An investigation into the political economy of industrial policy: the case of Mozambique

Abstract

This thesis examines the recent experience of industrial policy in Mozambique in the context o developments in the economy as a whole and in the Southern African region, in order to draw attention to the fundamental pressures and issues that form part of the economic policy decision-making process. The thesis analyses the debate between opponents and proponents of industrial policy, and concludes that there is no abstract rationale for or against industrial policy that is independent of specific socio-economic pressures and processes of change under consideration. Orthodox and heterodox arguments for and against industrial policy tend to analyse either agents or linkages in a simplistic way and to ignore the dynamic relationships between them. Thus, they fail to acknowledge that decisions making regarding investment and industrial strategies reflect a three-way interaction between the state, capital and labour under specific socio-economic conditions and pressures: that the state and the relationship between the economic agents through or outside the state are influenced by similar conditions, processes and forces; and that the state operates through the market. Hence, the state and market are not alternatives to each other. Outside the analysis of specific socio-economic conditions there is no way of determining how strategies, policies and interactions between agents and linkages will materialize in economic performance. The main original contribution of the thesis consists of the expansion and application of the linkages-agencies analytical framework to study of the recent experience of industrial development in Mozambique. This is done within the context of dynamic pressures, conflict, policy reform and development that occur in the economy as a whole, and pressures and influences associated with the Southern African region, in particular with the re-structuring of South African capitalism. Consistent long-term time series and cross section data sets were constructed, out of fragmented and inconsistent data sets, to analyse performance and role of the manufacturing sector within the Mozambican economy over the last four decades, and to study the patterns of investment in the Mozambican economy in the 1990s