ABSTRACT
Malawi's strong 1964-77 economic performance was the outcome of an export-orientated, agro-based, labour intensive development strategy under which import substituting industrialisation played a secondary role. The Bank's diagnostic work on the Malawian economy misinterpreted this strategy in two important ways which subsequently affected the quality of the adjustment programme. Firstly, the Bank over-estimated the growth rate due to an over-estimate of smallholder production. This helps to explain the Bank's failure in the SAL I-III adjustment programme to address the intra-sector policy bias against smallholders, its belief that price increases alone could stimulate aggregate smallholder output, and its failure to address the significance of the food self-sufficiency objective.
