MALAWI’s DEVELOPMENT:

What needs to be done?

Malawi’s economic development requires a comprehensive a policy which is to take into consideration a number of factors. These factors include policies on food security, rural urban linkages, free market trade orientation, and a development of a human capital with a number of skills in different disciplines.

Poor countries have a larger proportion of their national income huge part of its total expenditure devoted to the provision of food, according to Engels law. In Malawi, 60 billion of national budget has been spent on Farm Input Subsidy Programme (FISP). This subsidy is on subsistence maize production which depends on rain fed agriculture and primitive agricultural technologies. This drains government resources and does not generate any income for government since it is purely for consumption. Therefore, for Malawi to develop she needs to move from the subsidy programme, diversify to irrigation agriculture and adopt modern agricultural technologies and this will make yields high, prices low and more savings for government and households which will be used in other investments.

The Kuznets framework links economic development to structural transformation. Poor and underdeveloped economies are poor because they depend more heavily on primary activities-agriculture and mining. Malawi therefore needs to diversify out of primary production and into skills and technology-intensive secondary-manufacturing and tertiary-services sectors including Information and Communication Technology for her to develop.

There is a positive relationship between rural-urban development and national population distribution. According to the central places theory, the urban hierarchy serves a center for social-economic, political and development. Urban areas being ever increasing concentrations of populations, economic and other activities are magnates for population movements, attracting investment, new technology and innovation. Therefore, Malawi needs a heavy investment in road infrastructure to link the rural areas with the urban areas to facilitate the flow of goods and services.

In terms of trade orientation, Malawi should increase its export base by diversifying away from over-reliance on primary goods which have are price inelastic to secondary goods which have a high price elasticity as with the spirit of the Malawi Growth Development Strategies (MDGS). As Malawi is diversifying it has to implement free trade policies so that the market should operate according to the market forces of demand and supply. For instance the Malawi currency should be left to operate under the forces of law and demand in order to facilitate exports. 

Human capital development should be at the heart of development Malawi’s development policies. Sen’s defines poverty as characterized by lack of assets and one of them being the possession of unskilled labor which fetches low wages.  Therefore, Malawi has to pursue policies aimed at developing the human resources by promoting both formal and non-formal education focusing on literacy and skills transfer.