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When economic reform goes wrong: cashews in Mozambique
Impact of export liberalization programme on Mozambique's cashew farmers
Authors:
M. McMillan; D. Rodrik; K. H. Welch
Publisher:
John F. Kennedy School of Government, Harvard University, 2002
This paper is a case study into the impact of an export liberalization programme on cashew farmers in Mozambique. The authors argue that opponents of the reform felt that the policy did little to benefit poor cashew farmers while bankrupting factories in urban areas. It presents an analysis into the distributional and efficiency consequences of the liberalization program, and concludes that after 10 years, there was little to show for the reform
The main conclusions drawn were that:
- benefits reaped were offset by the cost of unemployment in the urban areas
- reforms took little note of important market imperfections such as the multi –layered marketing chain and monopsony role of India that reduced benefits to cashew farmers.
- Virtually no attention was paid to the credibility of policy changes and how it may have been enhanced.
- World Bank did not sufficiently appreciate the ineffectiveness of buying reform through aid-cum-conditionality.
