Técnicas De Debate

While it is evident that Mozambique has all the attributes of an underdeveloped country, to what extent can its relations with the industrialized economies be faulted for this? The mechanisms of dependency theory are certainly different in today’s global economy than they were at the height of its popularity in the 1960s and 1970s. Today’s global economy is

143 _{De Renzio & Hanlon (2009) – p.7} 144_{Sumich (2008)}

40 guided not only by the fully industrialized nations that form the ‘core’ of the dependency theory model, but also those newly-industrialized economies which have growing political and economic influence. Mozambique’s economic relations with foreign capital are not only limited to the industrialized countries of the West but are evidently also tied to these ‘newly-industrialized’ countries. South Africa continues to be Mozambique’s largest trading partner, while trade relations with Brazil, China and India have also increased

significantly.145 _{Hence, the core-periphery model does not adequately explain}

Mozambique’s economic relations with foreign capital. Its links to global capitalism were reinforced when the government first agreed to the policies of the BWIs, transforming the country into a market economy. The implementation of these policies has not yielded positive results for most of the country’s population. It has led to a fundamental shift in the ambitions of the national elite. While initially rooted in a national vision for development, pressure and encouragement from donors and the BWIs have effectively turned this group into a predatory elite. Granted, the dire state of the Mozambican economy in the midst of a civil war meant that the government had little choice but to give in to the demands of the BWIs. Yet, these institutions, historically associated with the interests of the West, actively supported those who were eager to implement rapid privatization and liberalization, while a group who envisioned a more pragmatic capitalist model were increasingly marginalized. As a result, a predatory elite has emerged which, through its political control, continues to engage in rent-seeking behaviour while showing little interest in improving domestic productivity. This has been to the benefit of foreign goods and capital.

Importantly, the early proponents of neo-Marxist dependency theory did not distinguish between developmental or predatory elites in contributing to the development of the periphery. Rather, in conjunction with the centers of capital accumulation, the antagonist was the capitalist system itself. In this view it would matter little if Mozambique’s political elite remained committed to national development, as its position within the global economy would prevent development, nonetheless. Dependency theory appears to be highly deterministic in this manner, as it emphasizes the barriers to development as arising exclusively from relations with external forces. Yet, Mozambique’s development continues to be hampered by an era of neopatrimonialism, as its political leaders have relied on rent-

41 seeking mechanisms and the appropriation of state resources to accumulate wealth and maintain political control. This clientelism established by the elite, which remains well insulated from Mozambican society, has been to the detriment of SMEs and the domestic manufacturing sector. Hence, the internal barriers to development ought not to be

overlooked. Furthermore, the current state of the manufacturing sector in Mozambique not only reflects the ambitions of its political leadership, but also reveals the impact of a colonial legacy and the centrally planned economy in Mozambique’s post-independence years. In 1975, Mozambique was the eighth largest industrial producer in SSA. A mass exodus of skilled labourers following independence, however, led to dire shortage of personnel capable of maintaining industrial production. Decreased demand for its final goods coupled with reduced efficiency in export sectors had serious consequences on economic output. Its economic woes were further compounded by the sabotage of infrastructure and road networks during the civil war.146 _{Thus, when the PRE was implemented in 1987, industry} was already in the process of collapsing. While the highly liberal approach has led to further deindustrialization of certain sectors, these sectors were already experiencing difficulties before Mozambique’s transition to a market economy. Mozambique’s ties to countries not considered part of the core group of industrialized economies, coupled with the detrimental impact of a predatory elite and a lasting colonial legacy, challenges the capacity of

dependency theory to account for the negative impact of the country’s transition to neoliberalism.

Despite this, the essence of dependency theory continues to be experienced in other ways. The implications of this theory dictate that governments in underdeveloped countries should maintain interventionist roles in order to promote domestic economic sectors. According to the neo-Marxists, this should be done through a centrally planned economy, which Mozambique has already attempted, albeit unsuccessfully. Reformists, on the other hand, advocate for targeted policies that governments can focus on to promote

development. In aid-dependent countries where government revenues depend for a large part on contributions from the international community, however, states become less accountable to their citizens, reducing incentives for promoting development.147 _Aid

146 _{Cruz, Guambe, Marrengula & Ubisse (2016)} 147 _{Moss, Pettersson & van de Walle (2006)}

42 essentially becomes an unearned revenue which accrues to governments. Although aid to Mozambique has predominantly been in the form of grants, there are still indirect costs associated with it. The primary cost is a loss of national sovereignty concerning national development policies. A secondary cost is the continuing lack of the state’s accountability to civil society.148 _{Crucially, the implementation of development-oriented policies requires the} motives of the political leadership to be subordinated to internal societal demands. In the case of Mozambique, however, the political leadership remains more accountable to foreign interests than to its own society. The interests of the highly concentrated group of elites have become contingent with anti-developmental policies, creating a perverse incentive structure within the political leadership.149 _{While aid continues to be spent on pro-poor} policies, it has not benefitted Mozambique’s economic productivity, effectively prolonging its dependence on aid. Hence, while the ‘resource curse’ has become a popular term used to describe Africa’s problems, the impact of the ‘aid curse’ can be similarly harmful. Higher dependency on aid is also found to deteriorate the effectiveness of democratic institutions, as concluded by Djankov et al.150 _{In this respect, there are grounds to be believe that aid has} contributed to the ‘development of underdevelopment’ in Mozambique.

In addition, the process of globalization has severely restricted the capacity of governments to effectively manage their economies. For under-resourced states such as Mozambique, this effect has been more pronounced. The speed and ease with which financial capital is transferred internationally means that states are already disadvantaged in attracting foreign capital. Without an established basis of industrial capital and technological know-how, and limited by low levels of human capital, the Mozambican government remains restricted in its ability to stimulate investment. As a result, it has had to incentivize foreign-owned mega projects through very generous terms, including tax exemptions and the ability to repatriate capital. Consequently, most of the economic surpluses associated with these projects favour foreign capital. This, in combination with the private accumulation of wealth by a domestic elite, has resulted in the inability to retain surpluses that could be used for the reproduction

148_{Macuane (2012)}

149 _{Fritz & Rocha-Menocal (2007)}

43 of the domestic economy. Castel-Branco has referred to this as economic porosity.151 _This has had notable negative impacts on the economy. Firstly, government policies and overall oppurtunities within the economy are subordinated to the interests of foreign capital and the individuals comprising the elite. The consolidation of power within this oligarchic elite further prevents the equitable distribution of income through the economy, while distorting labour relations. Secondly, it has made it challenging to mobilize resources for

comprehensive social and economic development, even when investments are increasing. This had led to an uneven development of industries within Mozambique, evident in the fact that few domestic firms have established linkages with the various mega-projects in the country. A paradox exists, whereby the political elite within Mozambique has been unable to govern effectively but continues to be able to channel resources to dominant groups within the country, cementing its control.152 _{The effect of this has been an unequal} development of capitalism both within Mozambique and between Mozambique and the sources of foreign capital. The Mozambican populace has not benefitted from these

developments. As such, while the claims of dependency theory might have been discredited in the past, the effects of globalization in prolonging underdevelopment suggests that its implications are still visible today.

8. Conclusion

This paper set out to examine the capacity of the dependency paradigm to explain the conditions and challenges of Mozambique’s economic development since its transition to a market-driven economy. It found that dependency theory is highly deterministic in its assertion that capitalism has caused underdevelopment in poor countries. It

overemphasizes underdevelopment as being caused by external economic factors, while paying little attention to the internal social and political dynamics of LDCs. The interests of Mozambique’s political leadership do not correspond with the needs of the majority of the country’s population. While the country’s shift towards neoliberalism has contributed to this contradiction, the blame cannot be laid completely on external factors. Furthermore, the

151 _{Castel-Branco (2015)} 152 _{Kabonga(2017)}

44 core-periphery model within neo-Marxist dependency theory does not accurately represent Mozambique’s relations with foreign capital, given that its largest trading partners are not historically associated with the centers of capital accumulation. However, the nature of the global economy today is fundamentally different than it was in the 60s and 70s, when dependency theory was popularized. Any contemporary assessment of the theory ought to take this into account. The inadequacy of the core-periphery model, however, does not completely invalidate the theory, rather suggesting that it needs to be adjusted to describe the contemporary global economy.

The implications of dependency theory in Mozambique are remarkably evident in other ways. Two diametrically opposed systems have characterized Mozambique’s political economy since it gained its independence in 1975. The first was a socialist project of national modernization, rooted in the state’s control over political and economic decision- making. The second, which continues to define it today, is a neoliberal project based on free-market principles, which has opened Mozambique up to foreign investment. While a national elite continues to have considerable political control, its influence on economic decision-making has effectively been subordinated to the interests of foreign capital. Consequently, the state remains incapable of questioning the neoliberal paradigm. This is both a result of a lacking capacity to otherwise generate investments and a high

dependence on foreign aid, which challenges its national sovereignty. While the country has experienced high levels of growth since its embrace of neoliberalism, the prospect for long- term development has been hampered by a lack of structural transformation in the

economy. This is augmented by an inability to retain economic surplus that could benefit the economy as a whole, rooted in the minimal contributions to public revenue resulting from the repatriation of surplus to foreign capital. Foreign-owned investments in the country are characterized as enclaves within the country. They contribute minimally to domestic employment and prevent the establishment of domestic linkages, leading to a disarticulated economy whereby its most productive sectors primarily benefit industrialized countries. In this respect, Mozambique continues to be on the periphery of the global economy, continually underdeveloped as a result of its relations with foreign interests.

45

9.

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