Adjustment and constrained response : Malawi at the threshold of sustained growth
Frischtak, Claudio
In the last decade Malawi has undergone considerable efforts at adjusting its economy to adverse shocks in terms-of-trade and transportation costs. At the same time there was a relatively successful attempt to cope with a large refugee influx despite rapid population growth and a limited resource base. Although Malawi's economy is small, and therefore unable to sustain more than one or a few producers in specific segments, a number of institutional and policy-related barriers have further deterred mobility and competition. In particular, a number of quasi-binding mobility barriers, by deterring entry and exit of producers, further protect what were already highly concentrated and monopolistically organized markets. Such structural rigidities, discussed in this paper, have only recently begun to change. The paper details the results from a survey of 55 micro, small and medium-size firms. Most of the results were found to be consistent with those of previous surveys in Malawi. The major constraints facing smaller firms are discussed, including limited markets, credit restrictions, and a confined entrepreneurial horizon, and it is argued that although smaller and larger firms face many specific problems, ultimately their development constraints call for a unified strategy to remove them.
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