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4.3 Emerging and developing economies

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Question 11

Trade and aid in Malawi

Figure 1: Official development assistance (ODA) received by Malawi (current US$ per capita), 2012 to 2022

YearODA received per capita (US$)
201258
201363
201467
201552
201655
201759
201851
201956
202068
202175
202260

Extract B: Development challenges in Malawi

Malawi’s real GDP growth has been volatile, averaging around 3.5% over the past decade, which has limited significant inroads into poverty reduction. The economy remains highly vulnerable to external shocks due to its heavy reliance on agricultural exports, particularly tobacco, which accounts for over 50% of export earnings. Government initiatives, such as the Affordable Inputs Programme (AIP) for fertilizer subsidies and investment in smallholder irrigation, have aimed to boost food security, but fiscal constraints have hampered their effectiveness. The national poverty rate remains high, only decreasing from 51.5% in 2010 to 50.7% in 2020, with rural poverty persisting at nearly 60%. Rising public debt-to-GDP ratios have severely restricted the government’s capacity to invest in secondary education, healthcare, and infrastructure. Malawi's Gini coefficient has also pointed to persistent inequality, hovering around 0.45.

With reference to the information provided, assess the likely impact on the Malawian economy of the change in aid received between 2021 and 2022.

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4.3 Emerging and developing economies Questions

  1. A Level
  2. /Economics
  3. /4.3 Emerging and developing economies