Displaying results 1 to 9 out of 9
Abstract: The objective of this study is to assess whether the formation of the Southern African Development Community (SADC) in 1992 has led to (i) convergence in real income or “catch- up” growth across the countries within the region or higher growth in the region as compared to advanced economies over the past two decades; and (ii) convergence in indicators of macroeconomic stability and/or the harmonization of macroeconomic policies within the region.
The paper investigates convergence in real per capita GDP and macroeconomic policy and stability indicators within the SADC, using primarily the concepts of beta and sigma convergence and common stochastic trends. Empirical tests for the period 1992-2009 showed no evidence of absolute beta and sigma convergence in real per capita GDP among the SADC economies. Although, absence of convergence does not necessarily imply lack of economic growth, further empirical assessment of possible conditional beta convergence did not reveal any tendency of convergence to own steady states. On an individual level, however, ADF unit root test indicated that Botswana and South Africa’s real per capita GDP converged to a common stochastic trend while the rest were characterized by a boundless drift.
With regard to the SADC macroeconomic convergence goals set for 2012, the findings indicate that most of the economies of the member states have shown a tendency of macroeconomic divergence in 2009 in monetary policy, fiscal policy, and foreign exchange reserve ratios. Since member countries are at varied levels of economic development, the goals themselves must be conditional on the level of convergence in economic structure and hence macroeconomic convergence may not be attainable. Furthermore, achieving the targets may be neither necessary nor sufficient to achieve good macroeconomic outcomes. We made further attempt to identify possible club convergence within SADC free trade area using Common Monetary Area criterion, including South Africa, Lesotho, Namibia and Swaziland. The result indicates that the real per capita GDP level of the CMA economies did not converge to the South African real GDP per capita level during the 18 years under consideration. The crucial implications of the above results are that the establishment of regional trading block did not enhance economic performance in the poorer member states in SADC during the 18 years under consideration. Poor member states failed to catch up with the more developed countries within the region. The same countries that were richer 18 years ago are richer today and the poorer countries remained largely poorer. This is not to suggest that regional trade agreements and economic blocks do not promote economic performance and help poor countries to catch up. It is rather the way member countries implement the regional integration agreements that matter most. Duplication of membership among the several Regional Economic Communities, low savings and investment, shortages of high level skills, high level of unemployment, inadequate and substandard infrastructure, and insignificant production and manufacturing capability all contributed to slow economic growth and lack of convergence in real per capita GDP. Regional economies need to urgently address these challenges in order to achieve deeper economic integration and catch up with the more developed economies in the sub region and the rest of the world. Macroeconomic policy strategies should also be designed conditional on the actual degree of convergence in the economic structure.
Abstract: Malawi’s educational system fairs poorly on a sub-regional scale. The gross enrolment rate is the lowest in the South African region. At the primary school level, pupil to teacher ratio stood at 80:1, repetition rates at 20 percent and the internal efficiency coefficient at 35 percent - all worse than the Sub-Saharan averages. Malawi ranked at the bottom of SACMEQ countries in English reading and math scores (SACMEQII, 2005). At 9 percent, the percentage of children reaching a minimum level of mastery in reading in English has halved over the 1998-2004 period. In Mathematics, 98 percent of the students do not possess skills beyond basic numeracy and none of them has skills beyond competent numeracy. Recent studies analyzing linkages between education, employment and earnings in Malawi employers find that graduates are more likely than others to find a job and that there is excess demand for skilled labour by the private sector [Jimat consultant (2008), Kadzamira (2003) and Pfeifer and Chiunda (2008)]. These studies find unemployment among secondary school graduates are low (8 percent in 2001 for graduates in 1990 and 1995), and close to zero among university graduates. Secondary school graduates are typically located in urban areas and are engaged in skilled wage employment. Of these, 70 percent are involved in wage employment, and 58 percent hold a professional and skilled non-manual job. The private sector is the main employer (69 percent), followed by the education system (mostly primary school teachers) This paper focuses on the relationship between education, employment and earnings in Malawi, with the aim to identify potential shortages in human capital and the incentives to be put in place for the country to satisfy its labour needs. It analyzes the relationship between education and employment in Malawi using data from the Integrated Household Survey (IHS-2) 2004-05. The study finds that education is critical to formal employment for both men and women, and leads to higher hourly earnings. Within regular wage employment, secondary education is associated with a 123 percent wage premium, and university education with a 234 percent wage premium (relative to illiteracy). In both rural and urban areas, income is positively correlated with specialization in regular wage employment. For example, in urban areas 60 percent of the households who derive at least 75 percent of their income from regular wage employment belong to the highest quartile of the income distribution. This reflects the relative scarcity of human capital. The study shows that among prime age males (25 to 39 years old), only 10 percent have completed secondary education. For women in the same age group, the situation is even worse, with the rate of completion of secondary schooling as low as 3 percent. Analysis of school enrolment highlights that teenage women experience high dropout rates, which prevent greater female enrolment in higher education, and therefore constrain future participation in the best forms of employment. The study stresses the need to address problems that cause high failure, repetition and drop-out rates for school children from poor households. Cash transfers programs that condition payments to regular school attendance may help sustain demand for education, reducing the opportunity cost of schooling. For such programs to be effective, however, supply side constraints should also be addressed. For example, the provision of monetary incentives aimed at increasing the number of qualified teachers in rural areas, where the majority of the poor live, may help reduce the ratio of students to qualified primary teachers, and may lead to improved quality of learning and pass rates.
Malawi - 2008 - Country Profile (2.0 MB)
Displaying results 1 to 9 out of 9