ABSTRACT
It has been argued that prior to the introduction of democracy in 1994, the Malawian political economy is best viewed as a mixed economy with economically motivated Government interventions in a regime not dissimilar to the newly industrial countries (NICs). The strongest lesson which emerges from the study of structural adjustment in Malawi is the importance of donor understanding of the political economy context within which the adjustment programme is implemented. The Malawian experience shows that for the low income aid dependant open economies of sub-Saharan Africa exogenous shocks can easily throw an adjustment programme off-course by reducing the government's ability and/or willingness to comply with reform conditions. Important macro-economic lessons can also be gleaned from the Malawian experience. One of the main reasons why the economy has failed to benefit from World Bank and International Monetary Fund adjustment programmes is that it has not achieved a stable macro-economic environment which is needed to attract investment.
