Discussion Paper

Industrial policy in Mozambique

Krause, Matthias / Friedrich Kaufmann
Discussion Paper (10/2011)

Bonn: German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

ISBN: 978-3-88985-538-1
Price: 6 €

Many scholars acknowledge that industrial policy can work well in countries with strong merit-based public services and political checks and balances. However, there are very few empirical studies available that analyse industrial policies in low and lower-middle income countries. This study intends to help fill this gap by assessing the quality of industrial policies and industrial policy making in Mozambique. To this end, the study draws on an extensive review of the relevant policy documents, expert interviews and two case studies about the promotion of the cashew industry and the promotion of linkages between foreign direct investment and small and medium-sized enterprises. The authors conclude that the Government of Mozambique lacks the vision, leadership and proper incentives needed to create an appropriate policy mix of investment climate improvements – to create the conditions for private investments and market competition – and targeted interventions – to accelerate productivity growth and enhance firms’ competitiveness.