Constraints to Growth in Malawi

Lea, Nicholas; Hanmer, Lucia

dc.creator	Lea, Nicholas
dc.creator	Hanmer, Lucia
dc.date	2012-03-19T19:13:20Z
dc.date	2012-03-19T19:13:20Z
dc.date	2009-10-01
dc.date.accessioned	2023-02-18T19:38:07Z
dc.date.available	2023-02-18T19:38:07Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091027100216
dc.identifier	http://hdl.handle.net/10986/4289
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/249789
dc.description	This paper applies a growth diagnostics approach to identify the most binding constraints to private-sector growth in Malawi - a small, landlocked country in Southern Africa with one of the lowest per capita incomes in the world. The approach aims to identify the constraints (in terms of public policy, implementation, and investments) most binding on marginal investment, and therefore whose relaxation would have the largest impact on growth through the investment channel. The authors find that growth in Malawi has been primarily driven by the domestic multiplier effect from export revenues. The multiplier effect is particularly pronounced due to the high number of smallholder farmers, which produce Malawi s main export crop, tobacco, and consequently results in the widespread and rapid transmission of agricultural export income. Furthermore, despite changes in the structure of agricultural production from estate to smallholder farming and liberalization of prices and finance, a longstanding relationship persists between exports in real domestic currency and overall gross domestic product. This central role of exports in creating domestic demand highlights the importance of the real exchange rate in Malawi s growth story, which directly increases the strength of the export multiplier. The most pressing constraint to growth in Malawi continues to be the regime of exchange rate management. Despite good progress, there is compelling evidence that the rate is still substantially overvalued. Furthermore, it is also likely that the inflow of foreign aid - in excess of 50 percent of exports -contributes to the overvaluation through its large component of recurrent expenditures.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5097
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCOUNTING
dc.subject	AGGREGATE DEMAND
dc.subject	AGRICULTURE
dc.subject	ASSET BASE
dc.subject	AUCTION
dc.subject	AUCTION FLOOR
dc.subject	AUCTION PRICE
dc.subject	BALANCE OF PAYMENTS
dc.subject	BANKING SECTOR
dc.subject	BARRIERS TO ENTRY
dc.subject	BASE YEAR
dc.subject	BINDING CONSTRAINT
dc.subject	BINDING CONSTRAINTS
dc.subject	CAPITAL ACCOUNT
dc.subject	CAPITAL FLIGHT
dc.subject	CAPITAL GROWTH
dc.subject	CARTEL
dc.subject	CENTRAL BANK
dc.subject	CHECKS
dc.subject	CIVIL WAR
dc.subject	COMMODITY
dc.subject	COMMODITY PRICES
dc.subject	COMPETITIVENESS
dc.subject	CONTRACT ENFORCEMENT
dc.subject	COST OF CAPITAL
dc.subject	COST OF FINANCE
dc.subject	CREDIT INFORMATION
dc.subject	CURRENT ACCOUNT DEFICIT
dc.subject	DEBT
dc.subject	DEBT SOURCE
dc.subject	DEPOSIT
dc.subject	DEPOSIT ACCOUNTS
dc.subject	DEPOSIT INTEREST
dc.subject	DEPOSIT INTEREST RATES
dc.subject	DEREGULATION
dc.subject	DERIVATIVE
dc.subject	DEVALUATION
dc.subject	DEVALUATIONS
dc.subject	DEVELOPING COUNTRIES
dc.subject	DEVELOPMENT ASSISTANCE
dc.subject	DEVELOPMENT ECONOMICS
dc.subject	DEVELOPMENT STRATEGY
dc.subject	DISBURSEMENTS
dc.subject	DOLLAR PRICE
dc.subject	DOLLAR PRICES
dc.subject	DOLLAR VALUE
dc.subject	DOMESTIC CREDIT
dc.subject	DOMESTIC CURRENCY
dc.subject	DOMESTIC DEBT
dc.subject	DOMESTIC ECONOMY
dc.subject	DOMESTIC FINANCIAL MARKETS
dc.subject	DOMESTIC MARKET
dc.subject	DOMESTIC PRICE
dc.subject	DOMESTIC PRICES
dc.subject	ECONOMIC THEORY
dc.subject	ECONOMIES OF SCALE
dc.subject	ELASTICITY
dc.subject	EQUIPMENT
dc.subject	EXCHANGE MARKETS
dc.subject	EXCHANGE RATES
dc.subject	EXPORT GROWTH
dc.subject	EXPORT MARKETS
dc.subject	EXPORT SECTOR
dc.subject	EXPORT SECTORS
dc.subject	EXPORTERS
dc.subject	EXPORTS
dc.subject	EXPROPRIATION
dc.subject	EXPROPRIATIONS
dc.subject	EXTERNAL FINANCING
dc.subject	EXTERNALITIES
dc.subject	EXTERNALITY
dc.subject	FACE VALUE
dc.subject	FACTORS OF PRODUCTION
dc.subject	FINANCIAL INSTITUTION
dc.subject	FINANCIAL INSTITUTIONS
dc.subject	FINANCIAL REFORM
dc.subject	FINANCIAL SECTOR
dc.subject	FINANCIAL SERVICES
dc.subject	FINANCIAL SYSTEM
dc.subject	FISCAL DEFICIT
dc.subject	FISCAL DISCIPLINE
dc.subject	FIXED CAPITAL
dc.subject	FIXED EXCHANGE RATE
dc.subject	FLOATING EXCHANGE RATE
dc.subject	FOREIGN CURRENCY
dc.subject	FOREIGN EXCHANGE
dc.subject	FOREIGN EXCHANGE MARKET
dc.subject	FOREIGN EXCHANGE RESERVES
dc.subject	FOREIGN INVESTORS
dc.subject	FUTURE GROWTH
dc.subject	GDP
dc.subject	GDP DEFLATOR
dc.subject	GDP PER CAPITA
dc.subject	GOVERNMENT BORROWING
dc.subject	GOVERNMENT DEFICIT
dc.subject	GOVERNMENT EXPENDITURE
dc.subject	GOVERNMENT EXPENDITURES
dc.subject	GOVERNMENT FINANCES
dc.subject	GOVERNMENT INTERVENTION
dc.subject	GOVERNMENT POLICIES
dc.subject	GOVERNMENT POLICY
dc.subject	GROSS DOMESTIC PRODUCT
dc.subject	GROSS FIXED CAPITAL FORMATION
dc.subject	GROWTH RATES
dc.subject	HEDGES
dc.subject	HOLDINGS
dc.subject	HOUSEHOLD WEALTH
dc.subject	HUMAN CAPITAL
dc.subject	HUMAN DEVELOPMENT
dc.subject	ILLIQUIDITY
dc.subject	INCOME
dc.subject	INDUSTRIALIZATION
dc.subject	INFLATION
dc.subject	INSTRUMENT
dc.subject	INSURANCE
dc.subject	INTEREST INCOME
dc.subject	INTEREST PAYMENTS
dc.subject	INTEREST RATE
dc.subject	INTEREST RATE PARITY
dc.subject	INTEREST RATE SPREAD
dc.subject	INTEREST RATES
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL DEVELOPMENT
dc.subject	INTERNATIONAL FINANCIAL STATISTICS
dc.subject	INTERNATIONAL MARKETS
dc.subject	INTERNATIONAL TRADE
dc.subject	INVENTORY
dc.subject	INVESTING
dc.subject	INVESTMENT CLIMATE
dc.subject	INVESTMENT DECISIONS
dc.subject	INVESTMENT RATES
dc.subject	INVESTOR PROTECTION
dc.subject	LACK OF COMPETITION
dc.subject	LAND HOLDING
dc.subject	LAND POLICY
dc.subject	LEGAL RIGHTS
dc.subject	LENDING INTEREST RATE
dc.subject	LENDING INTEREST RATES
dc.subject	LIABILITY
dc.subject	LIBERALIZATION
dc.subject	LIQUIDITY
dc.subject	LIQUIDITY CONSTRAINT
dc.subject	LIVING STANDARDS
dc.subject	LOAN
dc.subject	LOAN QUALITY
dc.subject	MACROECONOMIC ENVIRONMENT
dc.subject	MACROECONOMIC INSTABILITY
dc.subject	MACROECONOMIC MANAGEMENT
dc.subject	MACROECONOMIC RISK
dc.subject	MACROECONOMIC STABILITY
dc.subject	MARKET FAILURE
dc.subject	MARKET FAILURES
dc.subject	MARKET PRICE
dc.subject	MIGRANT LABOR
dc.subject	MONETARY FUND
dc.subject	MONOPOLY
dc.subject	MONOPOLY RENTS
dc.subject	MULTIPLIER EFFECT
dc.subject	MULTIPLIER EFFECTS
dc.subject	OIL PRICE
dc.subject	OPEN ECONOMIES
dc.subject	OPTIMIZATION
dc.subject	OUTPUT
dc.subject	OVERHEAD COSTS
dc.subject	OVERVALUATION
dc.subject	PER CAPITA INCOMES
dc.subject	POLITICAL ECONOMY
dc.subject	POLITICAL STABILITY
dc.subject	POSITIVE EFFECTS
dc.subject	POWER PARITY
dc.subject	PREFERENTIAL ACCESS
dc.subject	PRICE ELASTICITY
dc.subject	PRICE ELASTICITY OF SUPPLY
dc.subject	PRICE STABILITY
dc.subject	PRIVATE INVESTMENT
dc.subject	PRODUCT MARKETS
dc.subject	PRODUCTION INCREASES
dc.subject	PROFITABILITY ANALYSIS
dc.subject	PROPERTY RIGHTS
dc.subject	PUBLIC BORROWING
dc.subject	PUBLIC FINANCE
dc.subject	PUBLIC INVESTMENT
dc.subject	PUBLIC INVESTMENTS
dc.subject	PUBLIC POLICY
dc.subject	PUBLIC REGISTRY
dc.subject	PURCHASING POWER
dc.subject	RAPID GROWTH
dc.subject	RATE OF RETURN
dc.subject	RATE OF RETURN ON CAPITAL
dc.subject	REAL EXCHANGE RATE
dc.subject	REAL GDP
dc.subject	REAL INTEREST
dc.subject	REAL INTEREST RATES
dc.subject	RECURRENT EXPENDITURE
dc.subject	RECURRENT EXPENDITURES
dc.subject	REMITTANCE
dc.subject	REMITTANCES
dc.subject	RENT SEEKING
dc.subject	RESERVE
dc.subject	RESERVE REQUIREMENT
dc.subject	RETURNS
dc.subject	RULE OF LAW
dc.subject	RURAL MARKETS
dc.subject	SHAREHOLDER
dc.subject	SMALLHOLDER AGRICULTURE
dc.subject	SOCIAL DEVELOPMENT
dc.subject	STOCKS
dc.subject	STRUCTURAL CHANGE
dc.subject	TAX
dc.subject	TAX RATE
dc.subject	TAXATION
dc.subject	TOTAL FACTOR PRODUCTIVITY
dc.subject	TOTAL REVENUE
dc.subject	TRADE BALANCE
dc.subject	TRADE DEFICIT
dc.subject	TRADE REFORMS
dc.subject	TRADING
dc.subject	TRANSPARENCY
dc.subject	TREASURY
dc.subject	TREASURY BILLS
dc.subject	VALUE ADDED
dc.subject	VOLATILITY
dc.subject	WAGES
dc.subject	WEALTH
dc.subject	WORLD MARKET
dc.title	Constraints to Growth in Malawi
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	Africa
dc.coverage	Africa
dc.coverage	Sub-Saharan Africa
dc.coverage	Southern Africa
dc.coverage	Malawi