Globalization and Domestic Policy (Flatters) for CASP 9
The global economy presents important and interesting challenges for Mozambique’s businesses and policymakers alike. Mozambique has a strong interest in regional and global policy processes such as those taking place in the WTO, in negotiations with the EU concerning new Economic Partnership Agreements (EPAs), and in amendments to and extensions of SADC and SACU agreements. But its influence in these international and regional arenas is very limited. Fortunately, the most important policy issues that globalization presents are domestic. And it is here that Mozambique is sovereign. While international and regional treaties and agreements place some limitations on that sovereignty, most of them limit actions that would be against Mozambique’s best economic interests.
The name of the conference at which this paper is being presented— Mozambican Business Opportunities in a Global Economy and Business Strategy and Local Economic Development —alludes primarily to private business, but the government plays an important role in shaping the framework in which business decisions are made and in which Mozambique’s dreams of economic development will or will not be realized. This paper focuses on the interface between business and policy, drawing conclusions about international trade policy especially and making observations about a wide range of complementary domestic policies.
Section 2 presents general lessons about globalization drawn from international experience. Section 3 discusses two dimensions of trade policy: international trade diplomacy, which involves negotiating and implementing international trade agreements, and the formulation of unilateral trade policies. Section 4 describes five sets of issues that arise in formulating unilateral trade policies: protection of infant industries, the value of tax incentives, the effects of and best responses to “dumping” and subsidies, the reasons for and best responses to market and policy failures, and how best to handle resources and resource rents with regard to the general economy and domestic processing industries. Section 5 suggests a domestic reform agenda for Mozambique’s further integration into the global economy.
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