THE IMPACT OF POPULATION GROWTH ON INTERNATIONAL TRADE IN EUROPE

Abstract

This study investigates the relationship between population growth and international trade components (exports, imports, and trade volume) across European countries, employing fixed effects models to adjust for unobserved heterogeneity. Contrary to some existing literature which suggests that population growth facilitates an increase in international trade, our findings indicate a negative correlation between population growth and trade dynamics. Specifically, population growth appears to depress exports by boosting local demand for goods and services, while simultaneously reducing imports because of weakened economic conditions and diminished purchasing power. This adverse effect is potentially exacerbated by demographic shifts towards a higher proportion of non-active population segments, which do not contribute to productivity and economic development. Our results underscore the complexity of the relationship between demographic changes and trade patterns, suggesting a focus on the qualitative aspects of population growth as a key factor