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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Modelling the Impact of World Bank Policy-Based Lending: The Case of Malawi's Agricultural Sector
Author:Harrigan, Jane
Periodical:Journal of Development Studies
Geographic term:Malawi
Subjects:World Bank
agricultural development
economic policy
Economics and Trade
Development and Technology
Agriculture, Natural Resources and the Environment
Politics and Government
international relations
Abstract:Between 1981 and 1987 Malawi received three structural adjustment loans (SALs) from the World Bank which provided 167 million US dollars in balance of payments support. The accompanying reform package focused heavily on the smallholder agricultural sector and used adjustments in agricultural prices as the main policy instrument to stimulate growth in the sector. The impact on the smallholder agricultural sector is quantified using a multimarket agricultural pricing model on which three price policy scenarios are simulated, representing zero, partial and full compliance with the World Bank's price policy conditionality. These scenarios are analysed in terms of their impact on the government budget, smallholder real incomes, maize production, exportable cash crop production, and the balance of payments. The results of the modelling exercise provide evidence in support of the critique of the Bank's agricultural price policies. In particular, they support the argument that suppressing the relative maize producer price and increasing input prices jeopardized any increase in food crop productivity, which was essential if efforts to increase smallholder export crops through price increases were not to take place at the cost of a reduction in food security. An analysis of the policy bargaining between the Bank and the government of Malawi indicates that neither party was fully aware of the nature of the policy trade-offs revealed by this modelling exercise. Bibliogr., notes, ref.