We discussed this issue some time ago.
"When Economic Reform Goes Wrong: Cashews in Mozambique"
BY: MARGARET S. MCMILLAN
Tufts University
Department of Economics
DANI RODRIK
Harvard University
John F. Kennedy School of Government
National Bureau of Economic Research (NBER)
Centre for Economic Policy Research (CEPR)
KAREN HORN WELCH
Independent
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=376960
Paper ID: KSG Working Paper Series RWP02-028
Date: July 2002
Contact: DANI RODRIK
Email: Mailto:[EMAIL PROTECTED]
Postal: Harvard University
John F. Kennedy School of Government
79 John F. Kennedy Street
Cambridge, MA 02138 UNITED STATES
Phone: 617-495-9454
Fax: 617-496-5747
Co-Auth: MARGARET S. MCMILLAN
Email: Mailto:[EMAIL PROTECTED]
Postal: Tufts University
Department of Economics
Medford, MA 02155 UNITED STATES
Co-Auth: KAREN HORN WELCH
Email: Mailto:[EMAIL PROTECTED]
Postal: Independent
87 Hulme Court, Apt. 5c
Stanford, CA 94305 UNITED STATES
ABSTRACT:
Mozambique liberalized its cashew sector in the early 1990s in
response to pressure from the World Bank. Opponents of the
reform have argued that the policy did little to benefit poor
cashew farmers while bankrupting factories in urban areas.
Using
a welfare-theoretic framework, we analyze the available
evidence
and provide an accounting of the distributional and efficiency
consequences of the reform. We estimate that the direct
benefits
from reducing restrictions on raw cashew exports were of the
order $6.6 million annually, or about 0.14% of Mozambique GDP.
However, these benefits were largely offset by the costs of
unemployment in the urban areas. The net gain to farmers was
probably no greater than $5.3 million, or $5.30 per year for
the
average cashew-growing household. Inadequate attention to
economic structure and to political economy seems to account
for
these disappointing outcomes.
Keywords: International Development, International Trade and
Finance
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
