The contribution of public investment to agricultural productivity is well recognized as a key determinant of agricultural growth. Malawi is one of the few countries in Africa that has surpassed the Comprehensive Africa Agriculture Development Program (CAADP) commitment of spending at least 10 percent of one's national budget on agriculture.
Policy Note 27 focuses on how public investments affect crop productivity in Malawi’s districts, and estimates localized public expenditure multipliers to gauge whether government spending has slowed or accelerated agriculture sector growth.
This note offers a synopsis of a study, detailed in MaSSP Working Paper 17, which evaluates how public expenditure influences agricultural performance at the district level in Malawi, using panel data econometric techniques. The results of the analysis show that public expenditures in agriculture have generally been positive, with variable impacts on agricultural growth at the district level. The findings show substantial differences in terms of fiscal multipliers among the districts: most of these multipliers lie below one, although some are above one, while a few are negative. These results confirm that increasing public expenditures in agriculture can yield modest but positive impacts on agricultural productivity. The realization of improved impacts partly depends on both enhancing the quality of public spending and improving the health of public finances across the districts of Malawi.
Policy Note written by: Chance Mwabutwa, 2017