Political Change, Economic Transition and Catalysis of IMF and World Bank Models - the case of Malawi
This paper investigates whether or not there is a recognizable pattern of cohesion in economic policy formulation between poor countries (on one hand) and the IMF and World Bank (on the other hand) in the context of change in domestic political dispensation. Malawi provides an appropriate study setting on account of the recent shift from one party dictatorship to multiparty democracy against the background of traditional cooperation with the IMF and World Bank in policy formulation. The paper finds that World Bank and IMF had persistently opposed the strategy of elite agricultural expansion, inward looking industry and state expansion into the private sector. In their place, the Bretton Woods Institutions had suggested policies seeking to revitalize smallholder agriculture, promote outward looking industry and private enterprise. As a result intransigence of the previous regime the IMF and World Bank have taken advantage of political change in Malawi to push a reform program. The new regime is keen to bring rural agricultural sectors into the cash market economy, undertake privatization to ease off pressures on fiscal resources, liberalize industry to promote a competitive culture in business and also liberalize trade policies to continually integrate Malawi to the world trading system. However, thirty years of neglect, dysfunctional markets, weak supply response and fragile fiscal foundations are manifesting themselves in widespread economic stagnation. The enthusiasm of the World Bank and IMF in pushing for continued reform is further hurting the economy and pushing the regime into a crisis of confidence. The main conclusion of this paper is that liberal political systems have a higher propensity to conform to free market policy reforms, but rather than emphasize on resolve, credibility, and certainty of the reform process, and also allow reasonable time for adjustment, the Bank and Fund is keen to push for reform without shaping business expectations or minimizing the costs of transition for the firms and people affected. Despite commitment to reform, external financing remains a quid pro quo against specific policy actions. Contrary to existing literature on aid and economic policy, external assistance is yet to evolve to become a reinforcing agent or as a means of reducing the cost of reforms. This paper is a product of ongoing research on interactions between western ideals and economic models (on one hand) and homegrown programs of poor countries (on the other).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vito Tanzi, 2000. "The Role of the State and the Quality of the Public Sector," IMF Working Papers 00/36, International Monetary Fund.
- International Monetary Fund, 1997. "Corruption and the Rate of Temptation; Do Low Wages in the Civil Service Cause Corruption?," IMF Working Papers 97/73, International Monetary Fund.
- Roberts, M.J. & Tybout, J.R., 1990.
"Size Rationalization And Trade Exposure In Developing Countries,"
5-90-2, Pennsylvania State - Department of Economics.
- Mark J. Roberts & James R. Tybout, 1991. "Size Rationalization and Trade Exposure in Developing Countries," NBER Chapters, in: Empirical Studies of Commercial Policy, pages 169-200 National Bureau of Economic Research, Inc.
- Roberts, Mark J. & Tybout, James R., 1991. "Size rationalization and trade exposure in developing countries," Policy Research Working Paper Series 594, The World Bank.
- Howard White & Oliver Morrissey, 1997. "Conditionality When Donor And Recipient Preferences Vary," Journal of International Development, John Wiley & Sons, Ltd., vol. 9(4), pages 497-505.
- Roberts, Mark J & Tybout, James R, 1997. "Producer Turnover and Productivity Growth in Developing Countries," World Bank Research Observer, World Bank Group, vol. 12(1), pages 1-18, February.
- Svensson, Jakob, 1997.
"When is Foreign Aid Policy Credible? - Aid Dependence and Conditionality,"
600, Stockholm University, Institute for International Economic Studies.
- Svensson, Jakob, 2000. "When is foreign aid policy credible? Aid dependence and conditionality," Journal of Development Economics, Elsevier, vol. 61(1), pages 61-84, February.
- Svensson, Jakob, 1997. "When is foreign aid policy credible : aid dependence and conditionality," Policy Research Working Paper Series 1740, The World Bank.
- Svensson, J., 1995. "When Is Foreign Aid Policy Credible? Aid Dependence and Conditionality," Papers 600, Stockholm - International Economic Studies.
- Williamson, John, 1983. "On Seeking to Improve the IMF Conditionality," American Economic Review, American Economic Association, vol. 73(2), pages 354-58, May.
- Dani Rodrik, 1988. "Imperfect Competition, Scale Economies, and Trade Policy in Developing Countries," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 109-144 National Bureau of Economic Research, Inc.
- Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155, March.
- Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
- Ritva Reinikka & Paul Collier, 2001. "Uganda's Recovery : The Role of Farms, Firms, and Government," World Bank Publications, The World Bank, number 13850, October.
- John Williamson, 2000. "The Role of the IMF: A Guide to the Reports," Policy Briefs PB00-5, Peterson Institute for International Economics.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:0211003. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.