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THE IMPACT OF FISHERIES SOCIO-ECONOMIC CONTRIBUTION ON POVERTY
REDUCTION IN NAMIBIA
BY
RAUNA MUKUMANGENI
12293438
A DISSERTATION SUBMITTED TO THE WESTMINSTER BUSINESS SCHOOL,
UNIVERSITY OF WESTMINSTER
FOR THE DEGREE OF
MA IN INTERNATIONAL ECONOMIC POLICY AND ANALYSIS
SUPERVISOR: DR. SHEIKH SELIM
AUGUST 2013
iii
ACKNOWLEDGEMENTS
My most sincere gratitude goes to the Almighty Father for none of this would be possible
without his guidance and protection.
Other thanks extend to & to whom I say remain blessed:
My supervisor Dr. Sheikh Selim for his absolute guidance, assistance, prompt responses
and valuable expert advice on economic growth.
Mr. S. I. Savva, I shall forever remain indebted to you.
Panduleni Kadhila-Amoomo, for being the brother I never had. No words I can say shall
ever fit to describe.
My beloved twosome, husband Luis Miguel and daughter Maria for the love and
understanding. A year away is too long.
My dear parents, you did not only give life to me, even at this mature age you still ensure
I persevere through it with ease. You are truly amazing.
The rest of my family especially the Kashaka family, for all that matters.
iv
ABSTRACT
Poverty is a problem facing Namibia. Economic growth might be the solution. Given the
importance of economic growth, it is necessary to analyse its determining factors. The fisheries
sector is one of the most important sectors in Namibia and so is its economic growth. The
purpose of the study is to investigate if economic growth, with particular emphasis of the
fisheries sector, has impacted on poverty reduction during the period of 1990-2011. A
neoclassical model framework as an important tool in economic growth analysis is used to
analyse the determinants of Namibias fisheries economic growth and its effect on the countrys
economic growth. Additionally, the countrys economic growth is analysed. Estimated factors
are initial GDP, gross fixed capital formation, fisheries growth, general government expenditure
and unemployment. Conditional convergence is found for the fisheries sector and for the
economy. Namibias economic growth in 1990-2011 is mostly explained by initial GDP and
unemployment. The study finds that the fisheries sector growth is negatively correlated with the
countrys economic growth. Results of the fisheries sector imply that there is a negative
relationship between initial GDP and the sectors growth. Additionally, the sectors
unemployment is positively correlated with its economic growth. Furthermore the results do not
find enough evidence to suggest that the fisheries sector impacts on poverty reduction. The
results are important for policy formulation; that employment is created and initial GDP is
lowered to ensure enhancement of Namibias economic growth. An enhanced economic growth
presents great potential for poverty reduction.
Key words: Namibia, economic growth, per capita GDP, neoclassical model, poverty, resource
rent, conditional convergence
v
ABBREVIATIONS
BON BANK OF NAMIBIA
GDP GROSS DOMESTIC PRODUCT
HDI HUMAN DEVELOPMENT INDEX
MFMR MINISTRY OF FISHERIES AND MARINE RESOURCES
MOF MINISTRY OF FINANCE
NPC NATIONAL PLANNING COMMISSION
NSA NATIONAL STATISTICS AGENCY
R&D RESEARCH AND DEVELOPMENT
TAC TOTAL ALLOWABLE CATCH
vi
Table of Contents
ACKNOWLEDGEMENTS ......................................................................................................................... iii
ABSTRACT ................................................................................................................................................. iv
ABBREVIATIONS ...................................................................................................................................... v
CHAPTER 1 ................................................................................................................................................. 1
INTRODUCTION ........................................................................................................................................ 1
CHAPTER 2 ................................................................................................................................................. 3
CONTEXT & RATIONALE ........................................................................................................................ 3
CHAPTER 3 ............................................................................................................................................... 11
LITERATURE REVIEW ........................................................................................................................... 11
CHAPTER 4 ............................................................................................................................................... 16
METHODOLOGY ..................................................................................................................................... 16
4.1 MODEL SPECIFICATION .............................................................................................................. 16
4.2 DATA ............................................................................................................................................... 17
4.3 METHODS ....................................................................................................................................... 22
CHAPTER 5 ............................................................................................................................................... 23
RESULTS AND ANALYSIS ..................................................................................................................... 23
CHAPTER 6 ............................................................................................................................................... 37
CONCLUSIONS AND RECOMMENDATIONS ..................................................................................... 37
REFERENCES ........................................................................................................................................... 43
APPENDICES ............................................................................................................................................ 51
1
CHAPTER 1
INTRODUCTION
1. INTRODUCTION
Poverty is a major problem facing Namibia. This study attempts to investigate the impact of
economic growth on poverty reduction in Namibia during 1990-2011. Similarly, the study
attempts to find empirical evidence on the determinants of economic growth in Namibia during
the period 1990-2011 using the neoclassical framework borrowed from the pioneer work of
Barro and Sala-i-Martin (2004). In view of the country being natural resources endowed, in
particular the fisheries sector as one of the main pillars of the Namibian economy, the sectors
economic growth is investigated. The purpose of the study is to investigate if economic growth,
with particular emphasis of the fisheries sector, impacts on poverty reduction. In order to
effectively investigate the fisheries sector impact on poverty, the sectors economic growth and
the countrys economic growth are investigated to find the relationship, if any, between the
respective economic growth and initial per capita GDP, gross fixed capital formation, fisheries
per capita GDP, general government expenditure and unemployment. The study tests three
hypotheses that correlate gross fixed capital formation, unemployment and initial per capita GDP
on economic growth.
The country is involved in efforts to increase economic growth and fight against poverty
(MOF, 2012). The issue of economic growth is important because it is a major factor in reducing
poverty. Barro and Sala-i-Martin (2004) underlined economic growth as possibly the one single
factor that influences income levels of individuals and advocate for the understanding of its
determining factors to solve economic related problems such as poverty.
Poverty is a phenomenon that faces many third world countries and Namibia is no exception.
According to NSA (2012), approximately 20% of the population in Namibia is poor and 14% is
severely poor and 19% of households are poor. Globally however, the total number of poor
people, as a result of economic growth, has reduced during the past three decades (World Bank,
2008).
2
Combating poverty is high on the agenda of many governments including the Namibian
government and the international community. Its eradication is the number one goal on the list
of Millennium Development Goals of the Millennium Declaration adopted by the United Nations
General Assembly on September 8, 2000 (Cypher and Dietz, 2009). The government has
outlined how it is to address poverty, job creation and economic growth in its Fourth National
Development Plan and Vision 2030 (NPC, 2012). Despite the governments attempt to deal with
poverty, the problem persists (UNDP, 2007) and aggressive policy interventions are therefore
needed. Economic growth can be the engine to reduce poverty, and s