Themba G. Chirwa

Sources of economic growth in Zambia: an empirical investigation

In this article, the key macroeconomic determinants of economic growth in Zambia are investigated using the autoregressive distributed lag (ARDL) bounds testing approach. The study has been motivated by the unsustainable growth trends that Zambia has been experiencing in recent years. Our study finds that the key macroeconomic determinants that are significantly associated with economic growth in Zambia include, amongst others, investment, human capital development, government consumption, international trade and foreign aid. The study’s results reveal that in the short run, investment and human capital development are positively associated with economic growth, while government consumption, international trade and foreign aid are negatively associated with economic growth. However, in the long run, the study finds investment and human capital development to be positively associated with economic growth, while only foreign aid is negatively associated with economic growth. These results have significant policy implications. They imply that short–run economic policies should focus on creating incentives that attract investment and increase the quality of education, the effectiveness of government institutions, the promotion of international trade reforms and the effectiveness of development aid. In the long run, development strategies should focus on attracting the accumulation of long-term investment, improving the quality of education and the effectiveness of development aid.

Macroeconomic Determinants of Economic Growth: A Review of International Literature

Abstract The paper conducts a qualitative narrative appraisal of the existing empirical literature on the key macroeconomic determinants of economic growth in developing and developed countries. Much as other empirical studies have investigated the determinants of economic growth using various econometric methods, the majority of these studies have not distinguished what drives or hinders economic growth in developing or developed countries. The study finds that the determinants of economic growth are different when this distinction is used. It reveals that in developing countries the key macroeconomic determinants of economic growth include foreign aid, foreign direct investment, fiscal policy, investment, trade, human capital development, demographics, monetary policy, natural resources, reforms and geographic, regional, political and financial factors. In developed countries, the study reveals that the key macroeconomic determinants that are associated with economic growth include physical capital, fiscal policy, human capital, trade, demographics, monetary policy and financial and technological factors.

The Dynamics of the Real Sector Growth in Zambia: Key Macroeconomic Drivers and Challenges

This article examines the main macroeconomic drivers of economic growth in Zambia, covering the period 1960–2013. These drivers have been identified by assessing the growth episodes that occurred during periods of high and low economic growth. The former episodes were driven by mineral booms; while low economic growth was driven by mineral recessions. The study concludes that the accumulation of capital stock, human capital development, international trade, the real exchange rate, and inflation are the main macroeconomic drivers of economic growth in Zambia. The performance of these macroeconomic drivers has also been influenced by the major policy reforms that the Zambian authorities have instituted, especially moving from a command economy driven by nationalist ideologies to a market-oriented economy. The study identifies three major challenges that could affect future economic growth prospects in Zambia. These include: dependence on mineral growth, low human capital development and income distribution, and the deteriorating balance-of-payment position during lean periods.

THE MACROECONOMIC DRIVERS OF ECONOMIC GROWTH IN MALAWI

This paper examines the main macroeconomic drivers of economic growth in Malawi. The drivers are identified by examining the various development plans and reforms that Malawi implemented during the period 1970-2011. The examination concludes that the main macroeconomic drivers of economic growth in Malawi during this period were the accumulation of physical capital, human capital development, international trade, inflation and the real exchange rate. The examination also shows that country-specific development policies and institutions are important in identifying and influencing the macroeconomic factors of growth. Although Malawi has been able to identify the factors that would contribute to sustainable economic growth in its development policies, these factors were influenced by a number of structural challenges, such as low investment rates, inadequate investment in human capital, balance-of-payment problems, macroeconomic instability, and frequent policy reversals in the implementation of macroeconomic reforms.