Institutional drivers, historical determinism, and economic development in Mozambique

Purpose - The purpose of this paper is to examine the evolution of political and economic institutions, their persistence and interdependence and their effects on economic progress in Mozambique. Design/methodology/approach - Using a unique data set, which has developed detailed long-run indices of institutional change in Mozambique from 1900 onwards, the research utilizes time-series econometrics to estimate cointegration relations and Vector Autoregressive and Vector Error Correction models, and also Granger causality, correlation and residual analysis when interpreting the estimation results. Findings - It shows support for path dependence in political and economic institutions as well as the critical juncture theory and modernization hypothesis, and for webs of association between these institutions and economic development. It provides evidence of an equilibrium-dependent process, where history does matter (as do early conditions), and whose impact may differ depending on the nature of institutional arrangements. Various institutions created during colonial times have a bearing on the present state of institutions in Mozambique, as reflected in important continuities regarding the forms of political economy, among others. Originality/value - The work contributes to existing research not only through the employment of a new set of institutional measures, which allows for a particularly long time-series investigation in a developing country setting, but also through its contribution to studies on modernization and critical junctures but in a longitudinal manner which allows for the exploration of complex dynamics embedded within a country’s particular political economy. The implications are far-reaching and carry importance beyond the academy given the pressure on policymakers to get things right because of the persistence of institutions and their consequences and the associated path dependency.