[stop-imf] Rodrik on Mozambique cashews

[Robert Weissman]

> When Economic Reform Goes Wrong: Cashews in Mozambique
> (with Margaret McMillan and Karen Horn Welch), July
> 2002.  An analysis of the case that became a microcosm
> of the globalization debate.
>
> http://ksghome.harvard.edu/~.drodrik.academic.ksg/nuts.pdf

WHEN ECONOMIC REFORM GOES WRONG: CASHEWS IN MOZAMBIQUE*
Margaret McMillan? Dani Rodrik? Karen Horn Welch=A7
Tufts University Harvard University Harvard University
July 2002
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.