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Home Columns Economics and Business Forum

Growth theories, Malawi economic woes

by Johnny Kasalika
18/01/2013
in Economics and Business Forum
4 min read
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Once in a while, we come across someone who knows their subject well that we get intellectually or technically enriched. Provided, of course, we are people in search of knowledge.

On January 13 2013, I watched a TV programme in which Chawezi Banda was interviewing International Monetary Fund (IMF) managing director Christine Lagarde.

The first thing that surprised me was Lagarde’s command of English.

I wondered whether she was one of those French or German women who are at ease in speaking English because their mothers were British.

Secondly, the competence with which she answered the questions, some of which were too frank, was educative. She introduced herself as a lawyer, but she answered Chawezi’s questions as a chief economist.

Whenever we have visitors of exceptional knowledge, it is a good policy to let them address Malawians.

We need to be informed about causes of our economic problems and possible solutions.

I would suggest to MBC TV to let Malawians watch the programme as many times as they can.

This will help many people, especially those who comment on economic issues, understand where we are coming from and going. Besides, people will understand that IMF is not an enemy, but a friend.

When a doctor injects a baby with malaria drug, it may think the doctor wants to kill it. But the truth is that certain conditions can only be cured if they experience a certain degree of pain.

What I am saying is that we need to enhance our knowledge. There is too much politics of fault-finding out there. A little more knowledge of growth theories can help us appreciate that some of things we expect from government cannot be addressed at once. In fact, others require that we, citizens, should play our role.

A country’s resources such as land, labour and capital must grow first if people’s living standards are to improve for the better.

What I am saying is that the real gross domestic product (GDP) must grow. The real GDP is made up of the quantities of labour, physical assets and human capital (education and health).

A country’s long-term growth rate sometimes speeds up whereas at other times it slows down.

Economists seek a universal theory of economic growth to act as a guide whether we are dealing with developed or developing countries.

Economic growth has taken place if in a year, we produced two million bales of cotton and sold them all. In the second year, we produced three million bales and sold them.

This is important because when production is only expressed in monetary terms, a wring impression may be given, especially when money constantly loses value because of inflation.

Increase in labour productivity

When workers are able to produce more items per hour this year than they were doing last year, we say productivity has increased.

Increased productivity may have been brought about because of equipping workers with up-to-date machinery or because of technological change, perhaps because workers eat more nutritious food and are healthier.

Productivity increase based on the number of hours workers spend per hour on the job.

If daily hours and working days are reduced, this may frustrate the advantage of enhanced productivity.

For the past three years or so, as we approach Christmas, civil servants were given seven leisure days. I have never found out the real motive behind this. We are told that these are not public holidays, thereby implying that civil servants should not look at them as a right.

History has confirmed that the temporary tends to be the permanent. Having granted such time off, the President will find it difficult not to grant them at the end of this year bearing in mind that next year, she will have to fight elections.

In all countries where there are high growth rates, people spend more time working than watching football matches.

At the moment, we have an 18-month economic recovery programme. But that is not economic growth. It is what we are doing that will determine whether the economy will grow.

It is sustained growth over a period of about 20 to 30 that leads to development. During Bingu wa Mutharika administration, Malawi was said to be the fastest growth economy second to Qatar. But where are we now?

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