Understanding Sources of Economic Growth and Productivity in Malawi

Abstract

Abstract The chapter analyses the sources of growth in Malawi by examining the contributions of factor accumulation and productivity growth using a growth accounting approach over the period 1965–2017. Growth decomposition results reveal that physical capital was the highest contributor to output per worker growth, followed by human capital growth and TFP growth, over the period. Average output per worker growth is found also to hover around 1.6% per year, albeit lower than rates experienced in East Asian economies. Structural transformation, technology adoption, public spending, and regulatory quality are found to be the key drivers of productivity growth, signifying the need to strengthen policies that promote structural transformation and technology adoption and diffusion, coupled with improved macroeconomic policies and quality of economic and governance institutions to boost productivity and economic growth in Malawi.