International finance and the dynamics of capital accumulation - the case of Mozambique
Carlos Castel-Branco (Lisbon School of Economics and Management (ISEG/CEsA))
Paper short abstract:
This paper looks at the interaction between international finance and domestic, private capital accumulation in Mozambique over the last two decades, the factors that have affected this interaction and how these have shaped the specific characteristics of accumulation in Mozambique.
Paper long abstract:
Over the two decades prior to the 2016 crisis, the Mozambican economy became in increasingly important destination of international finance. In the period 2009-2014, Mozambique was the third most important destination of international private finance in SSA. The government followed a very proactive strategy to attract international private finance and "mined" the debt space created during the two decades of monetarist economic stabilization far beyond its "debt sustainability level". The "illicit debt crisis" revealed in 2015-2016 underlined a deeper structural problem with the system of capital accumulation, where the formation of domestic capitalist classes was dependent upon linkages with multinational capital. Large, multinational capital was attracted by the willingness of the Mozambican government to privatize huge reserves of minerals and energy resources, land and public infrastructures, "mine" its debt space to favor fast private capital accumulation, lower risks and costs for foreign investors and develop linkages, through financial leakages, with domestic capital. The paper argues that this mode of accumulation narrowed the path of accumulation along the limits of an extractive economy, and favored the accumulation of fictitious capital over the development of productive linkages and employment. The paper further argues that the low elasticity of poverty reduction with respect to economic growth and the speculative crisis that hit the economy from 2015 onward are consequences of the structural dynamics of capital accumulation.
Financialization and premature de-industrialization in the African context