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Thinking Development

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By Christopher Guta, PhD:

All countries do it; learning from other countries. It is called lesson drawing and I know at least one scholar based at Chancellor College who can tell us stories on lesson drawing and how effective Malawi has been at drawn lessons from other countries regarding development and implementation of public policy. In thinking about Malawi’s development, I draw lessons from a variety of sources. In this entry, I introduce generally thoughts about trust and how Malawi’s development can be moved further forward when trust flows like a river.

I found the catchy thought, attributable to former president, the late Bingu wa Mutharika of “converting Malawi from an importing and consuming nation to a producing and exporting one” a good starting point today. This is so because it captures, in one breath, all three important drivers of development. Production and consumption are captured directly while organisation, the third driver, is subsumed in the word ‘converting’ since such conversion would necessitate taking action to organise the economy.

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Economics is one of the subjects that should be central to thoughts on development. This is so because economists are that breed of people with theoretical and practical knowledge that influences decision making by agents regarding how a nation can efficiently and effectively allocate limited resources to satisfy never-ending lists of wants and needs.

There are three decision-making agents in an economy: households, firms and government. With respect to social and economic development, the position of Malawi on the League of Nations should be seen as a direct consequence of how our households, business firms and our government make decisions regarding allocation of scarce resources to satisfy needs and wants.

I developed an appreciation of economics through a study of how firms, my respected bases for economic growth and development, are thought to exist and why. An influential thought of how and why firms such as TNM Limited and Illovo Sugar Malawi Limited exist is, put simply, that they provide an internal environment for minimising the cost of transactions by attenuating opportunistic behaviour of economic agents. Opportunistic behaviour arises when a party to a transaction maximises self-interest (the Chichewa word for self-interest is kudzikonda) resulting in loss by other parties. This, for me, is where the debate on the importance of trust for economic growth and development enters the equation.

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Learning from others, I will, in the next three entries, be discussing development from a perspective of trust focusing on how it impacts on investment, education and technical change as important factors of development. For today, however, I want to sow in your mind an understanding of what trust is.

From a linguistic perspective, trust means ‘firm belief in the reliability, truthfulness or ability of someone or something’. When you and I cast our vote on May 21 2019 for a candidate in any of the three tiers of government, we did so, or should have done so, because we firmly believed that the person we were voting for will deliver the development prospects he or she was promising. We trusted him or her.

A technical view of trust is that it represents the expectations about the future actions of another individual that influence our choices of action now. In other words, there is a difference, not just in time between the choices we have to make today based on what another individual promises to do in future but also in the information that we and that individual hold. Thus, trust is engulfed with uncertainty as much as it is a matter of taking risk.

With the understanding that households, business firms and our government are the three agents central to economic decision making, to what extent are these decisions based on trust relationships? To the extent that trust is essential for cooperation among economic actors, it is has a bearing on thinking development in Malawi. It is an issue that must be seen to underpin transactions at all levels of Malawian society. If Malawi is to transform economically and socially, trust needs to flow like a river in our households, our business firms and in our government.

Back to Bingu and his legacy phrase: converting Malawi from an importing and consuming nation to a producing and exporting one. If we are to produce and export, we need to mobilise and accumulate the four factors of production, namely land, labour, capital and entrepreneurship. With respect to capital, trust is essential for accumulation of social as opposed to physical capital. If we only could live up to our popular proverbs that speak to the importance of cooperation such as: ‘Mutu umodzi susenza denga’ with trust relationships underpinning our transactions, we can move Malawi further forward faster. We should not only talk. We, as a people, need to also walk the talk.

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