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The political economy determinants of economic growth in Malawi

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  • Jonathan Said
  • Khwima Singini

Abstract

Since independence Malawi has failed to translate initial periods of economic growth (growth acceleration regimes) into sustained long-term growth (growth maintenance). This paper assesses why this has been the case and what feedback loops have existed between growth, the political settlement and institutions. This is done by assessing Malawi's: (1) deals space – are business-government deals credible and open to many, or not credible and closed? (2) rent space – where do political elites source money for their political objectives? (3) product space – to what extent does Malawi's product base organically spur economic growth? Malawi's long-term growth problem is that the rent space for the political elite remains too heavily tied to the 'powerbroker' business elite that have a low propensity to invest and support exported-oriented reforms. There is relatively little alignment of political rents to 'magicians' (value adders and job creators), rentiers (except mining and cotton) and workhorses (the poor). Developmental interest is increasing, though this comes about in dribs and drabs when politicians want growth, so that support is stop-and-go and lacks the continuity necessary to overcome major structural challenges to structural transformation and growth maintenance. This suggests that the nature of growth going forward will be volatile, with a number of booms and crises in short-term growth. While long-term growth is likely to remain positive, driven by improvements in technology, the financial sector, energy and regional integration, it is unlikely to be strong enough in the next eight years to support the welfare requirements of the burgeoning population so as to allow Malawi to maintain high long-term growth. Altering this route would probably involve the disintegration of Malawi's deeply embedded patronage and clientelist political settlement through the emergence of a developmental dominant party or the easing of political pressures currently caused by a five-year democratic term in which the largest voter group is rural, subsistence farmers, who are too far removed from the government's policy-making process.

Suggested Citation

  • Jonathan Said & Khwima Singini, 2014. "The political economy determinants of economic growth in Malawi," Global Development Institute Working Paper Series esid-040-14, GDI, The University of Manchester.
  • Handle: RePEc:bwp:bwppap:esid-040-14
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    References listed on IDEAS

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    1. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    2. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
    3. Sen, Kunal, 2013. "The Political Dynamics of Economic Growth," World Development, Elsevier, vol. 47(C), pages 71-86.
    4. Kalonga Stambuli, 2002. "Political Change, Economic Transition and Catalysis of IMF and World Bank Models - the case of Malawi," Macroeconomics 0211003, University Library of Munich, Germany.
    5. Lant Pritchett & Erik Werker, 2012. "Developing the guts of a GUT (Grand Unified Theory): elite commitment and inclusive growth," Global Development Institute Working Paper Series esid-016-12, GDI, The University of Manchester.
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    Cited by:

    1. Cornia, Giovanni Andrea & Martorano, Bruno, 2017. "Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: The Dynamics of Income Inequality in a Dualistic Economy: Malawi over 1990-2011," UNDP Africa Reports 267648, United Nations Development Programme (UNDP).
    2. Giovanni Andrea Cornia & Bruno Martorano, "undated". "The dynamics of income inequality in a dualistic economy – Malawi," UNDP Africa Policy Notes 2017-01, United Nations Development Programme, Regional Bureau for Africa.
    3. repec:rac:ecchap:2017-13 is not listed on IDEAS
    4. UNDP Regional Bureau for Africa & Bruno Martorano & Giovanni Andrea Cornia, "undated". "The Dynamics of Income Inequality in a Dualistic Economy: Malawi over 1990-2011," UNDP Africa Policy Notes 2017-13, United Nations Development Programme, Regional Bureau for Africa.

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