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Cape Verde and Mozambique as Development Successes in West and Southern Africa

Listed author(s):
  • Jorge Braga de Macedo
  • Luís Brites Pereira

This paper applies an interpretation of how globalization and governance (G&G) interact with convergence given Cape Verde and Mozambique's particular geographical and historical contexts. We hold that development success under globalization entails, necessarily but not exclusively, positive market perceptions regarding the orientation and predictability of policies as well as the accompanying institutional arrangements. As such, a positive G&G interaction with respect to a comparator group can usefully be defined as success notwithstanding the inexistence of a universally applicable development model. In practical terms, we first identify macro-level policy and institutional combinations underpinning successful trade diversification (an indicator of globalization) and income convergence (an indicator of governance) in the sub-regions of West and Southern Africa. We then assess to what extent these combinations apply to both countries using an empirical analysis. We find that trade openness drives convergence and export diversification in Western Africa (which is becoming more diversified) while convergence is instead driven by economic and political freedoms in Southern Africa (which is becoming more specialized). Our empirical analysis is complemented by a case-study narrative of Cape Verde and Mozambique's long-term development, which allows us to also identify the following common drivers: moving towards a market economy; opening up to regional and global trade; increasing economic and political freedom; pursing macroeconomic stability and financial reputation; ensuring policy continuity (especially in the industrial and trade sectors) and focusing on human development (especially education and poverty reduction). Moreover, both countries reveal convergence compared to their sub-regional peers when looking at average GDP per capita and indicators of financial reputation and good governance. While these findings are insufficient to conclude that convergence will be sustained, the positive interaction between trade and financial globalization, on the one hand, and good governance and democracy, on the other, may help explain the observed diversity of the Portuguese-speaking African community, which includes three other countries (Angola, Guinea-Bissau and São Tomé e Príncipe).

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File URL: http://www.nber.org/papers/w16552.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16552.

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Date of creation: Nov 2010
Publication status: published as Cape Verde and Mozambique as Development Successes in West and Southern Africa , Jorge Braga de Macedo, Luís Brites Pereira. in African Successes, Volume IV: Sustainable Growth , Edwards, Johnson, and Weil. 2016
Handle: RePEc:nbr:nberwo:16552
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  1. Paulo Bastos & Manuel Cabral, 2007. "The Dynamics of International Trade Patterns," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(3), pages 391-415, October.
  2. Barry Eichengreen & David Leblang, 2008. "Democracy And Globalization," Economics and Politics, Wiley Blackwell, vol. 20(3), pages 289-334, November.
  3. Federico Bonaglia & Jorge Braga de Macedo & Maurizio Bussolo, 2009. "How Globalisation Improves Governance," Chapters,in: The Law and Economics of Globalisation, chapter 7 Edward Elgar Publishing.
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  6. Torsten Persson & Guido Tabellini, 2009. "Democratic Capital: The Nexus of Political and Economic Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(2), pages 88-126, July.
  7. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
  8. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
  9. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
  10. Collier, Paul & Gunning, Jan Willem, 1999. "The IMF's Role in Structural Adjustment," Economic Journal, Royal Economic Society, vol. 109(459), pages 634-651, November.
  11. Angel-Urdinola, Diego & Wodon, Quentin, 2007. "Assessing Absolute and Relative Poverty Trends with Limited Data in Cape Verde," MPRA Paper 11111, University Library of Munich, Germany.
  12. Collier, Paul & Gunning, Jan Willem, 1999. "The IMF's Role in Structural Adjustment," Economic Journal, Royal Economic Society, vol. 109(459), pages F634-51, November.
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