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

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  • 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
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    Cited by:

    1. Themba G. Chirwa & Nicholas M. Odhiambo, 2021. "Binding constraints to productive investment in Malawi: A modified HRV framework," African Development Review, African Development Bank, vol. 33(1), pages 130-153, March.
    2. Revaz GERADZE, 2017. "Financial Liberalization And Economic Growth (Georgian Case)," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(3), pages 1-3, august.
    3. Chirwa, Themba, 2016. "Interpreting sustainable development goals for 2030: implications for Malawi," MPRA Paper 84192, University Library of Munich, Germany.

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    Keywords

    Malawi; Autoregressive Distributed Lag Models; Economic Growth;
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