IDEAS home Printed from https://ideas.repec.org/p/uza/wpaper/20037.html
   My bibliography  Save this paper

The drivers of real sector growth in Malawi: an empirical investigation

Author

Listed:
  • Chirwa, Themba G
  • Odhiambo, Nicholas M

Abstract

The paper empirically investigates the key macroeconomic determinants of growth in Malawi, using the recently developed ARDL bounds-testing approach. The paper is motivated by the social and economic hardships that Malawi has been facing in recent years. The study reveals that the key macroeconomic determinants that were significantly associated with economic growth include investment, human capital development, population growth, real exchange rate depreciation, inflation, and international trade. We find that, in the short-run, investment, population growth, real exchange rate depreciation, and international trade are positively associated with economic growth, while inflation is negatively associated with economic growth. However, the long-run results reveal that investment, human capital development, and international trade are positively associated with economic growth, while population growth and inflation are negatively associated with economic growth. These results have significant policy implications; since the economic strategies needed to increase economic growth in Malawi should focus on promoting incentives that attract investment, improve the quality of education, reduce population growth, ensure currency and inflation stability, and promote export diversification.

Suggested Citation

  • Chirwa, Themba G & Odhiambo, Nicholas M, 2016. "The drivers of real sector growth in Malawi: an empirical investigation," Working Papers 20037, University of South Africa, Department of Economics.
  • Handle: RePEc:uza:wpaper:20037
    as

    Download full text from publisher

    File URL: http://uir.unisa.ac.za/bitstream/handle/10500/20037/Working%20Paper%2003-2016.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Anaman, Kwabena A., 2004. "Determinants of economic growth in Brunei Darussalam," Journal of Asian Economics, Elsevier, vol. 15(4), pages 777-796, August.
    2. Robert J Barro, 1999. "Determinants of Economic Growth: Implications of the Global Evidence for Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 36(107), pages 443-478.
    3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    5. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    6. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    7. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    8. Nicholas M. Odhiambo, 2014. "Financial systems and economic growth in South Africa: a dynamic complementarity test," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(1), pages 83-101, January.
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Chen, Baizhu & Feng, Yi, 2000. "Determinants of economic growth in China: Private enterprise, education, and openness," China Economic Review, Elsevier, vol. 11(1), pages 1-15.
    11. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    12. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    13. Stanley Fischer, 1992. "Macroeconomic Stability and Growth," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 29(87), pages 171-186.
    14. Malcolm Knight & Norman Loayza & Delano Villanueva, 1993. "Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach," IMF Staff Papers, Palgrave Macmillan, vol. 40(3), pages 512-541, September.
    15. Senay Acikgoz & Merter Mert, 2014. "Sources of growth revisited: The importance of the nature of technological progress," Journal of Applied Economics, Universidad del CEMA, vol. 17, pages 31-62, May.
    16. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    17. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    18. John C. Anyanwu, 2014. "Factors Affecting Economic Growth in Africa: Are There any Lessons from China?," African Development Review, African Development Bank, vol. 26(3), pages 468-493, September.
    19. Robert J. Barro, 2003. "Determinants of Economic Growth in a Panel of Countries," Annals of Economics and Finance, Society for AEF, vol. 4(2), pages 231-274, November.
    20. B. Bhaskara Rao & Gazi Hassan, 2011. "Determinants of the long-run growth rate of Bangladesh," Applied Economics Letters, Taylor & Francis Journals, vol. 18(7), pages 655-658.
    21. Perron, Pierre, 1990. "Testing for a Unit Root in a Time Series with a Changing Mean," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(2), pages 153-162, April.
    22. Radelet Steven & Sachs Jeffrey & Lee Jong-Wha, 2001. "The Determinants and Prospects of Economic Growth in Asia," International Economic Journal, Taylor & Francis Journals, vol. 15(3), pages 1-29.
    23. Elbadawi, Ibrahim A. & Kaltani, Linda & Soto, Raimundo, 2012. "Aid, Real Exchange Rate Misalignment, and Economic Growth in Sub-Saharan Africa," World Development, Elsevier, vol. 40(4), pages 681-700.
    24. Easterly, William R. & Wetzel, Deborah L., 1989. "Policy determinants of growth : survey of theory and evidence," Policy Research Working Paper Series 343, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chirwa, Themba, 2016. "Interpreting sustainable development goals for 2030: implications for Malawi," MPRA Paper 84192, University Library of Munich, Germany.
    2. repec:scm:ecofrm:v:6:y:2017:i:3:p:3 is not listed on IDEAS

    More about this item

    Keywords

    Malawi; Autoregressive Distributed Lag Models; Economic Growth;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uza:wpaper:20037. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shaun Donovan). General contact details of provider: http://edirc.repec.org/data/deusaza.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.