Chapter

10 Assessing the Impact of Structural Adjustment on the Poor: The Case of Malawi

Editor(s):
Ke-young Chu, and Sanjeev Gupta
Published Date:
April 1998
Share
  • ShareShare
Show Summary Details
Author(s)
Ronald Hicks and Odd Per Brekk 

This case study of Malawi illustrates a practical approach for assessing the impact of structural adjustment policies on poverty. Malawi initiated a structural adjustment program in 1987, which, since mid-1988, has been supported by the IMF through an arrangement under the Enhanced Structural Adjustment Facility (ESAF), the first such program with an IMF member country. The pervasive nature of poverty in Malawi was recognized in formulating the ESAF-supported program. Social and demographic indicators for Malawi are shown in Table 10.1. Five principal factors were viewed as obstacles to poverty abatement in Malawi: (1) limited employment opportunities; (2) low physical productivity of land and labor, leading to low agricultural output; (3) poor health and educational services, which undermined the development of efficient and productive human capital; (4) rapid population growth, which created severe pressure on land resources; and (5) minimal income transfers. The macroeconomic objectives of the ESAF-supported program—the resumption of high-quality sustainable economic growth, the maintenance of a viable external position, and price stability—were aimed at providing impetus to improved economic welfare, which would benefit all groups in the economy, including the poor. Similarly, the program’s structural policies—most notably import liberalization, tax reform, and reforms of the agricultural and financial sectors—were intended to improve efficiency and longer-term economic growth across a wide spectrum of the economy and provide a stimulus to employment, including jobs for the poor. At the same time, it was recognized that the process of economic adjustment and structural change could have short-run adverse effects across the economy, including ramifications for the poor and disadvantaged who were less able to cope. These concerns required giving consideration to modifying policy instruments, or perhaps taking specific remedial measures to ease the burden of adjustment for certain population groups.

Table 10.1.Malawi: Social and Demographic Indicators1
Area118,428 square kilometers
Population8.2 million
Rate of growth3.3 percent a year
Density69 persons per square kilometer
Population characteristics
Life expectancy at birth47 years
Share of population under 15 years47 percent
Infant mortality148 per thousand
Crude birth rate54 per thousand
Crude death rate19 per thousand
Urban population14 percent
Labor force
Total labor force3.4 million
Women in labor force1.4 million
Overall participation rate43 percent
Health
Population per physician11,334
Population per nurse3,106
Access to piped safe water
Aural population50 percent
Urban population97 percent
Nutrition
Daily caloric supply per capita2,009
Protein intake per capita57 grams per day
Education
Adult literacy41 percent
Primary school enrollment66 percent
Secondary school enrollment4 percent
Source: World Bank (1990b).

Most recently available data as of 1991.

Source: World Bank (1990b).

Most recently available data as of 1991.

The principal focus here is to ascertain the short-run impact of adjustment policies on prices and incomes as they affected the poor in Malawi under the ESAF-supported program initiated in 1988. In this context, the chapter discusses various economic policy measures designed to alleviate possible short-run adverse effects of the macroeconomic and structural reform measures on poor groups. It should be borne in mind that while economic reform measures could adversely affect some of the poor, the same measures could also result in immediate benefits for other poor groups and in the longer run the poor may suffer more in the absence of reform measures.

Characteristics of the Poor in Malawi

Classification

The World Bank (1990a) identified two categories of the poor in Malawi, the “poor” and the “core poor”—or the poorest group—with the poverty line based on minimum nutritional requirements. According to this criterion, about one-half of the population is classified as living below the poverty line, with the core poor close to 20 percent of the population (Table 10.2).

Table 10.2.Malawi: Poverty Incidence1
PopulationHouseholds
Total poorCore poorOther poorTotal poorCore poorOther poor
(Proportion of total population excluding refugees, in percent)
Total552034512031
Smallholders2481831461828
Estates
Laborers422422
Tenants1111
Urban1111
(Proportion of subsector, in percent)
Smallholders2602238662640
Estates
Laborers673434472026
Tenants644123533023
Urban9977
Sources: World Bank (1990a). The World Bank data for each subsector are derived from the following sources: Smallholders, Annual Sample Survey of Agriculture, 1987/88; Estates, Estate Household Survey 1983; Urban, Urban Household Expenditure Survey, 1979/80; and Population, 1987 Census.

Poverty definition based on indicators for nutritional intake.

“Poor” smallholders are defined as households cultivating less than one hectare; “core poor” smallholders are defined as households cultivating less than one-half hectare.

Sources: World Bank (1990a). The World Bank data for each subsector are derived from the following sources: Smallholders, Annual Sample Survey of Agriculture, 1987/88; Estates, Estate Household Survey 1983; Urban, Urban Household Expenditure Survey, 1979/80; and Population, 1987 Census.

Poverty definition based on indicators for nutritional intake.

“Poor” smallholders are defined as households cultivating less than one hectare; “core poor” smallholders are defined as households cultivating less than one-half hectare.

Based on the 1987 census and evidence from surveys, the World Bank (1990a) identified three groups of the poor—poor smallholders, poor estate workers, and urban poor. Almost 50 percent of the total population in Malawi is composed of poor smallholders; another 4 percent are poor estate workers; and about 1 percent constitute the urban poor. Poverty in Malawi is essentially rural, pertaining mostly to smallholders and, to a much lesser extent, estate workers. Based on minimum nutritional requirements, the incidence of urban poverty is of far less importance. The high incidence of extreme poverty suggested by these data is reflected in social indicators such as low life expectancy (47 years), high infant mortality (148 per thousand), low adult literacy (41 percent), and low productivity in the smallholder agricultural sector.

Poor smallholder households include all households cultivating less than one hectare, the smallest size considered compatible with satisfying basic nutritional needs without relying on income transfers, and one-half of households farming between one and one and a half hectares. The smallholder “core poor” are defined as those households farming less than one-half hectare. These poor farmers generally concentrate on producing traditional maize, which is the staple in their diets, and root crops. Improved varieties of maize and cash crops, such as groundnuts, are cultivated to a limited extent.

The agricultural production of estate worker households differs markedly from that of smallholders. The primary products of estate agriculture are tobacco, tea, and sugar. The World Bank (1990a) estimated that about one-half of the estate worker households were poor, when judged on satisfaction of basic nutritional requirements. The incidence of poverty was higher among tenant estate households (about one-half). In contrast to smallholder and estate worker households, only 7 percent of urban households could be considered poor.

While no statistical information is available regarding the informal sector in Malawi, it is not believed to be large in the urban areas, partly because formal marketing activity is relatively efficient for a wide range of goods and services. In the rural areas, informal sector activity is thought to be significant among the self-employed and part-time workers, with a distinct seasonal pattern.

Sources of Income

Table 10.3 provides details relating to the sources of income of poor smallholders. Own-farm (subsistence) agricultural production provides a little over 70 percent of the income of smallholders in the core poor category, rising to about 90 percent for those households with higher incomes and larger plots. Off-farm activities—self-employment, paid agricultural labor, and other labor—constitute about 10–20 percent of income for poor smallholders. The poorest segment of the population supplements its income to a larger extent than other groups by paid employment and other off-farm activities, as well as food and cash transfers from household members who migrate to other sectors of the economy because of the low productivity on the smaller farm plots.

Table 10.3.Malawi: Smallholder Composition of Income(In percent)
Core PoorOther PoorNonpoor
Total100.0100.0100.0
Own-farm agricultural production72.686.793.7
Food remittances13.60.9
Cash remittances14.21.81.8
Paid other off-farm activities9.36.5
Paid agricultural employment6.32.4
Self employment4.01.74.5
Source: World Bank (1990a).

For the nonpoor, the figure for cash remittances includes any income that may come from food remittances.

Source: World Bank (1990a).

For the nonpoor, the figure for cash remittances includes any income that may come from food remittances.

For estate workers (both laborers and tenants), the World Bank (1990a) estimated that some three-fourths of their income was derived from permanent labor income (almost 80 percent in the case of the core poor in the estates, and just over 70 percent in the case of the other poor). The remainder of their income was from other wage income, with incomes from own-farm agriculture—in contrast to smallholders—being minimal.

For urban households, wages were the principal income source, including income from self-employment, household enterprises, and other informal activities.

In sum, subsistence agricultural production of traditional maize and root crops was the predominant source of income for the poor in Malawi. Wage income was the main source of income for the poor estate workers and also for the small group of the urban poor.

Expenditure Patterns

The information available with regard to spending patterns of the poor in Malawi is limited. Comprehensive household expenditure surveys have covered urban areas only,1 whereas the majority of the poor reside in rural areas. Broad-based surveys of expenditure patterns for estate workers and smallholder farmers do not exist, and only very limited information exists with regard to smallholders and estate workers.

Smallholders and Estate Workers

A limited survey of smallholder expenditure in Zomba South showed that expenditure on food accounted for more than 50 percent of total spending of the poorer smallholders in that area (Peters and Herrera, 1989). The proportion spent on food declined to 40 percent in the higher-income groups. Spending on household goods and services, including clothing, accounted for most of other expenditures for all income groups. For estate households, food was again the principal spending component, constituting, as estimated by the World Bank (1990a), about 65 percent of total spending for both poor estate laborers and tenants. However, transfer payments to their home villages amounted to an estimated 6 percent of expenditure for poor estate households, whereas such payments were negligible for smallholders.

Urban Poor

The 1978/80 Urban Household Expenditure Survey covered 3,000 households in four cities and indicated that food expenditure was close to one-half of total expenditure of the urban poor and that clothing and housing accounted for about 20 percent;2 fuel, power, and transport accounted for a considerably smaller proportion, although these categories were more significant in the larger cities. In 1988/89, a small income and expenditure survey was carried out among the low-income groups in the traditional housing areas in Lilongwe and Blantyre. The survey showed that food expenditure constituted about 45 percent of total household spending in both cities in 1988/89, that fuel and transportation expenditures seemed to have increased in importance since the 1979–80 survey, and that the share of clothing expenditure had declined. It is unclear, however, to what extent these developments reflect changes in the number and composition of low-income households rather than adjustments in overall expenditure patterns of these households. Neither is it clear to what extent this reflects changes in spending habits or relative prices.

ESAF Program and Implications for the Poor

The macroeconomic framework of the ESAF program for the fiscal years 1988/89–1990/91 focused on a sustained reduction in the budget deficit and on monetary restraint through a slowdown in aggregate credit expansion. Structural policies included import liberalization, parastatal and financial sector reforms, and pricing policies aimed at improving economic efficiency and productivity.

Financial Policies and Price Developments

The most pervasive influence of the ESAF program on prices and incomes stemmed from the tighter financial policies implemented over the period. The government’s overall budget deficit, excluding grants, was reduced from 12 percent of GDP in 1986/87 to just over 6 percent on average in 1989/90 and 1990/91. This reduction was due mainly to restraint in recurrent expenditures, including wages and salaries. The share of recurrent social services expenditures (principally education and health) in total recurrent spending edged up over the program period from 20 percent in 1987/88 to 22 percent in 1990/91; recurrent social services spending remained on average almost 4.5 percent of GDP during 1987/88–1990/91. Tax reform was responsible in part for a reduction in the revenue-to-GDP ratio, with tax reductions having a stronger impact than base-broadening; the impact on the poor of the introduction of a value-added tax was eased by zero rating of unprocessed food. Tighter financial policies led to a marked decline in broad money growth from a 12-month rate of 30 percent in March 1988 to 12 percent in March 1991, and a switch from negative to positive real rates of interest.

Against this background, the annual average inflation rate, as measured by the composite consumer price index, declined from 31 percent in 1988 to 12 percent in 1990.3 The price deceleration was considerably more pronounced in some categories than in others; for food, which has a larger weight in the low-income indices, the rate of price increase declined a little faster than the overall average, dropping from 37 percent in April 1988 to 9 percent in April 1991.

Apart from the broader impact of financial policies on price performance as indicated above, the specific fiscal measures adopted appear to have had only a moderate direct effect on the poorest segments of the population. Individual tax measures had a modest direct impact on consumer prices, as the focus of tax changes tended to be on imported or luxury goods not weighing significantly in the consumption of the poor. The effect of the increase in social expenditures on the poor seems to have been positive, but the extent of the impact is not certain. Fiscal and monetary policies have therefore had their favorable impact mainly through broader macroeconomic responses, reflected most notably in the pronounced slowdown in inflation.

Pricing Policies

As most prices had already been deregulated before the ESAF program commenced, the program focused on the periodic review and adjustment of prices of the few goods on which controls remained. Prices of the two main consumer items involved—petroleum and sugar—were kept unchanged during the first two years of the program. However, in keeping with their commitment to provide for an appropriate domestic pass-through of changes in world petroleum prices, and to ensure that cost developments were adequately mirrored in domestic prices, the authorities increased the domestic price of petroleum by 5 percent in April 1990 and 12 percent in October 1990. The domestic price of sugar was increased by 7 percent in April 1990, and by a further 19 percent in January 1991, reflecting concerns about the sustained increase in sugar prices in the southern African region, the high rate of domestic consumption, and the decline in Malawi’s sugar export volume. The artificially low domestic price of sugar generated not only supply shortages, but also informal trade with neighboring countries; the higher prices were therefore aimed at enhancing production incentives and export potential.

With fuel and power combined accounting for 2–5 percent of the various low-income urban CPI baskets, the price increases in April and October 1990 for petroleum products implied only a modest direct impact on the low-income CPI. For smallholders and estate workers, the effect most likely was even less. Similarly, with the weight of 4–5 percent for sugar in the urban low-income basket, the increases in the price of sugar in April 1990 and January 1991 also had a relatively small effect.

The ESAF program also focused on establishing appropriate producer prices to help ensure adequate financial incentives for agricultural development and diversification among smallholders. These administered producer prices, reviewed each year in consultation with the World Bank, were announced at the beginning of the crop year and applied to purchases from smallholders by the major agricultural parastatal, the Agricultural Development and Marketing Corporation (Admarc). The main commodities were maize, tobacco, groundnuts, and cotton. As noted earlier, maize is grown by almost all smallholders, mostly for their own consumption, accounting on average for about three-fourths of their total cultivated area. Private sector traders were free to offer higher prices for maize, and Admarc prices for this crop typically constituted a lower limit. Private trading activity did not make up a particularly important share of total trade in maize, partly reflecting the general tendency of producers to prefer the convenience of Admarc marketing outlets. The administered price of maize was almost doubled in 1988–89, and was increased by a further 40 percent in 1990, mainly to help stimulate production after a period of adverse growing conditions, particularly drought. These increases in the administered price of maize, together with higher production, clearly had a positive effect on the real earnings of net maize producers, but a negative effect on net maize consumers. On balance, the poorest sectors of the population, who were more dependent on labor and food markets because of the low productivity of smaller plots, likely experienced a decline in real incomes, given the higher food prices that resulted from producer price incentives.

To improve productivity in the smallholder sector and help overcome their limited access to credit, a smallholder fertilizer program was started in 1983 involving a subsidy on imported fertilizer, the high cost of which was due to the sharp rise in world fertilizer prices and the large transportation costs that stemmed from the use of longer-haul road routes. Most of the fertilizer used by smallholders was for maize. Against this background, budgetary outlays for the fertilizer subsidy rose, reaching MK 27 million, or 2 percent of total budget expenditures in 1990/91, which implied an economic subsidy level of about 30 percent.

Although fertilizer prices charged to smallholders continued to rise despite this subsidy, the marked increase in producer prices over the period, particularly for maize, helped restore the incentive to use fertilizer and thus sustain productivity. The government remained committed to phasing out the fertilizer subsidy to minimize distortions in production. The elimination of the subsidy was expected to be compensated in broad terms by lower transportation costs resulting from improvements in the traditional supply routes, expanded access to rural credit, and gains in productivity related to the adoption of high-yielding maize varieties.

Wages

An important element of the government’s strategy for improving living conditions of the poor in Malawi over the program period was the approximate doubling of minimum wages, effective May 1989, after several years of no change. The most significant impact of these increases occurred in the tobacco and tea estates, where large numbers of low-paid seasonal workers are employed. Still, the increase in the minimum wage is reported to have had some adverse impact, although not clearly measurable, on the level of employment in the tobacco and tea estates.

Interest and Exchange Rate Policies

The program supported by the ESAF provided for greater flexibility in interest rates. Even though nominal interest rates still tended to change rather infrequently, real rates of interest turned positive, reflecting the decline in the inflation rate. However, most smallholder estate workers and the urban poor did not have access to credit and were therefore not directly affected by changes in the cost of finance. The broader macroeconomic response to tighter financial policies— particularly the slower pace of inflation—had a more significant impact on the poor than monetary policy.

In an effort to bring down inflation, the government adopted a policy of nominal exchange rate stability for the Malawi kwacha in the context of nonaccommodating financial policies. Discrete adjustments to the exchange rate were made to strengthen external competitiveness. As with interest rates, the impact of exchange rate policy on the poor has been more closely related to the lower inflation associated with a stable exchange rate. This said, certain inputs—particularly fertilizer—relied heavily on imported supplies, where costs were affected directly by exchange rate developments (see above).

Import Liberalization

The import liberalization program, completed in January 1991, abolished the requirement of prior approval of foreign exchange allocations for imports. The liberalization program was carried out in stages, at first covering raw materials and intermediate goods and, in the final phases, consumer goods. The initial impact on consumer prices came through the domestic supply response related to the increased availability of imported inputs. Liberalization with respect to consumer goods could later be expected to generate greater import competition for such goods, thus lowering prices.

The deceleration in price inflation was particularly pronounced for commodities with a high import content in production (such as clothing, footwear, and transportation), whereas price increases for food—for which production was to a larger extent domestically based and which had a large weight in the consumption basket of the poor— decelerated less. Thus, while import liberalization led to an overall deceleration in inflation in the short run, it may have benefited low-income households less than other groups.

Estimates of Real Income Developments for the Poor

Because of limited data availability, only very rough estimates, concentrating only on first-round price effects and disregarding any quantity effects, were made of developments in real earnings for 1987–89 for the three poor groups identified above (Table 10.4).

Table 10.4.Malawi: Estimates of Real Earnings(1986/87 = 100)
1987/881988/891989/90
Poor smallholders
Nominal wage1102.9117.7158.8
Consumer prices2127.5162.3187.5
Real wage81.171.484.1
(Change in percent)(−18.9)(−11.9)(17.8)
Poor estate workers
Nominal wage3100.0131.5226.0
Consumer prices2127.5162.3187.5
Real wage78.978.6120.0
(Change in percent)(−21.1)(−0.3)(52.6)
Urban poor, Lilongwe
Nominal wage4100.0124.3197.2
Consumer prices5126.5161.4183.0
Real wage79.675.1107.0
(Change in percent)(−20.4)(−5.6)(42.4)
Urban poor, Blantyre
Nominal wage4100.0124.3197.2
Consumer prices6127.8162.7182.2
Real wage78.874.6107.4
(Change in percent)(−21.2)(−5.2)(43.9)
Sources: Data provided by the Malawian authorities; and IMF staff calculations.

Weighted average of Admarc producer prices (with 1988/89 Admarc sales used as the weights) and income from off-farm activities. The latter is assumed to have moved in line with the rural minimum wage.

Based on food in the overall CPI.

Minimum wage, rural areas.

Minimum wage, cities.

Lilongwe low-income CPI.

Bltantyre low-income CPI.

Sources: Data provided by the Malawian authorities; and IMF staff calculations.

Weighted average of Admarc producer prices (with 1988/89 Admarc sales used as the weights) and income from off-farm activities. The latter is assumed to have moved in line with the rural minimum wage.

Based on food in the overall CPI.

Minimum wage, rural areas.

Minimum wage, cities.

Lilongwe low-income CPI.

Bltantyre low-income CPI.

For poor smallholders, the largest poor group, nominal earnings are assumed to have moved in line with a weighted average of Admarc producer prices and the rural minimum wage (75 percent and 25 percent, respectively). The subindex for food in the overall CPI is taken to indicate trends in consumer prices, reflecting the predominance of spending on food in total expenditures of the poor.4 Based on these income and consumer price assumptions, real earnings declined in 1987/88 and 1988/89 but increased in 1989/90 to a level 4 percent higher than that of 1987/88. Considering that Admarc prices, particularly for maize, acted largely as floor prices, the real earnings of smallholders may have increased even more over the period. However, to the extent that these households produce less maize than they consume, the maize price increases would imply a real earnings decline for this group.

For poor estate workers, the nominal wage is assumed to have developed in line with the minimum wage for rural workers, whereas consumer prices are assumed to have moved in tandem with overall food prices, as was assumed for smallholders. The calculations indicate a drop in the real wage for estate workers in 1987/88 and 1988/89, followed by a sharp increase in 1989/90, so that in 1989/90 the real wage was about 50 percent above the 1987/88 level. However, the calculations probably overstate the variations in the real wage, especially as estate workers are paid partly in kind, and this part of overall remuneration may have been adjusted to offset movements in the formal minimum wage. To this extent, the real wage declines in 1987/88 and 1988/89 and the increase in 1989/90 might have been more moderate than suggested by the simple calculations. It should also be noted that employment was probably adversely affected to some extent by the overall rise in wages, although no quantification of this factor is available.

Real wage developments for the urban poor have been calculated on the assumption that the nominal wage has moved in line with the urban minimum wage in both Lilongwe and Blantyre. Consumer prices have been assumed to increase at the same rate as the respective low-income price indices. On these assumptions, the urban poor experienced sharp drops in their real wage in 1987/88 and 1988/89, which were more than compensated by a large increase in 1989/90, leaving the real wage in 1989/90 about 35 percent higher than in 1987/88, The caveats mentioned above with respect to the appropriateness of the minimum wage as an income indicator and the adverse effect on employment of the wage increase again need to be kept in mind. Note also that the urban poor who were engaged in informal sector activities and the urban poor who are unemployed were outside the formal protection of the minimum wage arrangements and may have been adversely affected by the strong increase in maize prices. However, there are no available data to assess the importance of this effect.

While keeping in mind the limitations of the estimates presented, particularly as regards the narrow range of data on wages, some general conclusions may be drawn. First, each of the three poor groups experienced declines in their real wages in 1988/89, the first year of the ESAF program, mainly because of continued high consumer price inflation. In 1989/90, the success in reducing inflation contributed to an increase in real wages. This increase, however, may have been much higher for the poor estate workers and the urban poor than for the poor smallholders, since the former were the main beneficiaries of the increase in minimum wages.5 Real earnings for poor smallholders—the majority of the poor—appear not to have risen, although to the extent to which actual prices for their marketed output exceeded prices set by Admarc, it is possible that their real earnings did develop more favorably.

Conclusions

This chapter has investigated the scope for assessing the impact of economic policies on the poor in Malawi during 1988–91. A simple methodology was applied that recognized the limitations of the available data. The approach was intended to illustrate the first-round (i.e., price) effects of the ESAF-supported adjustment program on the real earnings of the poor.

Even with this simple approach, we found that the requisite data were scarce and, in key respects, relevant information was not available. The definition of the poor needed to be rather ad hoc, based (for smallholders) on nutritional intake that can be derived from a given size of the household plot. Moreover, we found that information on income and expenditure patterns has severe limitations, particularly for the rural poor. Specifically, official household surveys covered only the main cities (which is typical of developing countries), where only a few of the poor are located. The scattered information available could not be easily combined to establish clear patterns of income and expenditure, without recourse to rather crude assumptions. In light of these problems, a simplified numerical analysis was adopted. Notwithstanding the shortcomings with respect to data, the analysis indicated that a simple methodology can usefully gauge important short-run consequences of economic policies on poverty. This analysis can, in turn, be taken into account when formulating economic policies to mitigate adverse effects on the poorer groups.

The analysis found that poverty in Malawi is a predominantly rural phenomenon, with poor smallholders constituting the majority. The elements of the ESAF program that most clearly affected the real incomes of the poor relate to first-round price effects of agricultural pricing policies and overall anti-inflationary measures. Developments in minimum wages have also been important. Simple ad hoc calculations suggest that all poor groups experienced a decline in real wages in 1988/89, when the ESAF program began. In 1989/90, all poor groups appear to have improved their real income position, and, in particular, real wages of the urban poor and estate workers seemed to have increased strongly. More generally, it must be emphasized that Malawi’s ESAF program did not incorporate measures directed specifically at the poor, given the pervasiveness of poverty and the fact that some agricultural policy changes, with World Bank support, were being implemented simultaneously to reduce poverty for poor smallholders (in particular, by increasing tobacco prices). Rather, the ESAF program focused on improving standards of living through more broadly based macroeconomic stabilization and structural changes.

Note: This chapter is an abridged version of IMF Working Paper 91/112 (Washington: International Monetary Fund, 1991).

A low-income household is defined in this survey as one with average monthly expenditures below MK 100 during the survey period; the World Bank (1990a) study adopted a much narrower definition of poverty.

The declines in the Blantyre and the Lilongwe low-income indices were from 33 percent to 10 percent, and from 34 percent to 12 percent, respectively.

The results are not significantly changed if the overall CPI for low-income groups is used.

It should be noted that these results hinge on the assumption that changes in the minimum wage are representative of changes in real wages for poor estate workers and the urban poor.

References

    PetersPauline E. and M. GuillermoHerrera1989Cash Cropping Food Security and Nutrition: The Effects of Agricultural Commercialization among Smallholders in Malawi (Cambridge, Massachusetts: Harvard Institute for International Development).

    PryorFrederic L.1988Income Distribution and Economic Development in Malawi: Some Historical StatisticsWorld Bank Discussion Paper No 36 (Washington: World Bank).

    RoeGillian and WycliffeChilowa1989A Profile of Low-Income Urban Households in Malawi (Zomba: University of Malawi Centre for Social Research).

    World Bank1990aMalawi—Growth Through Poverty ReductionCountry Economic Report No 8140-KAI (Washington: World Bank).

    World Bank1990bSocial Indicators of Development (Washington: World Bank).

    Other Resources Citing This Publication