Issachui Academy MATHEMATICS & ECONOMICS
STUDY GUIDE IB Economics HL · First assessments 2022 · Reviewed calculations · Historical examples dated

CORRECTIONS REVIEW · 15 OCTOBER 2026

Historical examples:
evidence and corrections

31 targeted edits across five chapters implement the 35-entry review. Useful historical observations have dates and attribution; unsupported amounts and overstatements have been removed or rewritten. The original capture, design, diagrams and interactive controls are preserved.

This review does not imply that every statement in the guide has been independently verified. Other country-profile details outside these changes remain subject to review.

Chapter 2.7 · review 6

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Before: After the hurricane, supplies of fresh water were compromised, and bottled water became difficult to get hold of due to the damage caused by the storm. This decrease in supply meant that the price of bottled water increased above $5 per gallon. This is clearly a problem: fresh, drinkable water is a necessity, and the higher prices disproportionately affect those on low incomes.

After: After Hurricane Katrina in August 2005, damaged water supplies and transport links made drinking water difficult to obtain. A shortage of a necessity places particular pressure on low-income households: if its price rises, they may have to reduce spending on other essentials.

Chapter 2.7 · review 6

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Before: There were therefore calls for the government to impose a price ceiling on bottled water in order to ensure that people could access water at a reasonable rate.

After: A price ceiling is one possible response to such a shortage. However, unless supplies also increase, a price ceiling below equilibrium leaves excess demand; emergency distribution and restoration of water supplies may therefore be needed alongside price controls.

Chapter 2.7 · review 5

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Before: One example of a government subsidy is housing subsidies; these aim to promote homeownership and to support the construction industry. In the US, the federal government spends around $15 billion on housing subsidies per year. Examples of housing support in the US include tax relief, such as the mortgage interest deduction on federal income tax, which reduces taxable income rather than the contractual mortgage interest rate, and down-payment assistance, through which the federal government matches the amount that low-income families save for a down-payment on a house.

After: Housing subsidies aim to support access to housing and may also encourage construction. In the US, housing support includes tax relief, such as the mortgage interest deduction on federal income tax, which reduces taxable income rather than the contractual mortgage interest rate. Down-payment assistance is another form of support, but eligibility, funding and repayment conditions depend on the particular programme. Source: GAO historical housing-assistance analysis; not support for the $15bn claim

GAO historical housing-assistance analysis; not support for the $15bn claim

Chapter 2.8 · review 3

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Before: Governments often use indirect taxes to reduce the consumption of demerit goods like cigarettes. For example, in 2016 around 44.3% of the price of a pack of cigarettes was, on average, made up by federal and state taxes in the US.

After: Governments often use indirect taxes to reduce consumption of demerit goods such as cigarettes. A US statistical table reported a weighted average cigarette excise-tax share of 44.3% of the retail price as of 1 November 2016. The calculation included federal and state cigarette taxes, with specified local-tax adjustments, and excluded sales tax. Source: NC Department of Revenue, 2017 Statistical Abstract, Table 7

NC Department of Revenue, 2017 Statistical Abstract, Table 7

Chapter 2.8 · review 4

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Before: These taxes have been effective in the US; studies have shown that for every 10% increase in the price of a pack of cigarettes, youth smoking rates drop around 7%. However, a 2012 study also found that higher cigarette taxes might disproportionately affect lower-income smokers. Using 2010–2011 survey data, the 2012 study found that lower-income smokers in New York spent 23.6% of household income on cigarettes, compared with 2.2% for higher-income New York smokers. These figures describe the burden on continuing smokers; they do not establish that higher taxes failed to encourage quitting.

After: A 2009 California tobacco-control report summarised earlier research suggesting that a 10% rise in cigarette prices was associated with nearly a 7% reduction in youth smoking prevalence. This is a historical estimate of a relative percentage change in the proportion who smoke, not a seven-percentage-point fall or a response that must occur in every market. However, cigarette taxation can place a substantial burden on low-income people who continue to smoke. Using 2010–2011 survey data, a 2012 study found that lower-income smokers in New York spent 23.6% of household income on cigarettes, compared with 2.2% for higher-income New York smokers. Those expenditure figures do not establish that higher taxes failed to encourage quitting. Source: California strategy report (2009), government-hosted copy

California strategy report (2009), government-hosted copy

Chapter 2.8 · review 7

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Before: Plastic bags are very harmful for the environment. They are manufactured from non-renewable crude oil, meaning that the manufacturing process produces large amounts of pollution, and that conventional plastic bags persist in the environment. Their breakdown depends on the material and environmental conditions; fragmentation into microplastics is not the same as complete biodegradation. Around 100,000 marine animals die every year from eating or being strangled by plastic bags.

After: Conventional plastic bags are generally made from fossil-fuel feedstocks, and their production and disposal can impose environmental costs. They persist in the environment; breakdown depends on the material and surrounding conditions, and fragmentation into microplastics is not complete biodegradation. Discarded plastic can harm marine wildlife through ingestion and entanglement. Sources: UNEP/MAP communication (2014) ; UNEP plastic-pollution communication (2019)

UNEP/MAP communication (2014) · UNEP plastic-pollution communication (2019)

Chapter 3.7 · review 8

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Before: For example, the government began to deregulate the electricity market in 2003, when it created the National Electricity Market of Singapore (NEMS). The NEMS is designed to promote competition and efficiency in the sector, and to encourage private investment. The government then moved to deregulate the retail market for electricity. By 2018, EMA reported that over 60,000 business accounts had switched to buying electricity from retailers; these accounts represented 79% of total electricity demand. Demand share is different from the proportion of consumers. This has led to a decrease in electricity prices of around 10%.

After: Singapore introduced the National Electricity Market of Singapore (NEMS) in 2003 to promote competition, efficiency and private investment, and progressively opened retail electricity supply to competition. By 2018, EMA reported that over 60,000 business accounts had switched to buying electricity from retailers, representing 79% of total electricity demand; this was a share of demand, not of consumers. Separately, EMA’s 2014–15 annual report recorded a 30% fall in wholesale electricity prices in 2014 compared with 2013, alongside additional generating capacity and lower gas prices. The fall cannot be attributed solely to liberalisation, and wholesale prices are not the same as household electricity bills. Source: EMA annual report 2014–15

EMA annual report 2014–15

Chapter 3.7 · review 2

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Before: Safety may also have improved as a result of privatisation. Research by Imperial College London found that 150 people had lived who may have died in crashes had privatisation not occurred. The graph below shows that Britain has one of the safest railways in Europe based on the number of train safety incidents.

After: Andrew Evans’s 2007 study examined British railway safety using accident data from 1967 to 2003 and comparisons with historical trends. It found no evidence that privatisation had caused safety to deteriorate. This does not establish a precise number of lives saved by private rather than public ownership. The international comparison in the graph below provides further context, but cannot by itself identify the effect of privatisation. Source: Evans, Rail safety and rail privatisation in Britain (2007)

Evans, Rail safety and rail privatisation in Britain (2007)

Chapter 3.7 · review 1

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Before: This decline in trade union membership has led to a gradual decrease in wage growth, of around 0.75% per year over the last 30 years. If the decline in the percentage of the workforce who are members of a union continues, the decrease in wage growth is likely to continue.

After: In a 2018 speech, Bank of England economist Andy Haldane used a long-run wage equation to estimate that declining unionisation had reduced annual wage growth by around 0.75 percentage points over the preceding three decades. This is an attributed model estimate, not a 0.75% annual fall in wages. The result suggests that bargaining power can matter for wage growth, but does not establish that any future fall in union membership must produce the same effect. Source: Bank of England, Pay Power (2018), p.11

Bank of England, Pay Power (2018), p.11

Chapter 3.7 · review 10

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Before: The government is also investing $4.8 billion US dollars into water infrastructure.

After: Water infrastructure provides another example. PUB’s estimate for Phase 2 of the Deep Tunnel Sewerage System was S$6.5 billion for the whole project. Contemporary reporting in 2019 expressed this as approximately US$4.8 billion; it was an estimated project cost, not annual spending. Sources: PUB industry briefing ; Contemporary project report

PUB industry briefing · Contemporary project report

Chapter 3.7 · review 9

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Before: In total, the data and analytics company GlobalData is predicting that Singapore will spend around $10.7 billion US dollars on infrastructure in 2021.

After: In August 2019, GlobalData forecast that spending on the infrastructure projects it tracked could reach US$10.7 billion in 2021 if all projects proceeded as planned. The pipeline included both publicly and privately funded projects. This was a conditional forecast, rather than a record of actual government expenditure in 2021. Source: Southeast Asia Construction, 19 August 2019

Southeast Asia Construction, 19 August 2019

Chapter 3.7 · review 11

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Before: By 2017, the government had established over one thousand ‘stage-guided funds’ endowed with $807 billion, much of which was earmarked for ‘Made in China’ industries.

After: Government guidance funds are one means of financing priority industries in China. They combine government backing with contributions from other investors to support selected firms and projects. Announced fund targets, capital actually raised and amounts invested are different measures; the total size of these funds should not be treated as government expenditure on Made in China 2025. Source: Original research, The China Quarterly

Original research, The China Quarterly

Chapter 4.10 · review 12

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Before: Russia has recently instituted a policy of import substitution which has enabled it to increase domestic production in many industrial sectors and reduce imports, particularly in the agriculture and food processing, automotive, chemical, pharmaceutical, aviation, and naval sectors.

After: Russia’s import-substitution policies in the mid-2010s sought to encourage domestic production in sectors including agriculture and food processing. The food embargo provides a historical example of restrictions intended to shift demand towards domestic suppliers. Source: Stephen Wegren, Effects of Russia’s Food Embargo (2019)

Stephen Wegren, Effects of Russia’s Food Embargo (2019)

Chapter 4.10 · review 12

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Before: From August 2014, Russia imposed an import ban on specified food products from specified countries; this led to the cost of food imports dropping from $60 billion in 2014 to $20 billion in 2017, and has allowed Russia to strengthen its global position in the market and to become self-sufficient.

After: From August 2014, Russia banned specified food imports from specified countries. Stephen Wegren’s 2019 analysis reports food-import values of approximately US$39.7 billion in 2014 and US$28.9 billion in 2017. This decline does not by itself establish the effect of the ban: exchange rates and domestic demand also influence the dollar value of imports. Russia continued to import food, so the figures do not demonstrate overall self-sufficiency. Source: Stephen Wegren, Effects of Russia’s Food Embargo (2019)

Stephen Wegren, Effects of Russia’s Food Embargo (2019)

Chapter 4.10 · review 13

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Before: The policy has also allowed Russia to develop in other industries, including the aviation industry, which will reach an annual turnover of $50 billion by 2025. The pharmaceutical industry has also grown to a worth of $5 billion, which will probably double by 2022.

After: Import substitution can give domestic firms an opportunity to expand, but lower imports alone do not show that an industry has become more productive or internationally competitive. Its success should be assessed using evidence on output, costs, quality and the effects on consumers.

Chapter 4.9 · review 14, 15, 35

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Before: The graph below shows Haiti’s economic growth between 1960 and 2018. It shows that Haiti’s rate of growth has tended to be low, averaging around 2% over the last ten years. In 2019, its GDP per capita was $756, making it the poorest country in the Western Hemisphere. Its Human Development Index ranking in 2019 was 169th out of 189 countries. A child born in Haiti today will only achieve 45% of the productivity as an adult that they could have achieved had they enjoyed full education and health.

After: The graph below shows Haiti’s economic growth between 1960 and 2018. An October 2020 USAID report, citing World Bank figures available at the time, put GDP per capita in 2019 at US$756; this is a historical data vintage, rather than a value checked against subsequent revisions. Haiti ranked 169th out of 189 countries in the 2019 Human Development Report. The World Bank’s 2020 Human Capital Index was 0.45: under the pre-pandemic health and education conditions used in the model, a child born in Haiti could expect to reach 45% of the adult productivity associated with complete education and full health. Sources: USAID report, October 2020 ; World Bank Haiti HCI brief, October 2020

USAID report, October 2020 · World Bank Haiti HCI brief, October 2020

Chapter 4.9 · review 16

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Before: Many regions are inaccessible by road, and the road system that does exist consists mainly of unmarked and unpaved roads; in 1999, the country had 1,011km of paved roads and 3,149km of unpaved roads. Most of the road system was built during the US occupation in the early 1900s, and has since been damaged by the climate.

After: The Library of Congress’s May 2006 country profile reported 1,011 km of paved roads and 3,149 km of unpaved roads in 1999. It also described road construction during the US occupation of 1915–1934. These figures illustrate the historical infrastructure constraint; they are not a current inventory of Haiti’s road network. Source: Library of Congress Haiti profile, May 2006

Library of Congress Haiti profile, May 2006

Chapter 4.9 · review 17

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Before: Public transport services exist, including privately operated shared vehicles, but poor roads, affordability and limited access constrain mobility, as described in the World Bank’s 2018 transport analysis. However, there are only around 36 vehicles per 1,000 inhabitants.

After: Public transport services exist, including privately operated shared vehicles, but poor roads, affordability and limited access constrain mobility, as described in the World Bank’s 2018 transport analysis.

Chapter 4.9 · review 18

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Before: In 2012, there were 50,000 telephone landlines in use, ranking Haiti 163rd in the world on this measure. However, Haiti’s mobile phone coverage increased from 6% to 30% between May 2006 and May 2007, and in 2012 61.6% of the population had access to mobile lines.

After: Telecommunications can reduce the cost of obtaining information and reaching markets. When assessing access, the number of subscriptions must be distinguished from the number of individual users and the population covered by a network: one person may hold several subscriptions.

Chapter 4.9 · review 19

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Before: In 2015, there were around 1.3 million internet users in Haiti, making up around 12.2% of the population.

After: The World Bank’s October 2020 Human Capital Project brief reported that 32% of Haiti’s population used the internet in 2018. This dated measure describes internet use, rather than the number of telephone subscriptions or the reach of a mobile network. Source: World Bank Haiti HCI brief, p.2

World Bank Haiti HCI brief, p.2

Chapter 4.9 · review 20, 21

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Before: Haiti’s education system is extremely poor. In 2016, only 58% of women and 65% of men were literate. There are also disparities between the rural and urban populations, with the rural population being significantly less educated than the urban population. In 2018, the Haitian government spent only 2.8% of GDP on education, in comparison to a world average of around 4.5% and an average among LDCs of 4.0%.

After: Bertelsmann’s BTI 2022 Haiti report, citing World Development Indicators, gives estimated literacy rates for 2016 of 58.3% for women and 65.3% for men. These historical estimates indicate a gender gap in literacy. The World Bank’s October 2020 Human Capital Project brief also reported government education spending of 2.8% of GDP in 2018. Limited education and public resources can constrain the accumulation of human capital. Sources: BTI 2022 Haiti country report ; World Bank Haiti HCI brief, p.2

BTI 2022 Haiti country report · World Bank Haiti HCI brief, p.2

Chapter 4.9 · review 22, 35

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Before: Around 40% of Haitians rely on small-scale subsistence farming, which is particularly vulnerable to damage from natural disasters. Haiti also exports agricultural products, making up around 28% of Haiti’s annual GDP in 2004 and employing around 66% of the population in the same year. The main agricultural products exported are coffee, mangoes, and cocoa. Haiti also has a mining industry, extracting mainly bauxite, copper, calcium carbonate, gold, and marble.

After: Agriculture provides livelihoods but is vulnerable to damage from natural disasters. According to the Library of Congress’s May 2006 profile, agriculture, forestry and fishing together accounted for around 28% of GDP and 66% of the labour force in 2004. The GDP figure measures the combined sectors’ value added, not agricultural export revenue; the employment figure refers to the labour force, not the entire population. Source: Library of Congress Haiti profile, May 2006

Library of Congress Haiti profile, May 2006

Chapter 4.9 · review 23, 24, 25

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Before: In Haiti, only around 13% of the labour force are employed in the formal sector. Agriculture and the urban informal sectors provide around 40% and 47% of employment respectively. Earnings in the informal sector tend to be less than half of those in the formal sector, meaning that the earnings of those working in that sector are insufficient to lift them out of poverty; furthermore, the informal sector is particularly likely to face problems such as lack of electricity and infrastructure. Women are 6% more likely to be employed in the informal sector than men, exacerbating issues of gender inequality.

After: World Bank analysis of Haiti’s 2012 labour-market data described a small formal employment sector: roughly 13% of paid workers were in formal work, with around 40% in agriculture and 47% in urban informal activities. These are historical employment categories, not shares of the whole population. The Bank’s poverty assessment described informal earnings below half formal-sector earnings in its discussion of poor households; low earnings can constrain poverty reduction, but this does not mean every informal worker is poor. The same assessment estimated that, holding other social and demographic characteristics constant, working women were 6 percentage points more likely than men to work informally. Sources: World Bank Haiti country diagnostic, 2015, labour-status figure ; US State Department, Haiti 2021 report ; World Bank poverty assessment

World Bank Haiti country diagnostic, 2015, labour-status figure · US State Department, Haiti 2021 report · World Bank poverty assessment

Chapter 4.9 · review 26

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Before: The informal economy in Haiti stretches from micro-level vendors to small and medium enterprises; in urban areas, it consists mainly of vendors selling food, household items, and used clothing and shoes. These enterprises make only small profits, as there are many substitutes for the goods they sell. The World Bank’s ‘Doing Business’ database ranks Haiti 180th out of 183 countries for ease of starting a business, meaning that these informal businesses are unlikely to transition into the formal sector.

After: Informal enterprises in Haiti include small vendors and other businesses selling food, household goods and clothing. The World Bank’s Doing Business 2012 country profile ranked Haiti 180th out of 183 economies on its starting-a-business indicator. This historical ranking illustrates obstacles to formal business entry; it does not establish that an individual informal enterprise will remain informal. Source: World Bank Doing Business 2012 Haiti profile

World Bank Doing Business 2012 Haiti profile

Chapter 4.9 · review 27, 35

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Before: Haiti declared independence in 1804. In 1825, France demanded that the country pay the French government and French slaveholders the modern equivalent of $21 billion in compensation for the slaves and land of Haiti; this debt was paid off in 1947. In 2006, Haiti was added to the World Bank and IMF’s highly indebted poor country initiative; it met the requirements for the completion of this programme in June 2009, which meant that it qualified for the cancellation of its external debt obligations. However, due to various factors, including the fact that the debt initiative only cancelled loans made before 2005 and the 2010 earthquake, it still had around $2,212.8 million in external debt in 2018.

After: Haiti declared independence in 1804. In 1825, France imposed an indemnity intended to compensate former slaveholders for their losses. Borrowing to meet the indemnity created a further debt burden; the later refinancing obligations continued into the twentieth century, with the final payments in that debt chain made in 1947. This was not an unchanged indemnity paid directly to France throughout the period. Debt service can limit the resources available for public services and investment. Source: AP historical account, 17 April 2025

AP historical account, 17 April 2025

Chapter 4.9 · review 29

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Before: Due to its location, Haiti is vulnerable to significant natural hazards, including hurricanes, floods, and earthquakes, with around 96% of the population considered exposed to those hazards. When Hurricane Matthew hit the country in 2016, it caused damage of around 32% of GDP.

After: Haiti is exposed to natural hazards including hurricanes, floods and earthquakes. A World Bank/GFDRR account reports that more than 96% of the population was exposed to at least two hazards. Hurricane Matthew in 2016 caused estimated damages and losses equivalent to around 32% of Haiti’s 2015 GDP. This is a comparison of damages and losses with GDP, not a measured 32% fall in annual output. Sources: GFDRR Haiti disaster-risk account ; World Bank project appraisal, 2017

GFDRR Haiti disaster-risk account · World Bank project appraisal, 2017

Chapter 4.9 · review 28

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Before: The HAPHIA household survey, conducted from July 2019 to November 2020, estimated HIV prevalence at 1.8% among adults aged 15–64. This is a dated prevalence estimate, not a current count of AIDS cases. AIDS is the leading cause of death for adolescents and adults, making up 5.8% and 21.6% of deaths respectively.

After: The HAPHIA household survey, conducted from July 2019 to November 2020, estimated HIV prevalence at 1.8% among adults aged 15–64. This is a dated prevalence estimate; it does not measure the proportion of deaths caused by AIDS.

Chapter 4.9 · review 30, 31, 32

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Before: Malawi has a GNI per capita of $320, and ranked 172nd out of 189 countries in the 2019 Human Development Report, using 2018 data. Around 70% of the population live below the poverty line, with an income of below $1.90 a day. In 2015/16, around 40% of the population, or 6.5 million people, relied on food aid.

After: Malawi ranked 172nd out of 189 countries in the 2019 Human Development Report, using 2018 data. The World Bank’s October 2021 Poverty & Equity Brief estimated that 69.2% of the population lived below US$1.90 per person per day in 2016, measured using 2011 purchasing-power-parity prices. Following the poor 2015/16 growing season, approximately 6.5 million people—around 40% of the population—were assessed as needing food assistance during 2016/17. Assessed need does not establish that everyone received assistance. Sources: World Bank regulatory-governance profile ; World Bank Poverty & Equity Brief, October 2021 ; WFP assessment documentation

World Bank regulatory-governance profile · World Bank Poverty & Equity Brief, October 2021 · WFP assessment documentation

Chapter 4.9 · review 31

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Before: Historical poverty measure: The $1.90 line quoted in this case uses the earlier 2011 PPP standard. The paragraph combines statistics from different periods; its undated estimates remain awaiting source verification. The World Bank updated its international extreme-poverty line to $3.00 a person per day in 2021 PPP prices in June 2025. Earlier $1.90 figures use 2011 PPP prices. PPP dollars are purchasing-power-adjusted units, not amounts converted at market exchange rates. Old poverty percentages cannot be relabelled with the new threshold; they require recalculation from the underlying survey data. World Bank: June 2025 update

After: Historical poverty measure: The $1.90 line quoted in this case uses the earlier 2011 PPP standard. The figures above refer to specified historical periods, rather than a single current snapshot. The World Bank updated its international extreme-poverty line to $3.00 a person per day in 2021 PPP prices in June 2025. Earlier $1.90 figures use 2011 PPP prices. PPP dollars are purchasing-power-adjusted units, not amounts converted at market exchange rates. Old poverty percentages cannot be relabelled with the new threshold; they require recalculation from the underlying survey data. World Bank: June 2025 update

World Bank: June 2025 update

Chapter 4.9 · review 34

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Before: Malawi does have an independent judiciary, but due process does not always prevail in civil and criminal matters: there is a tendency for arbitrary arrest and detention, and defendants are often forced to represent themselves in court despite being constitutionally entitled to legal representation. Police brutality and killings at the hands of the police are also common; a report from the Centre for Human Rights Education, Advice and Assistance in 2019 found that of the 43 extrajudicial killings they investigated, 28 of the victims had been shot by police under ‘suspicious circumstances’.

After: Freedom House’s 2020 report, covering 2019, described shortcomings in due process and concerns about police conduct in Malawi. It cited a December 2019 investigation by the Centre for Human Rights Education, Advice and Assistance: among 43 alleged extrajudicial killings investigated, 28 victims had been shot by police and died in circumstances the researchers regarded as suspicious. This is an attributed finding about investigated cases, not a national incidence rate or a count of judicially established offences. Source: Freedom House Malawi 2020 report

Freedom House Malawi 2020 report

Chapter 4.9 · review 33

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Before: Freedom House is an NGO which carries out research on democracy, political freedom, and human rights. It gives countries scores based on the degree of political rights and civil liberties that exist in that country. On the Freedom House measure, Malawi scores 62/100, meaning that it is considered ‘Partly Free’. Freedom House writes:

After: Freedom House assesses political rights and civil liberties. Its Freedom in the World 2020 report, covering events in 2019, gave Malawi a score of 62 out of 100 and classified it as Partly Free. The description below comes from that historical report, rather than an assessment of current conditions: Source: Freedom House Malawi 2020 report

Freedom House Malawi 2020 report

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