CREATING A VIRTUOUS
CYCLE IN MOZAMBIQUE
A case study on the Western intervention in
Mozambican agriculture
Bachelor Thesis Political Science: The politics of Development
Tom Tetteroo 11148063 Dhr. Dr. Sebastian Krapohl Dhr. Dr. Philip Schleifer January 2019 Wordcount: 7884
Inhoud
INTRODUCTION ... 2
THEORETICAL FRAMEWORK ... 5
Relevance: why Agricultural export?... 5
The central theory: Circular and Cumulative Causation ... 6
Key actors and implications ... 8
Hypothesis ... 9
RESEARCH DESIGN ... 10
MOZAMBIQUE ANALYSIS... 12
Colonial era (1961-1975) ... 13
First post-colonial era: state ownership (1975-1987) ... 14
Second post-colonial era: privatisation (1987-1994) ... 16
Third post-colonial era: the long term (1995-now) ... 18
Conclusion ... 22
LITERATURE: ... 24
INTRODUCTION
In 2017, 65% of the African population was employed in the agricultural sector. Two third of the entire population was working and earning in this sector, that provides the most basic needs for almost seven billion people. This number would give the idea that Africa is using the products deriving from this labour as one of its biggest export forces. However, in the preceding years, the total African food imports were 30 billion US Dollars bigger than the exports (Fundira 2017: 1-2). There seems to be a total food trade deficit in a continent that is highly depending on food production. This paradox causes questions, as to what this implies for the overall economic status of African states. However, within the continent of Africa, there is a huge difference between the regions within the continent and even between different states. Therefore, to answer any question on economic development or international trade, it is better to analyse the African states separately. In this way it is possible to point out singular causes for the food or agricultural trade deficit.
In this research, the analysis will be directed towards the case of Mozambique. The state of Mozambique had experienced a transition from net food exporter, into a net food importer in the 1990’s (Ng & Aksoy 2008: 39). This transition shapes the paradox that the African continent seems to be in. Therefore it is relevant to analyse what the underlying causes are for this transition. However, this research goes further and tries to scrutinize the role of the Western World in the food deficit of primarily Mozambique in the 1990’s, but also the whole of Africa as net food importer. As there was intervention from the IMF, World Bank, US, EEC and Scandinavian states in 1987, the trend of the agricultural deficit should be influenced by this intervention. Important to note is, that in this research the intention of the Western interventions are left aside, as it is not a normative paper. Instead, an attempt will be made to link the results to the conditions and circumstances of the aid provided. This also means that the theory that is being used for this research is not a normative one like
neo-colonialism, with attention to the underlying intentions of the West and is easily referred to in this research subject. Instead, a much more practical theory will be provided that looks at the totality of underlying causes. The central theory will be the Theory of Circular and Cumulative Causation, a theory that claims that the causes for a state’s economic situation are multiple and interlinked (O’ Hara 2008: 378-384). The intervention of the IMF, World Bank, US, EEC and Scandinavian states is therefore seen from a perspective of more
pragmatic question: did it work? This question is answered by an analysis of the results of the policy, linked to the requirements that the chosen theory poses in order to have proper intervention.
By answering this question from this particular perspective, a lot could be concluded about provided help by the West. Instead of a discussion about the intentions of the aid provider, the results will be scrutinized, which in the end is what counts for African states. The agricultural, and therefore food, deficit is a potentially huge problem for a continent which has agriculture as dominant economic sector. If we can see what is working and not working in the policy to turn around vicious cycles in agricultural development, we can see what is proper policy to save Africa from a huge agricultural deficit. Related to the social relevance, there is also academic relevance. In the existing literature, there is not much about
intervention from the West from the perspective of the theory of Circular and Cumulative Causation. This can be seen as a gap in the literature, as this theory is highly applicable to cases like Mozambique in the 1990’s, and at the same time gives a totally different perspective on this kind of cases.
The combination between the theory and the research subject provides a central research question that tries to analyse the results of the intervention by the Western governmental bodies that took place around the 1990’s. The central research question is: “What has been
the actual impact of intervention of the IMF/World Bank/US/EEC/Scandinavian states on the agricultural performance in Mozambique?”
First, there will be a theoretical framework that introduces the central theory for this research. There will be an introduction to the theory, followed by the central idea and concepts that this theory inhabits. The theoretical framework ends with the main hypotheses that derive from the theory. In the research design, there will be an explanation on why this particular case is chosen. Furthermore, there will be evaluated on the reason why this is a qualitative research and in what ways sources were used to do a proper analysis. The research analysis that follows, holds the actual analysis of statistics and literature, that tell if the presumed causation of the intervention in the Mozambican case could be seen and if it was successful. In the end, there will be concluded what the implications are for the found causation. In other words, first there will be proved wether there was indeed a reason to believe that the theory was applicable on the case. Secondly, and most importantly, there will be analysed if the
intervention did have the result that should be hoped for. In the end of the conclusion there will be advised what could be done with these findings.
THEORETICAL FRAMEWORK
Within the theoretical framework there will be clarification on both the used theory, as the current status of literature in relation to the subject. In addition it will explain what the social and academical relevance is and how the key player should be used in the analysis.
Relevance: why Agricultural export?
The first question that is presented in the introduction is about the fact that Africa has become a net food importer. Africa seems to have a substantial agricultural problem, for it employs two-third of their entire population. The question that rises then is what we could identify as the causes for this agricultural problem. As Africa is still struggling in the
international market, with big economic and social problems as result, it is important to see what is behind this. There is a big social relevance in assessing what is causing the problems for the struggle within international trade. If this could be made more clear, there could also be more efficient policy on how to solve these problems. This research gives a different view on the relations between the West and Africa in terms of economy. Therefore it may help to shape policy to Africa in a more efficient way, if the problems could be seen from a different perspective than they are seen now. To achieve this different view, the research will try to stay away from normative perspectives that sometimes seem to dominate this research subject. The World Bank and IMF, as well as the whole colonial relations will be only assessed on their results in relation to agriculture. The underlying intentions will be left aside, for they are compromising this alternate view on Western policy in Africa. By
researching the intervention of the West in Mozambique on the basis of agricultural export, there will be an attempt on finding clues to why Africa still is a net food importer. The academic relevance is related to the social relevance, and lies in the fact that this is a new perspective on the much debated interventions of bodies like the IMF/World Bank and the EEC (EU) in Africa. The theory of Circular and Cumulative Causation will be used on a case that might be old, but could still be exemplary for the situation and causation that the theory writes about. Further research could build on this way of thinking in order to analyse contemporary cases of Western policy in Africa.
The central theory: Circular and Cumulative Causation
The central theory that will be used to analyse the cases is the theory of Circular and Cumulative Causation (or in short CCC). Of a number of thinkers that developed the theory, Myrdal is the one that brings both economic and institutional influences together the most. It is therefore that we stick the closest to Myrdal’s thoughts, for they are the most applicable to the international economic situation of this research, more than those of Kaldor or Veblen (Fujita 2007: 281, Ho 2004: 538).
The theory claims that the causations behind a state that is struggling to develop, are usually interlinked and amplifying each other. Therefore, it can be seen as a vicious circle that reinforces itself. Social or economic situations that cause a state to be struggling to develop are usually highly interlinked and are both the cause as the result. The theory doesn’t explain the origin of malicious situations, but it does pose indications for the endless string of struggles that some African states seem to find themselves in (Stilwell 2012: 224-225). In this research the theory will be directed towards the causations behind the agricultural struggle of Mozambique. The mechanism within the theory emphasises the differences between more developed and less developed groups. This can be on different levels, but in the research about Mozambique it is about the international economic relation with the rest of the world and therefore the state level. This means that it is about the inequality between states. This inequality leads to less developed states that are profiting less from international trade. Two central concepts within the theory are ‘backwash effects’ and ‘spread effects’. These effects could be seen as working against each other. The backwash effects are caused by the fact that attractivity of more successful players is pulling the requirements for development towards them, they have momentum. For example, because of a better infrastructure they attract capital and labour. Capital flights away from the underdeveloped parts will occur, as well as brain drain and de-industrialisation. Spread effects imply the fact that the overflow of activity in the ‘momentum-region’ will be passed on to surrounding regions, therefore making less developed regions benefit as well. However, backwash effects are seen to be far more powerful than spread effects, therefore causing a net outcome of backwash effects. This causes the growing inequality between developed and underdeveloped regions, or within the international economy, states. International trade empowers market forces to carry this inequality (Stilwell 2012: 224-225, Sai-Wing Ho 2004: 538). It is a mechanism, or cycle, that
amplifies itself, for underdeveloped states this is into a negative direction. However, the theory of Circular and Cumulative Causation gives a way out from this vicious cycle. “With strong policy commitments (and a little bit of luck), vicious cycles can be turned into virtuous cycles” (Stilwell 2012: 224). Key to policies that are able to turn the situation around from vicious to virtuous, is finding possibilities to make the underdeveloped regions ‘counter magnets’. In other words, it is important to find the potential of the underdeveloped regions and try to assess and battle their weaknesses (idem: 225). Important to recognize is that the creation of virtuous cycles is not as easy as only finding potential growth areas. “The problems of international economic inequality are particularly hard to resolve, because of the need for international cooperation in the pursuit of solutions. Long-term commitments, emphasising a necessary role for the state as a manager of the process of reform, are required. It entails a holistic approach to economic and social policy” (ibid). Only focussing attention on the economic dimension gives misleading information about development. It could seem that the state is doing well, but there could just as well be a fake correlation (Berger 2008: 359). The social and political dimensions are just as important and could create opportunities for development. The other way around, they could also play a negative role if overlooked (O’ Hara 2008: 376-379, Stilwell 2012: 223). The development always has it costs, it is a big investment to make, especially when a state doesn’t have the economic power it desires. Therefore, as is described, it leads to the need for international cooperation.
Both the circular as the cumulative aspect have a central role in the theory and therefore in need of a more technical explanation. The circular causation is characterized by multiple interrelated variables that interact through time. Critical is also the fact that socio-economic factors are seen as combined with other factors such as political (O’ Hara 2008: 379). Myrdal described the interaction between the two as follows: “…circular causation will give rise to a cumulative movement only when [. . .] a change in one of the conditions will ultimately be followed by a feed-back of secondary impulses [. . .J big enough not only to sustain the primary change, but to push it further. Mere mutual causation is not enough to create this process.” (Myrdal 1968, 1875). With this, he emphasises the fact that the factors causing the circular causation have to have a certain force to establish a cumulative movement. At least one of the factors has to push the causation in a certain direction (Myrdal 1968: 1875-1876, O’ Hara 2008: 379). Take for example economic failure that leads to political unrest, which in turn
leads to problems for economic development. If both the economic failure and the political unrest could be contained to a certain level, it will not create a vicious cycle. However, if through a crisis the economy collapses, then a state that is prone to political unrest will become politically less stable. Rebel groups will emerge and spread violence, therefore damaging the infrastructure or scaring farmers away from their land. This leads to more economic troubles as the production and transportation becomes increasingly difficult. These economic troubles lead to more poverty and dissatisfaction among the population, strengthening the sympathy for rebel groups that promise to fight for change.
With the explanations about vicious cycles, the theory believes in a certain type of path dependency. This means that if a state is heading in a certain direction, it will keep on heading in this direction. If Mozambique is heading towards a state of agricultural underdevelopment in relation to the rest of the world, it would be logical that this will not be solved on its own and reversed towards agricultural development. With path dependency comes, in combination with anti-equilibrium thoughts, that the situation can never go back to the old equilibrium. It always evolves in a certain direction, away from the previous situation (O’Hara 2008: 380).
Key actors and implications
Although the literature describes the international cooperation as particularly hard, in the case of Mozambique there indeed was international cooperation. The IMF and the World Bank, together with the US, EEC and Scandinavian countries, indeed did an attempt on getting the Mozambican economy back on track (Marshall 1990; 30). These organisations are not being scrutinized on the basis of their intentions or governance structure. The organisations have a share-holder based structure, which results in a disproportional power for the United States and other rich states, mainly in the West (Krueger 1997: 6). This often leads to the idea that the two organisations act on the interest of the Western World, including mainly Europe and North America. However, in this research there will be no special attendance to this view. The most important for the used theory is the results of the policy. Therefore the analysis will be based on results and actual events and social structures that took place and could be noticed empirically. This also means that the intervention that is being written about is seen as done by a group of actors, and used as an autonomous actor with no significant political agenda. This means that the research will refer to the intervention as such, and not to one of
the actors that took part in the intervention. Only the characteristics of the intervention will be researched, for they are important in the analysis on whether the intervention had the competence to succeed. The intervention is seen as own entity, representing the international actors that are behind it.
Hypothesis
The theory, the actors that play a role and the choice for agricultural export form the central hypothesis of this research. As is described in the theoretical framework, this research takes the default analysing point of a vicious cycle, a negative situation in Mozambique with economic difficulties. From the theory it also seems apparent that the intervention of the Western actors must be an event that would turn the situation of Mozambique around. The way the theory describes it turns out to be the most vivid in what the result of the
intervention should be: from vicious to virtuous cycle. Therefore the hypothesis has the same typology as the central theory. As the intentions of the intervention were most presumably to succeed, the hypothesis will be formed in the same spirit:
H1: The intervention of the IMF/World Bank, US, EEC and Scandinavian Countries succeeded in turning the vicious cycle of Mozambican agriculture into a virtuous cycle.
RESEARCH DESIGN
In this paper, a case study is being used for the research. The main case that is being used, is Mozambique. With using a case study, the theory of Circular and Cumulative Causation could be researched in the best way. This is because the theory argues that multiple causes act and interact simultaneously. In the research this means that for the selected period of time, two or more dimensions within the Mozambican development should be analysed and explained. Only with a case study it is possible to go into such detail and still provide a coherent conclusion. The case of Mozambique will be researched thoroughly, with special attention to the period of the 1980’s and the 1990’s where a huge drop in agricultural exports was being noticed. Within this period, all the significant factors play a part, both economically as socially. As the interdependence between different factors is central to the theory, it will also become clear that this interdependence is the reality in Mozambique in that period. Together with the choice for a case study, the research type will be dominated by qualitative research. Only the economically measured effects are suitable to be measured by comparative numbers, as they are already provided by big international databases. The numbers that are being presented in graphs and tables in this research are always provided with background information. Moreover, this qualitative background information will be the core of the research, because it will explain the causes behind the economical numbers. Therefore, only by analysing the theoretical literature, a sufficient picture can be drawn about the situation Mozambique was in those years. The central graph that is being referred to in the periods within the analysis is made out of the agricultural export data of the FAO. This graph is used as visual representation to determine the agricultural implications of the events that took place in the same time period. Therefore, the chronological order of the analysis gives a structured overview on the relevant events that took place. Each time period refers back to the time period on the graph, hence linking the events to the effect on the agricultural export. The research tries to have a proper balance between numbers and underlying causes. The analysis first presents the central graph with the agricultural export from the 1960’s until 2011. In this way, the big lines of the agricultural development will be visually represented. In addition, other tables and a second graph will contribute to a more elaborate view on the agricultural statistics.
The unit of analysis that is chosen is primarily the state. Unsurprisingly, there are also non-state actors in this analysis, such as the IMF and the World Bank or even the EEC. However,
the state policy is central in this research, as well as the effects that are measured at state level. More importantly, the effect of Circular and Cumulative Causation in the international economy is mainly directed towards states. In the contemporary international economy it is hard to leave out the influence of multinational companies or international organisations. In order to give a recommendation on policy for the future, the power of Multinational Corporations is to be reckoned with. In the analysed situation of Mozambique big companies play a role as well. However, as the IMF and World Bank are intergovernmental organisations, just as the EEC (now European Union) was, states are still dominant within the analysed situation. The state is also the most reliable and extensive source for information. A state like Mozambique could be compared to other states in terms of economic performance. States have a yearly report on not only economics, but on performance on a lot of other levels as well, the World Competitiveness Report as an example for this. With a central government, it is also more identifiable what to expect from a state. Although Mozambique had different situations for the north and for the south of its country, the policy of the intervention was still directed towards the whole state (Morgan 1990: 614).
The internal validity of this research is strengthened by the consistence of the results in the graphs, the situations and warnings described in the literature, and the implications made in the theory. The analysis will show that the theory of Circular and Cumulative Causation is being ratified in the analysis as applicable on the case. The mechanism of circular causation and cumulative direction will be shown in the Mozambican characteristics. Subsequently, there will be an analysis on question whether the intervention had the competence to turn the vicious cycle into a virtuous cycle. In this analysis, the literature and the statistics show a congruent picture about the competence of the intervention. The external validity is more problematic, as the case is mainly researched in the period of 1975 until late 1990’s. The world of today can be seen as totally different than the one of the previous century. However, the hope is that this research could give an insight on a different way to assess intergovernmental policy towards African states. In this way, contemporary intergovernmental policy could learn from the mistakes that were made in the past, and could afterwards be analysed in the same way as this research did.
MOZAMBIQUE ANALYSIS
In the case of Mozambique, there is an interesting trend to be seen. After a relatively high export-surplus in the 1980’s, there is a huge drop into a substantial export-deficit in the 1990’s. After the big drop, the agricultural economy seems to show a relative recovery towards 2004/5, where the export-deficit almost entirely vanishes (figure 2). It seems as if after a free fall of the agricultural economy, something turned around, and the export-deficit could be reduced. Both the drop as the recovery ask for explanation from the existing
literature about forces and events that took place in Mozambique in this period. As is already hinted towards in the theoretical framework, multiple dimensions in this part of history are interlinked. A certain way of path dependency shows that historical events that take place in one time era, are caused by multiple events in earlier history. Therefore, in order to give a logical and complete picture, it is helpful to see the events in chronological order. Central for this analysis is the graph that shows the net agricultural exports. This graph can tell a lot about the historical events, and gives a visual representation for the consequences of all the interlinked causes. In other words, both social and economic factors that caused the changes in the agricultural export can be shown from the diagram. These potential causes will be looked at from the colonial area until 2011. This time period will be divided into time era’s, that each have their own characteristics.
-500000 -400000 -300000 -200000 -100000 0 100000 200000 300000 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Agricultural Net Export Value Mozambique (1000 US $)
Net Export Value
Colonial era (1961-1975)
Under the Portuguese, the Mozambican people had to restructure their existing agricultural economy, so that it was designed to support the Portuguese economy. In the first colonial period, the Portuguese policy towards the Mozambican colony could be summarized as Portuguese incompetence. Therefore, the colonial system had a design that was particularly bad for Mozambican development. Because the Portuguese economy acted as a surrogate for the British economy, they lacked own capital. This in turn led to the design of
colonisation towards Mozambique. The biggest part of the country was either hired out to big companies, or dominated by workers that worked in South Africa. The companies didn’t invest much in agricultural development, whereas the migrant workers in South Africa didn’t have own agricultural land nor capital to invest in it. This led to a situation where there was an exceptional lack of own agricultural capital. When Salazar came to power in Portugal, there was a reform in the colonial design, but again it was not particularly beneficiary for the Mozambican people (Munslow 1984: 199-201). They had to reform their family-based businesses through a forced transition into the cotton industry. It dislocated the
Mozambican traditional agricultural economy, therefore alienating it from the Mozambican peasants. The peasants didn’t have much affection anymore with the industry they were working in. After the political independence of Mozambique, the Portuguese just left Mozambique with this design, creating big problems to have a sustainably developed industry. Upon independence, there was a lack of infrastructure as well as skilled workers in Mozambique (Morgan 1990: 609-610).
The colonial period could be seen as a default situation for Mozambique to start from in building their own agricultural economy. As the theory of CCC doesn’t provide answer to how a certain situation starts (Stilwell 2012: 224), it is best to see this period as the starting point for the analysis as well. The colonial design clearly gives Mozambique a bad position to form their own policy on. The inability of Mozambique to develop on the agricultural
dimension during the colonial area could therefore partly be contributed to Portuguese incompetence. In the next era’s it will be shown that this bad starting point contributed to the vicious cycle Mozambique got involved in.
What already, although with caution, could be seen as a an early form of backwash effects, is the flows of capital within the colonial system. Portugal could be seen as the developed core
where capital flows towards, and therefore away from Mozambique as periphery.
Investments in industry were only done in the Portuguese core, as the potential there was seen as higher and more valuable than in Mozambique. In stating this analysis the caution lies in the fact that this backwash effect was not based on free market principle, but the more forced principle of colonialism. Therefore it is difficult to say if this capital flight is coming from a legitimate force causing it.
First post-colonial era: state ownership (1975-1987)
The first thing to notice at the graph of figure 1 is the drop in export after 1975, the year that Mozambique became independent. This drop has direct connections with the independence, as the Mozambican independence was paired with a lot of political instability. Loss of trade was one of the numerous consequences that caused a damage to the Mozambican economy estimated up to $550 million (Morgan 1990: 610). For the whole agricultural sector, from marketing to the provision of spare parts, the Portuguese just abandoned it. It was a huge capital flight from Mozambique to Portugal, as a backwash effect of Mozambique being the less developed area. The flight caused a collapse in the agricultural industry and therefore in the food supply for the cities (Raikes 1984: 96). It also means that with no production, export declines as well. In the period after independence there was a combination of declining production and raising food demand. This demand was caused by the total collapse of the commercial agriculture. Because of this combination, imports of food rose. The result is the net export drop that is visible so dramatically in figure 1. The government after the
independence made a lot of the Mozambican agricultural sector state-owned, partly as a response to the collapse of the commercial agriculture. The reasons for this state-ownership varied from Marxist-Leninist influences to droughts. In a way the Mozambican government was almost forced to make the agriculture state-owned. The Portuguese just left the farms, leaving the government to fill in these gaps. Because of the combination with droughts that took place in this same time, the population turned towards the state. The state owned enterprises were poorly managed and the contribution of the peasants that had to work there was relatively low, because of the new way of work and life they had to adapt. This caused the peasants to become less enthusiastic about the work they had to do. The social problems therefore kept on rising in the background. As a result of the poor management
and lack of peasant energy, the big state-owned companies produced a low turnout, compared to the investments being made in them (Morgan 1990: 610-611, Marshall 1990: 28-30). However, not only financial problems originated from this mis-management, but other problems as well. In the first place there was a food shortage that caused a severe food crisis. Together with resentment for the policy of the government, many peasants turned to violent solutions, therefore increasing political instability. Terrorist organisations as Renamo gained sympathy, created by the dissatisfaction towards the government. As a result of this violence, implementation of projects turned out to be even more problematic (Morgan 1990: 610-612). The social problems that rose from the background were therefore a problem for attempted development in the projects. Slowly the peasant population, and thus the labour force of the core industry of Mozambique, were turning against the own state and were alienated from their work through all the dislocations in the agricultural industry. Marshall summarizes the agricultural struggle as follows: “Historically the family sector had been the backbone of agricultural production in Mozambique, including cash crops for export. The downward spiral of production in the rural areas was recognised as, in large measure, the result of the lack of investment in both producer and consumer goods for the family sector.” (Marshall 1990).
Marshall talks in his research about a ‘downwards spiral’, in other words a vicious cycle. The cycle is being constructed by factors that reinforce each other. The poor structure of the Portuguese colonial agriculture in Mozambique led to a difficult legacy for the government that had to take over after independence. A bad agricultural design led to a peasant population not able to control the agriculture, therefore moving away from a central role within the agricultural sector. The government took over, in a perceived answer to these problems, and in turn created a policy that had bad turnouts. Peasants were alienated from their lives and way of work, therefore again moving away from a central role. This is the self-reinforcing, circular movement that could be seen within the situation in Mozambique.
The cumulative aspect is seen in the fact that at least one of the factors was strong enough to bring the circular causation into a downwards movement. The legacy of the Portuguese brought a default position of agricultural dislocation and peasant alienation from their own sector. The default position was also marked by the political unrest that was created by the independence. As is described above, the causes reinforced each other. In addition, they
also were strong enough to put them into downwards motion. In the graph could be seen that the export rates dropped, making the economic problems increase on a high phase. At the same time the alienation of the peasant people, which could be seen as a social aspect, increased as well. At first there was only the inability to fill the agricultural gaps for the Mozambican peasants, but in later stages they became increasingly unsupportive for the government. The state owned companies were met with lack of enthusiasm of the peasants. In later stages the alienation became more extreme in the form of terrorist groups that gained sympathy, making the social problems gain a political aspect as well. The social factor therefore became increasingly difficult as well, together with the economic factor.
Second post-colonial era: privatisation (1987-1994)
The government eventually turned around and tried to undo the production disaster by privatisation on a big scale (Morgan 1990: 609). This privatisation became part of a high scale economic reform, sponsored by the IMF, World Bank, the US, EEC and Scandinavian countries. In exchange for loans of $100 million per year from the World Bank/IMF and debt rescheduling from the US, EEC and Scandinavian countries, there was a set of economic terms. The terms were in line with the total reform, often referred to as the ERP:
liberalisation was the main theme. Not only the state owned enterprises were privatized, the prices for agricultural goods were liberalized which made the consumer prices in
Mozambique to rise as a result. The Mozambican currency was devaluated and imports were liberalized (Marshall 1990:30, Alfieri et. al. 2007: 4-5). In the short term, this reform seemed to have some successes, as the downward motion of the general economy stopped
(Marshall 1990: 29-30). This could be seen in the statistics in figure 2, where the huge drop seemed to have been put to a halt, and have been bended into a motion back towards export-surplus. The literature also reports that the most important part of agriculture increased its production (Alfieri et. al. 2007: 4-5).
In line with the theory of Circular and Cumulative causation, this intervention of the Western players would be the intervention that could turn the vicious circle into a virtuous circle.
Figure 2 could imply that the IMF and World Bank intervention was able to stop the vicious
cycle Mozambique was in. The privatisation in the years after 1987 seemed to have turned the huge drop around from 1990/1 onwards. However, figure 1 already gives different results on these years.
Also, if we take a look at the food exports separately in figure 3, we could see that there is a more complicated picture as well. The export-deficit seemed to have been turned around in 2000/1, but dropped again in 2004/5. As food turned out to be the most vulnerable sector in Mozambique, it will be the first sector that collapses with drawbacks. All in all, there seems to be no sustainable stop to the downwards motion of the Mozambican agricultural export.
Reports on Mozambique warn for this motion, and say that the reforms were at a high social price (Marshall 1990). As the theory of Circular and Cumulative Causation argues, there is also a need for social development, a holistic approach. The privatization, with support of the IMF and World Bank, was an economic success, but was also met with social difficulties. The reforms caused a social problem, due to a combination of instability and deregulation on the agricultural markets. The 1980’s inherited a huge food shortage, where more than half of the population was dependent on food aid. The deregulation of the market caused the prices of food to drastically increase, making it impossible for people in the city to sustain the support of their families. The continuant instability also caused the production of agriculture to be less than expected (Marshall 1990: 31-34). Therefore, research suggests that the intervention of the World Bank and the IMF was too much about the economic prices, instead of a broader needed view. In order to increase agricultural production, not only price mechanisms play a role, but also the social background of the peasant (Marshall Figure 3 (Ng & Aksoy 2008: 44)
1990: 35). Still, in total, the privatisation caused an overall increase of production of key food products and cash crops (Alfieri et. al. 2007: 5).
The warning of these social factors was also directed towards the sustainability of the economic development. In figure 1/figure 4, it shows that the intervention of the IMF and World Bank had caused the free fall of export to stop, but the rise is far less optimistic as the
figure 2 showed. Net export stayed negative and even had an exceptional low in 1995. As
the theory of CCC argues, it is crucial to not only focus on economic development. Social development is just as important. Otherwise, as is described in the theoretical framework, there will be only a seemingly causation of improvement. In figure 1 it looks like this was the case. First looks on the intervention seemed to be quite positive, but in the end the warning of the literature became reality, in continuing struggles in export numbers between 1991 and 2006 (figure 1).
The war that was ongoing almost since the independence, lasted from 1977 until 1992 and was not only highly damaging for social reforms, but also for infrastructure (Virtanen & Ehrenpreis 2009: 6). Together with the social damage, the statistics show that the agricultural sector was hugely damaged from the war directly as well (figure 1).
Third post-colonial era: the long term (1995-now)
Even in longer term, the agricultural development of Mozambique is struggling. The
characteristics in 2009 of the Mozambican agriculture show that they have been lacking a lot of development and therefore still have substantial problem. The country has low crop yields, and there is almost no mechanisation. The potential of productivity is huge when improvement is being made (Mucavele 2009: 3). It shows that even in 2009, the agriculture is still in a quite primitive state. Research in 2003 shows that Mozambique was among the lowest users of crop enhancing products (Bias & Donovan 2003: 33-35). The difficulties in agricultural development that are at play in 2009, are mostly caused by a lack of capital to invest in the own sector. The privatisation wave has led to a dominance of small-scale farmers, mostly producing for their own households (Mucavele 2009: 3). These farmers are struggling to accumulate enough capital to invest in their production. “About 75% of the smallholder farmers are resource-poor and cannot afford to 6 purchase the necessary inputs to increase production.” (idem: 4-6). Also from the side of the government, accumulating capital for development is problematic. Crop diseases, together with drought pose natural
difficulties to accumulate capital. On top of that, the long term effects of the production shortage in the years around 1990 still cause significant costs. Moreover, the agro-industry was hard hit by the policies and turmoil in the 1990’s, causing it to shrink. The farmers turn to the informal sector to get their financing (idem: 6). “It seems that the inexistence of financial institutions in the rural areas, the low levels of public and private savings led to low levels of investment in agriculture” (idem: 7).
The literature also poses hints towards the backwash effects in practice. In the Global Competitiveness Report of 2009-2010, Mozambique is ranking 65th in position on ‘Brain
Drain’, out of 133 countries. This means that in Brain Drain competitiveness, they are in the middle section. Furthermore, the report states that Mozambique has a competitiveness disadvantage, which in this regard means that they are still on the negative side of brain drain (Schwab 2009: 231) . Connected to the CCC-theory this means that Mozambique still suffers backwash effects. However, compared to other African states, like Zimbabwe (130th)
and Ghana (90th), Mozambique is in a relatively good position (idem: 155-331). Research
from 2005 shows the regional backwash effect in practice as well. One of the indicators for backwash effect is brain drain. A research on students from Swaziland shows that
Mozambique is one of the least attractive states to move to if they had the chance (Crush 2005: 36).
A part of the import and export numbers could also be attributed to natural factors. At first glance, these factors have no causation in bad policy and are therefore just examples of sheer bad luck. However, although these disasters themselves have no origin in bad policy, the consequences do. A state that would have a well-designed agricultural sector, prepares itself better for natural disasters and other problems caused by nature. A substantial
agricultural development is needed to be prepared for droughts, for example (Wilhite 2003: 23-25). In Mozambique, several factors complicated the agricultural sector to be stable enough to be well prepared for natural drawbacks. Local farmers haven’t been able to accumulate enough reserves to survive droughts. The government, together with non-governmental organisation, had a structural task in providing free seeds to the farmers after droughts. The growing infertility of the soil is increasing this problem. Therefore, as they seem to be unrelated to poor agricultural design, natural factors do have much higher impact on Mozambique than they do on states with a more well-designed agricultural
sector. The vulnerability leads to relatively big blows to production of agricultural products. As there is no substantial use of fertilizer, combined with the growing population that is forced to cultivate less fertile soil, the lack of sustainability in production only increases. Therefore, with production drops and an increasing demand through population growth, the vulnerability for export drops will be higher as well. Financing is also still a problem, through the inability of rural banking, making it harder to accumulate capital for farmers (Mucavele 2009: 6). As figure 4 shows, the export deficit is not only to be contributed to the drawback in exports. The exports did rise from 2005 onwards, but imports kept on rising quicker. The above mentioned problems could be a cause of this. From 2007 onwards, the number and intensity of floods of the rivers in Mozambique started to rise. These floods give a double blow to the Mozambican population in combination with droughts. As the droughts became more severe as well between 2010 and 2012, the impact for the rural population in
particular was high. This impact was amplified heavily with a major resettlement program by the government. People that were resettled to the highlands were extremely affected by the droughts, therefore moving back to the lowlands, where floods became a risk again. All these factors together could lead to a production drop. This in turn has impact on the import, as is shown before in this research. The huge peak of imports in 2013 could be the consequence of this. Important to notice is that these events have the characteristics of a vicious circle again, therefore imply the failure to create a virtuous cycle. In addition, it also
0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Agricultural Export to Import Value Mozambique (1000
US$)
Export Value Import Value
puts the net export drop of figure 1 in perspective, as huge imports doesn’t necessarily mean low exports. However, as the final economic performance is derived from the net export in this research, figure 1should still be seen as leading in the conclusions that have to be drawn.Figure 4 is only to support and further elaborate the numbers presented in figure 1.
Conclusion
Looking at the case of Mozambique, there is a number of things that can be concluded. First of all, the theory of Circular and Cumulative Causation seems to be congruent with the information that the literature provides. The theory argues primarily that there is a number of factors that cause a state to be in a certain position. These factors seem to be apparent in Mozambique in the analysed period. A combination of bad legacy from the Portuguese, political instability, bad agricultural design and economic difficulties reinforced each other.
With analysing in chronologic order, there also has been a systematic way of using the theory. In the first periods it is proven that and how the theory works. The colonial period shows the bad start of Mozambique. It highlights the factors that caused Mozambique to be in a backwards position. The colonial rule of Portugal has left Mozambique with
exceptionally bad circumstances, which was a beginning for their vicious cycle. This vicious cycle was then reinforced and continued by the first post-colonial period. The state
ownership proved the wrong choice to turn the economic downfall around. In the
background, both economic and social structures played a part in the vicious circle. Because of badly judged policy, the already vulnerable agricultural sector collapsed and huge food shortages arose. The combination with rising political violence led into a self-sustaining cycle of political instability and agricultural failure. This proves the circular and cumulative
mechanism right.
Then in 1987, the second post-colonial period, the IMF and World Bank stepped in and handed out loans in exchange for conditionalities. Setting the intentions of the intervention aside, it was analysed from a CCC perspective. Only with good policy directed towards
creating a counter magnet, the Western organisations could turn the luck of Mozambique on agricultural export around. Looking at figure 1, about net export of agriculture, this was not an undebated success. Moreover, the agricultural export still continued to decline. In the short term, it is obvious that it is not plausible to turn the whole economy around. However, the short term has shown some successes, whereas the long term proved to be problematic. The liberalisation proved to be too much for the fragile socio-economic status of the
peasants in Mozambique, whose ability to accumulate own capital was taken away over and over again in the periods before.
The conclusion from CCC perspective could be made in the way that the intervention didn’t work as it supposed to. This is mainly in the fact that social/political factors were overlooked, making it too much focussed on only economics. Several literal pieces already warned for the social factors, especially on agricultural design. From the Portuguese colonialism on, the agricultural design was reformed in ways that only alienated the Mozambican peasant population, and often even suppressing them. This social factor turned out to be crucial for the way the agricultural sector was economically able to sustain itself. Even in this century, it was proved that the agricultural economy in Mozambique was still too vulnerable for natural causes. Together with demographic developments, the agriculture in was in 2007 still
unstable in production. This instability is mainly caused by the lack of agricultural
development in Mozambique. In terms of machinery, crop enhancement and production stability, they still have a long way to go in order to catch up with the rest of the world, even with a lot of other African states. The intervention didn’t do enough justice to the social factors, therefore failing in the long term. Therefore, the hypothesis has to be falsified. The intervention was unable to turn the vicious cycle into a virtuous cycle. Contemporary policy towards Africa should look at the mistakes made in this intervention, in order to create a better and more sustainable policy.
The question one could ask himself, is if at that time it was possible at all to create policy that would do enough justice towards both economic and social factors. However, it was not possible to analyse this in this research. Further research could go into the role of the
Economic Partnership Agreements in contemporary West Africa. The estimates of the European Commission itself suggest that they seem to have an influence that creates a virtuous circle (Beranger et. Al. 2016).
LITERATURE
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Appendix
FAOSTAT:
Import and export value ($ US 1000) Mozambique
Items aggregated: Agricult.Products,Total + (Total) 1961-2016
Year
Export Value
Import
Value Net Export Value 1961 79312 20042 59270 1962 76985 22538 54447 1963 81437 24971 56466 1964 83350 25160 58190 1965 82053 27797 54256 1966 87804 32307 55497 1967 90938 35100 55838 1968 122735 33857 88878 1969 113684 35612 78072 1970 119132 37434 81698 1971 124614 35169 89445 1972 140714 36681 104033 1973 179717 51727 127990 1974 230153 46489 183664 1975 131279 75228 56051 1976 102845 62080 40765 1977 103286 47185 56101 1978 105257 69044 36213 1979 166655 76293 90362 1980 156870 117026 39844 1981 142380 101636 40744 1982 111624 93056 18568 1983 65275 131386 -66111 1984 49685 148800 -99115 1985 37368 153678 -116310 1986 36238 110966 -74728 1987 53108 200611 -147503 1988 46957 202371 -155414 1989 44320 200002 -155682 1990 41439 211628 -170189 1991 45396 245342 -199946 1992 53499 296355 -242856
1993 26075 219834 -193759 1994 63268 402120 -338852 1995 55768 276780 -221012 1996 51453 222800 -171347 1997 52430 180770 -128340 1998 47110 219050 -171940 1999 39140 191910 -152770 2000 61933 226417 -164484 2001 53684 241939 -188255 2002 76097 315178 -239081 2003 103206 292571 -189365 2004 123172 437662 -314490 2005 139971 454080 -314109 2006 316106 479183 -163077 2007 332059 501751 -169692 2008 328988 675913 -346925 2009 336763 743785 -407022 2010 449682 800683 -351001 2011 572535 940029 -367494 2012 599887 690037 -90150 2013 713114 1490840 -777726 2014 743155 1006664 -263509 2015 653299 859890 -206591 2016 683064 1395684 -712620
