Economic growth, goals

T

here is no shortage of people both as individuals and groups castigating presidents since the advent of the multi-party era. Former presidents are said to have not done justice to the poor.

The criticism is prima facie, justified, but not constructive enough. To be constructive the criticism ought to have been accompanied by suggestions of what and how the presidents could have halted the tendency in a capitalist society for wealth to be concentrated in 20 percent of the population while 40 percent live on a dollar a day.

One of the greatest English authors of the twentieth century W. Somerset Maugham wrote in The Summing Up: “During this period I met persons who by their rank, fame or position might very well have thought themselves destined to become historical figures. I did not find them as brilliant as my fancy had painted them, I concluded, perhaps rashly that no great degree of intelligence was needed to rule a nation.”

To those holding positions of authority, Maugham’s remarks verge on rudeness. However, they should be welcome because they remind us that our rulers have merged out of our ranks. They are not supernatural beings superimposed on us in the way colonial rulers were. They make no claims to miraculous abilities.

Their failures to improve the living standards of the poor may be due more to inability than to parsimony or greed. You can redistribute wealth to the satisfaction of most people only in conditions or robust economic growth. The basic problem in Malawi is stunted economic growth. The first President Dr H Kamuzu Banda put his heart and soul to uplifting the lives of the people. At the time he left office, candid newspapers told us that 60 percent of Malawians were living below the international poverty line.

During the first term that Goodall Gondwe served as Minister of Finance under Bingu wa Mutharika we were being told now and again that the percentage of the poor was falling below 50 percent.

But today, it seems Malawi is still the poorest country in the world. What then must we do to reverse what cannot be worse? Among many conditions which contribute to the economic growth of a country, here we must review a few often given by economists.

Security of property rights and political stability: Prejudice, injustice and high inequality of wealth create fertile environment for potential upheavals, political corruption and a history of favouritism which retard development.

Competitive market: Adam Smith taught that when competition is available even self interested people will tend to promote the general welfare. Where there is little competition and monopolies abound, innovations and inventions do not take place, and there is no economic growth.

Stable currency and prices: Such environment provides the foundation for the efficient operation of a market economy. Uncertainties reduce investment without which there is no economic growth. In conditions of unstable currency and galloping inflation, foreigners look for a country with better conditions. Even citizens take their money out where it can have steady value.

International trade and open economy: No country can realise its potential in development unless it engages in trade with other countries. This is particular so with small countries. China started prospering when it threw open its markets to the rest of the world. Firms that do not find adequate markets at home are able to expand production when they have free access to foreign markets. At the same time they tend to operate more efficiently to compete effectively both in the domestic and foreign markets.

Open capital market: If investment is going to increase, the wealth of a nation capital must be channelled into productive projects. When a country’s capital market is integrated with the world market it will be able to attract more capital and economic growth will accelerate.

Instead of just pontificating about how the poor should be treated we should be asking ourselves how we have used our talents to create the wealth. Bodies such as Economics Association of Malawi (Ecama) should transform themselves into think-tanks, do research on what retards development and suggest what should be done to accelerate it without which there can be no fair distribution of wealth. n