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Growth, Poverty and Inequality in Mozambique

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  • Pekka Virtanen

    ()
    (University of Tampere, Finland)

  • Dag Ehrenpreis

    ()
    (International Poverty Centre)

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    Abstract

    Mozambique has experienced more than a decade of sustained economic growth based on two sectors, agriculture and industry. Absolute poverty has fallen rapidly. The main factor in the reduction of poverty since the mid 1990s has been increased production in agriculture, the main source by far of livelihoods in the country. However, this growth represents only a ?bounce-back? to pre-war levels of agricultural production, without any substantial improvement in productivity, which remains very low even when compared regionally. Growth in industrial production has been the main driving force behind Mozambique?s rapidly growing exports. Based on a few mega-projects, this growth has, however, created few jobs while its contribution to public revenue has been marginal when compared to its value of production. Due to the enclave character of such projects, the spillover effect in terms of technology transfer or skills development has been minimal. External aid provides a major part of all foreign exchange available to Mozambique, and it has thus far had a positive effect on growth without major negative impact on the real exchange rate. Aid must be allocated now to crucial services for creating globally competitive agricultural production capacity, including rural infrastructure, in order to promote sustainable livelihoods and enhance labour productivity.

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    File URL: http://www.ipc-undp.org/pub/IPCCountryStudy10.pdf
    File Function: First version, 2007
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    Bibliographic Info

    Paper provided by International Policy Centre for Inclusive Growth in its series Country Study with number 10.

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    Length: 26
    Date of creation: Sep 2007
    Date of revision:
    Publication status: Published by UNDP - International Poverty Centre, September 2007, pages 1-26
    Handle: RePEc:ipc:cstudy:10

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    Keywords: Growth; Poverty; Inequality; Mozambique;

    This paper has been announced in the following NEP Reports:

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    1. Christopher Adam & David Bevan, 2004. "Aid and the Supply Side: Public Investment, Export Performance and Dutch Disease in Low Income Countries," Economics Series Working Papers 201, University of Oxford, Department of Economics.
    2. Tarp, Finn & Simler, Kenneth & Matusse, Cristina & Heltberg, Rasmus & Dava, Gabriel, 2002. "The robustness of poverty profiles reconsidered," FCND briefs 124, International Food Policy Research Institute (IFPRI).
    3. Tony Addison & George Mavrotas & Mark McGillivray, 2005. "Aid to Africa: an unfinished agenda," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 989-1001.
    4. Simler, Kenneth R. & Mukherjee, Sanjukta & Dava, Gabriel & Datt, Gaurav, 2003. "Rebuilding after war: micro-level determinants of poverty reduction in Mozambique," Research reports 132, International Food Policy Research Institute (IFPRI).
    5. Tarp, Finn, 2006. "Aid and Development," MPRA Paper 13171, University Library of Munich, Germany.
    6. Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 31-49.
    7. Brautigam, Deborah A & Knack, Stephen, 2004. "Foreign Aid, Institutions, and Governance in Sub-Saharan Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 255-85, January.
    8. Benfica, Rui M.S. & Zandamela, Julieta & Miguel, Arlindo & de Sousa, Natercia, 2005. "The Economics of Smallholder Households in Tobacco and Cotton Growing Areas of the Zambezi Valley of Mozambique," Food Security Collaborative Working Papers 56064, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    9. Channing Arndt & Sam Jones & Finn Tarp, 2006. "Aid and Development: The Mozambican Case," Discussion Papers 06-13, University of Copenhagen. Department of Economics.
    10. Todd Moss & Gunilla Pettersson & Nicolas van de Walle, 2006. "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa," Working Papers 74, Center for Global Development.
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