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.