Abstract

Using the aggregate production function, the study examines the main components of Malawi’s growth rates as well as elasticity of output growth with respect to sectorial factor inputs from Agriculture, Manufacturing and Services between 1980 and 2012. The study employs a parametric approach where Ordinary Least Squares (OLS) procedure is applied and Total Factor Productivity (TFP) is obtained as a residual. The estimated growth of TFP is 7% (9%) while elasticity of output growth with respect to capital accumulation and growth in labor are 0.5 (78%) and 0.2 (13%), respectively and the figures in brackets are contributions to output growth. The sectorial analysis shows that factor inputs in the manufacturing sector have statistically significant positive effect on economic growth, with elasticities of 0.17 and 0.37 for labor and capital respectively. Labor in the agriculture sector is statistically significant and has a coefficient of -0.59 while the other variables are insignificant. The results indicate capital accumulation as main growth channel and the manufacturing sector as the most productive sector.

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School	: School of Law, Economics and Government
Issued Date	: 2017

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