| Working In line with neoclassical economic growth propositions that outwardorientation fosters economic growth,since Malawi attained independence from Britain in 1964 the Government has placed foreign trade at the center of its economic development agenda.In spite of this theoretical affirmation of the foreign tradegrowth relationship,some empirical studies that have been done both in the country and abroad show contrary results.This prompted this study to be undertaken with the aim of assessing the impact of foreign trade on economic growth in Malawi from 1961 to 2016.This study has used a neoclassic economic growth model containing gross domestic product,exports,imports,capital and labor force as variables of analysis.After collecting annual time series data on the variables for the period 1961 to 2016 from the World Bank Data Bank,Ordinary Least Squares regression and several econometric tests were run on the model to ensure robust and accurate results.Statistical accuracy of the findings was further cemented by use of the 5 percent level of significance.The four variables which included exports,imports,gross capital formation and labor force were found to have a positiveeffect on the country's economic growth.Nevertheless,the study also strongly confirmed the presence of a long-run equilibrium among the variables.The above results strongly suggest that Malawi should continue with its foreign trade economic growth strategies such as the Economic Recovery Plan(ERP)and the Malawi Growth and Development Strategy(MDGS).However,if the two economic development plans are to bear fruit this study strongly urges Malawi to consider diversifying its economy away from primary export production and instead embark on value-addition.Furthermore,the country should reduce the importation of consumer goods in favor of capital goods,but also improve the quality of the labor force and capital formation,if Malawi is to realize its economic development and poverty alleviation aspirations. |
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