Mali Economic Development - Research Proposal Example

Mali Economic Development Mali is a landlocked country and is ranked among the poorest nations across the globe. In fact, it is ranked at number 178 out of 182. Due to these grim statistics or ranking, it is estimated that around 60 % of its population lives under the poverty line. Most of these are often children and women who reside in the rural areas. As a country, Mali is sparsely populated and most of its lands are expansive deserts. Also, it possesses a very undiversified economy. The Malian economy is often vulnerable to the negative effects of climate change, and commodity price fluctuations. Also, the country is seen as having one of the fastest population growth rates in the world. When combined, these characteristics have fuelled instability, food insecurity and instability in Mali. In light of this, the paper will analyze and evaluate the development trajectory of Malian terms of its economic growth. Also, a brief description of the Malian economy will be included in the text. In 2005, Mali returned to a robust and good growth rate of 5.5 % after being characterized by a poor 2.2 % in its previous year. Cotton production in Mali involves around 3.3 million people and close to 200000 families farms hence accounting for about 10 percent of the Malian GDP. When compared to 2004, cotton production in 2005 improved greatly due to well distributed and adequate rainfall(Moser 56). Since the Mali government acknowledges the importance and significance of the cotton sector, it has organized it in an integrated format managed by the Compagnie Malienne pour le Développement du Textile (CMDT). CMDT is tasked with regualtiong and managing the whole chain of cotton production. Additionally, it is mandated with the development of rural areas via the provision of the necessary infrastructure such as a road network some areas like Segou, Kayes and Koulikoro. In general, Mali’s agricultural sector is characterized by low productivity due to lack of a specialized labor force (Butt, et al 27). In light of this, it is clear that human capital has a significant impact on a country’s economic development. Human capital is often made up of education and health of the people. A human welfare index which incorporates education shows that Mali has a very low rate of school enrollment rates when compared to the rest of sub Saharan Africa. As such, Mali’s economic development over the years lags behind in comparison to most sub Saharan states. Thus, Mali’s failure to possess enough human capital is a challenge and hinders its economic development. Since education positively labor productivity, an inadequate human capital affects the economy widely. The poverty head count at national poverty lines (% of population) showed a decreasing trend from the year 2001 to 2010 according to the World Bank. Also, the GNI per capita of Mali had a consistent increase during the same period. Of particular interest is the spectacular expansion and increase of people taking part in education in Mali as measured by the school enrolment rates. Over the same period, school enrollment has significantly increased although at a slower rate when compared to the rest of sub-Saharan Africa. The school enrollment in Mali increased from 67% in 2001 to 90% in 2010 whereas the poverty head count at national poverty lines decreased from 55.6% to 43.6% during the same period. This positive economic development can be attributed to education. The new growth theories in their attempt to explain economic growth state that investment in research and development, knowledge and human capital are the primary drivers of economic development. In regard to Mali, these new growth theory assumptions are true since an increase in school enrolment in Mali has seen a sharp increase in economic development. The relationship between economic development and education has always been a contentious issue over time. As a result, various economic analysts have found a positive relationship between education and how it influences a nation’s wealth. The process of increasing education in a country is a form of human capital accumulation. Human capital is made up of skills, knowledge and competency which are acquired through the process of learning. Through education, people are equipped with the necessary skills and knowledge to increase production. Since a person’s acquired skills and knowledge are transferred to certain services or goods, it can be generally said that education or learning is the primary factor to human capital accumulation. A nation having an educated population tends to attract more business which in turn offers better paying jobs, and normally, this leads to increased levels of output for that specific nation. An increase in economic growth in turn results in an increase in a nation’s GDP. An investment in the physical capital has a direct effect on economic growth. According to the Harrod Domar model, growth mainly depends on capital and the quantity or amount of labor. More investment results in capital accumulation which leads to economic growth. According to the model, although Mali has enough labor supply, its economic growth is slow since it has inadequate physical capital. On the other hand, the Solow model attributes economic growth to capital accumulation. An increase in a nation’s capital investment will lead to an increase in economic growth of a country. Mali has continued to pursue its programme of economic growth although most economic sectors still continue to post weak growth rates amidst increased insecurity or regional instability. The government of Mali acknowledges the importance of the energy sector in its goal of reducing poverty and subsequent improvement of the nation’s economic development and competitiveness. The economic development of Mali is on a positive trajectory (although slow) as a result of the government’s efforts to focus on human capital (education), agriculture, energy and gold sectors. For instance, in 2006, Mali’s GDP was at a low of 5.31 while in 2014, it increased to 10.94. Work Cited Butt, Tanveer A., et al. "The economic and food security implications of climate change in Mali." Climatic change 68.3 (2005): 355-378. Mali. The World Bank, n.d. Web. 2 March. 2009. Moser, Caroline ON. "The asset vulnerability framework: reassessing urban poverty reduction strategies." World development 26.1 (1998): 1-19. Read More