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Cape Verde’s foreign policy: an economic perspective

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  • Jorge Braga de Macedo

Abstract

The virtuous cycle between development success and foreign policy in Cape Verde reflects a positive interaction between globalization and governance. Development success under globalization entails positive market perceptions regarding the orientation and predictability of policies as well as the accompanying institutional arrangements, thereby making foreign policy salient beyond the comparator group, or “aspirational”. Even if there is no universally applicable development model, an aspirational foreign policy can be built on positive rankings with respect to comparator groups. In Macedo and Pereira (2010), macro-level policy and institutional combinations underpinning trade diversification and income convergence in West and Southern Africa are used to establish development success for Cape Verde and Mozambique respectively. Here, the narrative of long-term development helps identify the following drivers: moving towards a market economy; opening up to regional and global trade; increasing economic and political freedom; pursuing macroeconomic stability and financial reputation; ensuring policy continuity (especially in trade and industrial sectors) and focusing on human development (especially poverty reduction and education). Looking at GDP per capita and indicators of financial reputation and good governance of sub-regional peers is not sufficient to conclude that Cape Verde’s convergence will be sustained. Nevertheless, the positive interaction between trade and financial globalization, on the one hand, and democracy and good governance, on the other, have positive implications for the effectiveness of foreign policy across the region as well as in the Portuguese-speaking community. JEL codes:

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  • Jorge Braga de Macedo, 2012. "Cape Verde’s foreign policy: an economic perspective," FEUNL Working Paper Series wp572, Universidade Nova de Lisboa, Faculdade de Economia.
  • Handle: RePEc:unl:unlfep:wp572
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    1. Jorge Braga de Macedo & Luís Brites Pereira, 2014. "Cape Verde and Mozambique as Development Successes in West and Southern Africa," NBER Chapters,in: African Successes, Volume IV: Sustainable Growth, pages 203-293 National Bureau of Economic Research, Inc.
    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.
    4. Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
    5. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
    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. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    8. 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.
    9. 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.
    10. Jorge Braga de Macedo, 1986. "Collective Pegging to a Single Currency: The West African Monetary Union," NBER Chapters,in: Economic Adjustment and Exchange Rates in Developing Countries, pages 333-368 National Bureau of Economic Research, Inc.
    11. Jorge Braga de Macedo & Luis Pereira & Afonso Reis, 2009. "Comparing Exchange Market Pressure across Five African Countries," Open Economies Review, Springer, vol. 20(5), pages 645-682, November.
    12. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    13. Macedo, Jorge Braga de, 2010. "Global crisis and national policy responses: together alone?," FEUNL Working Paper Series wp546, Universidade Nova de Lisboa, Faculdade de Economia.
    14. Cabral, Manuel Heredia Caldeira & Veiga, Paula, 2010. "Determinants Of Export Diversification And Sophistication In Sub-Saharan Africa," FEUNL Working Paper Series wp550, Universidade Nova de Lisboa, Faculdade de Economia.
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