Lelo Nxumalo

Update (November 13, 2015). Official statistics show that Malaysia grew at 4.7%, higher than the ARIMA forecast of 4.5% below. Read more here . ------ Using seasonally adjusted quarterly GDP data from 2005, I estimate that Malaysia’s economy will grow by approximately 4.8% in 2015 and 4.9% in 2016 . I applied the autoregressive integrated moving average (ARIMA) model to derive quarterly forecasts for 2016 and 2017. Year-on-year growth during 2015Q3 is expected to come in slightly lower (4.5%) than second quarter growth (4.9%) due to EM headwinds from a weakening China, one of Malaysia's leading trade partners. Growth in 2016 might come in higher than ARIMA would predict because the 11th Malaysia plan projects will start to kick in. The country needs to grow by 5-6% per year if it is to reach the high income goal by 2020. (Actual data for 2015Q3 will be made public on November 13th according to the Malaysian economic calendar ). A Note on ARIMA Models With the ARIMA meth...

The R-generated motion chart below is a representation of East Asian economies as of 2013. The data used are from the World Bank's WDI database. Bubble size represents the relative size of the country's GDP (measured in 2011 PPP dollars). The default colors show the rate of growth with red standing for the the fastest growing.

In a recent post on the World Economic Forum website (See here ), Daron Acemoglu summarizes findings from his recent work on what really causes economic downturns . His focus is on the US economy and starts by showing that the distribution of post war growth in America has generally not followed the normal distribution. I was curious what this would look like for Malaysia (where I am currently working) so I ran the Normal Q-Q Plot in R and this is what I found. Data from the World Bank's WDI database Malaysian real per capita income growth between 1960 and 2013 has largely followed a normal distribution but there are significant tail risks. The plot above shows that large negative downturns are more common than the standard normal distribution would suggest. The downturns correspond,  in descending order of severity, to 1998 (Asian Financial Crisis), 1985 (Commodity Shock), 2009 (Great Recession), 1986 (Commodity Shock continued), 2001 (Dot Com Bust), and 1975 (...

For a while it seemed self evident to me that income growth precedes human development, and that nations should focus on engineering growth before focusing on the distributional aspects (think China). Without even trying I implicitly rationalized the need for benevolent dictators to champion rapid economic development ( See here ). Even after reading Amartya Sen's seminal work Development as Freedom , which argues that this so-called "Lee thesis" (attributed to Singapore's former leader Lee Kuan Yew) lacks comprehensive inter country evidence, I found myself leaning toward what William Easterly calls "conscious planning" in his latest book. In this post, however, I confront this bias of mine and conclude that growth ought to be judged by the extent to which it facilitates the acquisition of what Sen calls individual agency. Individual agency is practically manifested as the ability to escape premature mortality, preventable morbidity, or involuntary st...

I am presently working on a growth diagnostic project for the Malaysian economy. As with any diagnostic, an appreciation of the growth history of the country under study is necessary for one to say anything meaningful about growth prospects. (The outcome of the diagnosis will be published later this year). During the course of my research, I have discovered interesting parallels in the origins of Malaysia and Zimbabwe's redistribution policies after independence. Several years after independence from Britain (Malaysia in 1957 and Zimbabwe in 1980) both countries went through violent racial strife brought about by unresolved issues from their decolonization processes. Malaysia had gotten independence from the British but the Malay majority still had poor economic prospects compared to their Chinese counterparts and, to a lesser extent, their Indian compatriots. This is not to say there were no Malays among Malaysia's elite at the time. After all, the constitution had assure...

It has been a while since I penned my thoughts and I just wanted to take this opportunity to very briefly reflect on what has been happening since I graduated in May. I made the decision to accept an offer from Bright Vision Consulting (BVC) and move to Kuala Lumpur, Malaysia. I work as an Economic Consultant getting my hands dirty applying some of the frameworks I learned at Harvard. BVC was started by a fellow HKS alum, and we work primarily with state and federal authorities on the most pressing challenges in Malaysia. In this season of giving thanks (at least in America), I just wanted to say that it is a great privilege to be able to do what I do. I am grateful each day for the opportunity to not only be alive but also feel alive doing work that really matters! Photo Credit: Pancho  

One of the many things I learned from graduate school was the importance of having a theoretical framework within which to situate a perceived problem you seek to address. Not every problem is amenable to such conceptual grounding so it is worth articulating one for yourself so that you don't get led astray in your pursuit of feasible policies. Many of the issues I discuss in my blog can be viewed from policy frameworks used in public policy schools. Other frameworks I have had to acquire from personal research. To that end, one book that I think will stand the test of time is  Why Nations Fail by Daron Acemoglu and James Robinson (2012). The  key message in this tome (it is 546 pages long) is that  n ations fail because their extractive economic institutions do not create the incentives  needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit fr...