Malawi Case Study Political Economy Determinants

Transcript:Malawi Case Study Political Economy Determinants:
Malawi Case Study Political Economy Determinants of Economic Growth Effective States for Inclusive Development Seminar – Cape Town 28th April 2014 Jonathan Said jonathan@imanidevelopment.com Objective To present findings of Malawi Case Study Overview Introduction Malawi’s Growth and Structural Transformation Experience Political History Evolution of Deals Space and Situation Today Political Dynamics of Growth Acceleration Political Dynamics of Growth Maintenance Conclusion Overview Introduction Malawi’s Growth and Structural Transformation Experience Political History Evolution of Deals Space and Situation Today Political Dynamics of Growth Acceleration Political Dynamics of Growth Maintenance Conclusion Introduction Study of institutions & growth Why do growth-impeding institutions persist in many LDCs Inadequate understanding of political dynamics of economic growth 3 unanswered questions: some countries initiate episodes of rapid growth while others suffer extended stagnation some countries sustain growth episodes while other episodes revert to stagnation or collapse? what characterises feedback loops between growth & institutions? Malawi case study to contribute to literature on political determinants of growth Application of conceptual framework developed by Sen (2012) & Pritchett/Werker (2012) Qualitative assessment of political factors that explain past & current growth processes in Malawi Analyses roles played by product space, structure of rents around product space & incentives of political & business elite in Malawi’s growth regimes & structural transformation process since 1954 Overview Introduction Malawi’s Growth and Structural Transformation Experience Political History Evolution of Deals Space and Situation Today Political Dynamics of Growth Acceleration Political Dynamics of Growth Maintenance Conclusion 3 Structural Growth Breaks since 1955 Source: Penn World tables 7.1 – PPP Converted GDP Per Capita (Chain Series), at 2005 constant prices Malawi’s GDP per Capita (1955-2010), US dollar prices, and breaks filtered from 4 possible Bai-Perron Breaks 1st Growth Regime 2nd Growth Regime First two growth regimes: stagnation then acceleration 1954 - 1964: Stagnation Final years of British Colonial Rule Monetary and Fiscal Policy ill-suited to Malawi. E.g. British Pound too strong Infrastructure expenditure focused on South Rhodesia (Zimbabwe) 1965 – 1978: Growth Acceleration Hastings Banda’s dualistic development strategy Government intervention: construction of hospitals, capital city, schools, universities, roads etc 2 Government Companies ADMARC to buy agricultural products Press Holdings; involved in many sectors eg retailing, wholesaling, tobacco, banking, fuel, property, transport, pharmaceuticals, estate farming. Accounted for 1/3 of GDP at peak. Strategic Partners: targeted private sector investment; i.e. one ‘winner’ (foreign companies) picked in each key sectors such as tobacco, sugar, tea, cotton, textiles, beverages etc Export-led