EconPapers    
Economics at your fingertips  
 

Binding constraints to productive investment in Malawi: A modified HRV framework

Themba Chirwa () and Nicholas Odhiambo ()

No 27072, Working Papers from University of South Africa, Department of Economics

Abstract: The paper applies a modified Hausmann, Rodrik, and Velasco (HRV) growth diagnostics framework to analyse Malawi?s growth challenges. The study finds five critical binding constraints affecting productive investment and output growth in Malawi. These include land administration, taxation, customs and trade regulations, political governance, and cost-of-finance. Land constraints are evidenced by highly urban and rural population growth, an inverse co-movement between the rural population and investment per capita, and low land administration indices. Tax constraints are evidenced by the negative growth of investment per capita. Customs and trade regulations constraints are evidenced by non-tariff measures, such as high costs and the time it takes to export and import. Political governance constraints are evidenced by rising government debt and the low score on transparency, accountability, and corruption based on the World Bank?s Public Transparency Scale. Lastly, high cost-of-finance constraints are evidenced by monetary policy challenges, such as high real interest rates, inflation rate, uncompetitive exchange rate, and foreign aid ineffectiveness. Therefore, we recommend that the formulation of crucial policy strategies to alleviate these five significant binding constraints be encouraged. The government should base such an approach to sound growth therapeutics that fully account for each challenge?s root causes.

Keywords: Growth Diagnostics; Investment; Land; Fiscal Policy; Trade; Political Governance; Monetary Policy (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://uir.unisa.ac.za/bitstream/handle/10500/2707 ... 0HRV%20framework.pdf (application/pdf)

Related works:
Journal Article: Binding constraints to productive investment in Malawi: A modified HRV framework (2021) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uza:wpaper:27072

Access Statistics for this paper

More papers in Working Papers from University of South Africa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Shaun Donovan ().

 
Page updated 2021-04-12
Handle: RePEc:uza:wpaper:27072