- Is Mozambique following a latecomer developer strategy?
Development for poor countries is becoming increasingly difficult, as the developed world closes off traditional avenues for domestic economic growth. Tighter intellectual property rules mean poor nations cannot simply ignore patents, as the United States did during its period of industrial growth. Free trade and tendering rules make it harder to give preference to domestic companies, as Europe did when it developed. Negotiating deals with local business groups, as South Korea did, is now treated as corruption. Having an industrial policy like the East Asian Tigers is now unacceptable because it is trying to ‘pick winners’ and interfere with the free market. Support for agriculture, including massive subsidies, is OK for Europe and the United States, but unacceptable for developing countries.
The South Korean born Ha-Joon Chang, Reader in the Political Economy of Development at the University of Cambridge, in his 2003 book Kicking Away the Ladder: development strategy in historical perspective, declares that ‘developed countries did not get where they are now through the policies and the institutions that they recommend to developing countries today. Most of them actively used “bad” trade and industrial policies, such as infant industry protection and export policies.… If this is the case, aren’t developed countries, under the guise of recommending “good” policies and institutions, actually making it difficult for the developing countries to use policies and institutions which they themselves had used in order to develop economically in earlier times?’ Chang’s answer is yes, and his book title comes from a quote from the 19th century German economist Friedrich List: ‘It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him.’ [End Page 137]
Mozambique is a poor, peripheral African country where the leaders are trying to find the ladder to climb out from poverty. But in the attempt to follow a sensible latecomer development strategy, they are having to bend the rules, in the face of overwhelming donor pressure.
After a decade long Cold War proxy war in the 1980s killed a million people and did $20 billion in damage, Mozambique came into the 1990s in no position to challenge the international donors. So it opted for the opposite approach – total subservience which made it a donor darling and aid exceeded $1 billion per year from 1999. It dutifully followed the neo-liberal policies imposed by the World Bank and IMF, privatising thousands of businesses including the entire banking sector, ending agricultural research and marketing, cutting civil service wages to below poverty levels, and cutting health and education spending – then following instructions and increasing health and education spending after the donors adopted the Millennium Development Goals. No support was allowed for the nascent private sector, so privatised businesses closed and new firms and jobs were not created. Foreign investment was promoted with huge tax breaks, but it has been largely in the capital-intensive mineral-energy sector which created few jobs. With Mozambique seen as such a star pupil, donors turned a blind eye to growing corruption – until 1999–2001 when banks were looted of several hundred million dollars and two people investigating the thefts were assassinated. Meanwhile, between 1997 and 2003 – despite all the aid being poured into the country – poverty increased, and nearly two-thirds of the population were below the poverty line.
The ruling party, Frelimo, reacted and decided that President Joaquim Chissano could not stand again in the 2004 Presidential elections. Instead the party chose Armando Guebuza, a leader in the 1965–74 independence war, then a government minister, then the government’s chief negotiator in the 1990–92 Rome peace talks that ended the proxy war. Guebuza had been quick to see the importance of the change to capitalism in the 1990s and became one of Mozambique’s wealthiest businessmen. An early Guebuza priority was building the economy and a central plank of his election platform was that Mozambique should have a development bank which would promote domestic business. But even before the election, he was...