Macroeconomics

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.

This study seeks to better understand reasons for Mozambique’s low productivity and suggest some policy recommendations to increase productivity growth. The study was conducted to find reasons for Mozambican firms’ low productivity, and suggest policy changes to increase productivity. The research was based on a combination of an extensive literature review, field interviews, and data analyses. Data were obtained from field visits to a sample of firms, most in the industrial sector. The study also included a survey. The Ministry of Industry and Trade (MIC) arranged the interviews. We also obtained industry- and firm-level data from MIC sources.

Supporting Sustained Economic Growth and Development: Lessons from Successful Countries and Implications for Mozambique (Steve Radelet, 2004)

During the last forty years about two dozen low-income countries have achieved either moderately high or very high rates of economic growth, sustained productivity increases, and poverty reduction. The best known are the East Asian “Four Tigers,” China, Malaysia, Thailand, and Indonesia, but other countries have achieved steady growth and poverty reduction as well, including Botswana, Mauritius, Tunisia, Chile, the Dominican Republic, Lesotho, and more recently India. For some the growth was spectacular, while for others it was more modest, but still important. For example, the Dominican Republic has recorded a seemingly modest growth rate of 2.5 percent per capita, but since this average growth was sustained for 40 years it resulted in a tripling of average real income.

The Action Plan to Reduce Absolute Poverty (PARPA) aims to promote economic growth in a sustainable and comprehensive manner to reduce absolute poverty. To realize this objective, PARPA defines and implements a series of policies and action plans.

The TIP Project provided a review of tax policy in Mozambique as input into the evaluation of the second Action Plan to Reduce Absolute Poverty (PARPA).

This section contains two reports:

The Trade and Investment Project worked closely with the Private Sector Working Group (PSWG) and the Government of Mozambique to evaluate the private sector indicators of PARPA II and make recommendations for new private sector indicators for PARPA III.

The Social Security System in Mozambique

Economies the world over recognize the importance social security systems. Social security systems are a fundamental part of the private sector – and ensuring systems work responsibly and effectively is critical for a vibrant economy.

Economic Effects of Regulating the “Surrender” of Export Earnings

Under the 2009 Foreign Exchange Act (Lei n.o 11/2009 de 11 de Março), Article 9 requires “resident entities” to declare any funds that are generated or held abroad and to remit to Mozambique receipts from exports of goods, services, or foreign investment, subject to terms and conditions to be defined by regulation. In December, 2010, the Council of Ministers approved a set of regulations, including a provision relating to Article 9 of the Act requiring corporations to remit 50 percent of their export earnings to Mozambique and convert the remittance to local currency. This type of regulation is often referred to as an “export surrender” requirement.