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- Convenors:
-
Carlos Castel-Branco
(Lisbon School of Economics and Management (ISEG/CEsA))
Alfredo Saad Filho (LUT, Finland and University of Johannesburg, South Africa)
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- Stream:
- Economy and Development
- Location:
- 50 George Square, G.05
- Sessions:
- Thursday 13 June, -
Time zone: Europe/London
Short Abstract:
The panel discusses how dynamics of capital accumulation and (des)industrialization in the African context are part of, integrated in and affected by financialization, and the implications of these for the advancement of the political economy analysis of economic growth and transformation in Africa.
Long Abstract:
In the first decade of the XXI century, robust growth of African economies led to the argument that "African Cheetahs" were finally following on the footsteps of the "Asian Tigers", with little attention being paid to patterns of growth and economic transformation, global and local dynamics of capital accumulation and their relationship. The slowdown of the rates of growth and the accumulation of public and private debt undermined this initial enthusiasm and also showed the limitations of the Cheetah's argument and of its mainstream criticism.
The experience of the first two decades of this century provide an opportunity to re-address how African economies are integrated in the world economy and how this is shaped by and shapes the systems, processes and patterns of capital accumulation, class formation, distribution and the dynamics of expansion, instability and crisis. In doing so, it provides an opportunity to advance the political economy analysis of economic growth and transformation in the African context.
We are looking for papers, from established scholars and post-graduate, research students, to discuss the specific characteristics of financialization and of patterns of (des)industrialization in the African context, how they are interlinked, how they are historically related with specific systems and processes of capital accumulation, and what their implications might be for economic growth, instability, crisis, transformation and political economy analysis.
Accepted papers:
Session 1 Thursday 13 June, 2019, -Paper short abstract:
This paper examines the impact of financialization upon post-apartheid capital accumulation and the system of accumulation. In particular it points to how two important sets of interests - those of old order white capital and new black capital - have intersected.
Paper long abstract:
This paper examines the impact of financialization upon post-apartheid capital accumulation, and the system of accumulation as a whole, the Minerals Energy Complex (MEC). In particular, it argues that two sets of interests have intersected to produce the de-industrialization of the economy: 'Old order' white capital and new black capital. The former has (with exceptions, of course) extensively internationalized and financialized its operations to be amongst some of the largest actors in the global economy. The latter, weak for historical reasons, has emerged heavily financialized and/or dependent upon state contracts and political largesse. The consequences for South Africa's political economy have been far reaching, with severe and ongoing crises of unemployment (which stands near to 40%), inequality (the highest in the world), poverty (at 65% of the population on a generous measure) and the cracking open of the political settlement of 1994. Attempts at more interventionist industrial policy have been ghettoized in a small corner of the state unable to shift the broader trajectory of economy and society. Financialization and, connected to it, neoliberal macroeconomic policy, and the patterns of class formation produced, have been significant obstacles to more broad-based development. Now, these factors combined with the end of the commmodity boom and extensive corruption, the crisis of the economy is the crisis of the MEC itself.
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.
Paper short abstract:
The financialisation of capital accumulation in Mozambique is producing a reprimarization of the productive structure, curtailing the development of manufacturing and putting the country in a path dependence of growth based on simpler and extractive processes.
Paper long abstract:
This paper analyses financialization in the context of an African peripheric country, Mozambique. It argues that it differs significantly from the patterns characterizing financialization processes in more advanced economies and that there are clear signs linking financialization and a reprimarization of the economy.
The financialisation of capital accumulation in Mozambique can be seen as the result of internal and external constraints. Internally, this process had its origins in the IMF's structural adjustment program of 1987, that introduced a set of policies easily identified in the "Washington Consensus". Moreover, it had to adapt to a narrow economic structure with a small industrial base, and to an elite without links to economic production. Externally, several conditioning factors were also significant: the growing liberalization of the Western economies, the commodity super-cycle, and the growth of capital movements.
Of the several characteristics of financialization in Mozambique (state financialization; transformation of land-based resources in financial assets), the reprimarization of the productive structure is one of the most significant. What determined a reprimarization of the economy was: liberalization of the banking system; FDI for sectors where the country has "comparative advantages"; additional short-term capital inflows; currency appreciation with a monetary policy concerned with inflation control. This results in an expansion of simpler production processes and a curtailment of the conditions for a robust manufacturing sector. Reprimarization is, therefore, a consequence of financialization and it puts the country in a path dependence of growth based on simpler and extractive processes.
Paper short abstract:
This paper intends to apply a political economy approach to investigate the dynamics of premature deindustrialization in Mozambique. Specifically, the paper analyzes the characteristics, drivers and implications of the productive structure developed in the country since independence.
Paper long abstract:
The fact that many African economies once part of the 'Africa Rising' narrative are currently facing deep economic crisis reinforces the urgent need to re-assess the political economy factors leading to vulnerability to cyclical crisis of accumulation and dependency on external capital. Indeed, the recent rejuvenation of the debate on industrialization has highlighted the importance of analyzing the interplay between defining economic, political and institutional relations within the country under consideration and its integration with the world capitalist system. It is within this context that this paper intends to apply a political economy approach to investigate the dynamics of premature deindustrialization in Mozambique, a country that despite having been part of the 'Africa Rising' narrative, has its economy dependent on foreign capital (aid, foreign investment and debt), exporting a limited number of low value-added natural resource-based commodities, with limited backward and forward linkages with the rest of the economy and impact on employment generation and poverty reduction. Specifically, the paper starts by analyzing the characteristics and implications of the productive structure developed in the country since independence; it then discusses what explains the production patterns described by looking at the interactions between the role of the state, domestic power relations and global production structures.