A SURVIVAL ANALYSIS OF EXPORT SPELLS IN MALAWI: THE ROLE OF AGGLOMERATION ECONOMIES

Abstract

Poverty is increasing in Sub-Saharan Africa at a dire rate. It is projected that 90% of the poor will exist in Sub-Saharan Africa by 2030. Developing countries have long since adopted export-led growth strategies to enhance economic growth, consequently alleviating poverty. However, exports in developing countries continue being marginalized; exacerbated by the 2019 COVID-19 pandemic. Literature posits that short export spells are one of the leading causes of low trade volumes in developing countries. Using Malawi as a case study, the study establishes the duration of exports and identifies its determinants. The focus is on the role of agglomeration economies. Export data between Malawi and 117 trading partners for 20 years (2003-2022) is used. First, the Kaplan-Meier method is used to establish the duration of exports in Malawi. Secondly, a multivariate parametric inverse Gaussian frailty survival model, with a proportional hazard Weibull distribution is used to analyse the role of the agglomeration economies on the survival of exports. For Malawi’s exports, the first-year survival rate is 38%, and the median duration of Malawi’s exports is 1 year. The survival time for 25 percent and 50 percent of Malawi's exports is just one year, while the survival time for 75 percent of the exports is just two years. Further, the findings from the frailty survival regression show that overall agglomeration economies significantly improve export survival for Malawi. This study provides that export duration in Malawi is short-lived, but agglomeration economies significantly improve the export survival for Malawi. The short duration of export spells provides a critical need for policies that enhance export longevity, and the beneficial role of importer's agglomeration economies.