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Financial liberalisation and industrial development in Malawi

  • Grant P. Kabango
  • Alberto Paloni

It has been suggested that financial liberalisation may be a key policy to promote industrialisation as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalisation on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalisation has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

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Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2010_08.

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Date of creation: Mar 2010
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Handle: RePEc:gla:glaewp:2010_08
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