NAVIGATING DEMOGRAPHIC CHALLENGES FOR SUSTAINABLE ECONOMIC GROWTH IN THE BALTIC STATES

Abstract

The Baltic States face severe demographic challenges, including low fertility rates, high emigration, an aging population, and urbanization pressures. These factors have significant implications for sustainable economic growth. This research study aims to assess the impact of these demographic trends on economic growth in the three Baltic States, Estonia, Latvia, and Lithuania and propose solutions to foster economic stability. Using a panel regression framework, this research analyzes longitudinal data from 1990 to 2023, sourced from the World Bank and United Nations Population Division. The study examines key demographic variables, fertility rates, age dependency ratios, urban population growth rates, and net migration. On the other hand, sustainable economic development is measured using GDD per capita data. Descriptive statistics, multicollinearity assessments, and robust fixed-effects regression models were employed to in the data analysis process. The statistical tool that was used is the R Software (R-code provided in Appendix 2:. The findings of the research study reveal that the age dependency ratio significantly influences GDP per capita. This highlights the burden of a growing elderly population on economic productivity. In contrast, urban population growth, net migration, and crude birth rates were not statistically significant predictors. The findings show that the increasing dependency ratio is the key demographic challenge affecting the Baltic States. To address these challenges, the study recommends resolutions to extend working lifespans, such as raising the retirement age and offering phased retirement options. Additionally, immigration policies targeting younger, skilled workers could mitigate labor shortages.