relationship between population size and economic development in the Republic of Serbia over the past 25 years. The initial hypothesis suggests a negative correlation between the population number and GDP, which was tested using the Pearson correlation coefficient on absolute values. The analysis confirmed a negative link between demographic and economic trends, with the theoretical framework based on Robert Solow’s neoclassical growth model. Through a graphical interpretation of the model, it is shown that a decrease in population, ceteris paribus, may lead to higher capital and output per worker. However, in the long run, population decline limits overall output growth, reduces investment and demand, and may lead to economic stagnation. The original contribution of this paper lies in the application of a classical economic model to the contemporary economic conditions of the Republic of Serbia, while its practical significance is in highlighting the importance of technological progress, institutions and education as corrective measures aimed at mitigating the negative effects of population decline.
Keywords: economic development; population decline; GDP; Solow growth model; labor productivity; capital per worker; demographic trends; technological progress; Republic of Serbia; macroeconomic analysis.
ECONOMIC DEVELOPMENT AND DEMOGRAPHIC CHANGES: ANALYZING THE RELATIONSHIP IN THE CASE OF THE REPUBLIC OF SERBIA THROUGH THE LENS OF THE NEOCLASSICAL GROWTH MODEL
Ivan Pavlović, Ivana Kostadinović
Abstract: The aim of this paper is to examine the relationship between population size and economic development in the Republic of Serbia over the past 25 years. The initial hypothesis suggests a negative correlation between the population number and GDP, which was tested using the Pearson correlation coefficient on absolute values. The analysis confirmed a negative link between demographic and economic trends, with the theoretical framework based on Robert Solow’s neoclassical growth model. Through a graphical interpretation of the model, it is shown that a decrease in population, ceteris paribus, may lead to higher capital and output per worker. However, in the long run, population decline limits overall output growth, reduces investment and demand, and may lead to economic stagnation. The original contribution of this paper lies in the application of a classical economic model to the contemporary economic conditions of the Republic of Serbia, while its practical significance is in highlighting the importance of technological progress, institutions and education as corrective measures aimed at mitigating the negative effects of population decline.
Keywords: economic development; population decline; GDP; Solow growth model; labor productivity; capital per worker; demographic trends; technological progress; Republic of Serbia; macroeconomic analysis.
