Abstract

Malawi has been facing forex challenges due to perpetual Balance of Payments (BoP) problems emanating from insufficient trade activities both within and beyond Africa. It is in this vein that this study employed the Pseudo Poisson Maximum Likelihood (PPML) method to estimate the gravity equation of international trade between Malawi and the rest of Africa by year 2021. The main objectives of the study were to determine drivers of trade between Malawi and the rest of Africa, and to estimate trade potential between Malawi and the rest of Africa. The study employed cross section data obtained from NSO, World Bank, PRB and Distance Calculator. It has been revealed through this study that only GDP and trade agreements are crucial in driving trade flows between Malawi and the rest of the African counterparts. In terms of trade potential, Malawi has potential to increase trade activities with all the African countries and the trade potential has been estimated at USD 413,506.44 Million (MK 413 Billion). Therefore there is need for Malawi to do a thorough market research in these countries where it has trade potential to find out which products it needs to increase production for the purposes of exporting to these countries as a way of responding to demand in these countries. Where possible, Malawi would arrange to sign bilateral trade agreements with these countries.

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School	: School of Law, Economics and Government
Issued Date	: 2023

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