Malawi - Promising reforms, bad luck

The aim of this paper is to learn from the policy experience of Malawi. Starting from a very low level at independence in 1964, the country managed to raise its per capita income rapidly. The end of the 1970's, however, saw the emergence of serious difficulties. The government made substantial efforts to carry out economic policy reforms during the 1980's of which a number succeeded. However, Malawi continued to be plagued by negative developments related to international commodity prices and to political stuggles in Southern Africa. The resulting financial pressures, transport disruption, and inflow of refugees swamped the positive impact of the reforms. This paper starts by assessing the factors responsible for Malawi's economic difficulties. Chapter 1 focuses on four exogenous shocks. In Chapter 2, some weaknesses in the economic policy framework are pointed out. Chapter 3 explores the impact of political and administrative factors on economic policy. Next, Chapter 4 analyzes a series of policy packages adopted and implemented during 1980-86. Finally, Chapter 5 draws some lessons from Malawi's experience.