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Integration into Global Markets: Opportunities and Challenges for Mozambique
Steven Radelet
Center for Global Development
May 4, 2006
Openness and growthGDP Per Capita Growth, 1989-98
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Closed Moderately open Open
Note: Over this period in Mozambique, manufactured exports/GDP = 1.4%
Manufactured Exports and GDP growth in Developing Countries, 1993-2004
00.5
11.5
22.5
33.5
0-5% (60countries)
5-10% (18countries)
10-20% (22countries)
20-45% (18countries)
Manufactured Exports/GDP (%)
Annu
al G
DP g
rowt
h pe
r cap
ita (%
)
Primary Product Exports and Economic Growth
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0-5% 5-10% 10-20% > 20%
Primary Exports as % GDP in 1971
Ave
rage
Gro
wth
Rat
e of
Per
Cap
ita
GD
P
(PP
P$)
, 197
1-20
01
22 countries
14 countries
26 countries
21 countries
Wage Growth and Global IntegrationBetween 1980s and 1990s (percent)
Source: Freeman, Osstendorp, and Rama (2001), as quoted by World Bank
The impact of red tape onexport competitiveness
inputs inputs
wageswages
profitsprofits
0
20
40
60
80
100
120
Cost structure without redtape
Cost structure with red tape
profits
red tape
wages
inputs
red tape
Perceptions of the Rule of LawRule of Law (percentile rank), 2004
0%
10%
20%
30%
40%
50%
60%
70%
80%
Mozambique Botswana Ghana India Madagascar South Africa Tanzania Uganda
Source: World Bank Institute. Kaufmann, D., A. Kraay, and M. Mastruzzi. 2005. “Governance Matters IV: Governance Indicators for 1996–2004,” World Bank Policy Research Working Paper 3630.
Perceptions ofControl of Corruption
Control of Corruption (percentile rank), 2004
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Mozambique Botswana Ghana India Madagascar South Africa Tanzania Uganda
Source: World Bank Institute. Kaufmann, D., A. Kraay, and M. Mastruzzi. 2005. “Governance Matters IV: Governance Indicators for 1996–2004,” World Bank Policy Research Working Paper 3630.
Procedures Duration Cost Minimum capital
Country (number) (days) (% GNI per
capita) (% GNI per
capita)
Mozambique 14 153 95.0 12
Botswana 11 108 10.9 0Ghana 12 81 78.6 28India 11 71 61.7 0Madagascar 11 38 54.3 2158South Africa 9 38 8.6 0Tanzania 13 35 161.3 6Uganda 17 36 117.8 0
Source: Doing Business in 2006 , World Bank.
Starting a business
Business Costs [1]
Business Costs [2]
Difficulty of hiring
Rigidity of hours
Difficulty of firing
Rigidity of employment
Hiring cost
Firing costs
Country(% of
salary)(weeks of
wages)
Mozambique 83 80 20 61 4.0 141.0
Botswana 11 40 40 30 0.0 18.9Ghana 11 40 50 34 12.5 24.9India 56 40 90 62 12.3 79.0Madagascar 67 60 50 59 18.0 40.9South Africa 56 40 60 52 2.6 37.5Tanzania 67 80 60 69 16.0 38.4Uganda 0 20 20 13 10.0 12.0
Source: Doing Business in 2006 , World Bank.
(0-100 index, 0=best)
Hiring and firing workers
Competitiveness Rankings
Country 2003 2004 2005
Mozambique 8 12 23
Botswana 64 57 60Ghana 29 35 50India 44 48 58Madagascar 5 8 9South Africa 58 61 65Tanzania 31 21 40Uganda 21 24 26
Source: Global Competitiveness Report 2005-06 , World Economic Forum
Growth competitiveness index (Percentile ranking)
Competitiveness RankingsBusiness
competitiveness index, 2005
Public institutions index, 2004
Macroeconomic environment index, 2004
Technology index, 2004
N=116 N=106 N=106 N=106
Mozambique 98 82 95 92
Botswana 55 26 30 59Ghana 45 65 68 86Madagascar 97 96 79 97South Africa 28 43 40 40Tanzania 82 59 76 81Uganda 85 84 71 77
Source: Global Competitiveness Report 2005-06 , World Economic Forum
(Absolute ranking)
Time to clear goods at port
02468
101214161820
Days to clear imports, median Days to clear exports, median
Source: Benn Eifert, Alan Gelb, and Vijaya Ramachandran, “Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data,” CGD Working Paper #56, 2005.
Costs of crime, unofficial payments, and securing contracts
0
1
2
3
4
5
6
7
8
9
10
cost of crime + security,% of sales
unofficial payments to “getthings done”, % of firmsales, average
% contract value ininformal payments requiredto secure contract, average
Source: Benn Eifert, Alan Gelb, and Vijaya Ramachandran, “Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data,” CGD Working Paper #56, 2005.
Indirect costs as a share of total costs
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
chinanicaragua
bangladeshsenegal
indiamorocco
boliviaugandanigeria
ethiopiakenya
tanzaniamadagascar
zambiamozambique
indirect labor capital inputs
Source: Benn Eifert, Alan Gelb, and Vijaya Ramachandran, “Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data,” CGD Working Paper #56, 2005.
Perceptions ofGovernment Effectiveness
Government Effectiveness (percentile rank), 2004
0%
10%
20%
30%
40%
50%
60%
70%
80%
Mozambique Botswana Ghana India Madagascar South Africa Tanzania Uganda
Source: World Bank Institute. Kaufmann, D., A. Kraay, and M. Mastruzzi. 2005. “Governance Matters IV: Governance Indicators for 1996–2004,” World Bank Policy Research Working Paper 3630.
Regulatory Quality
Regulatory Quality (percentile rank), 2004
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Mozambique Botswana Ghana India Madagascar South Africa Tanzania Uganda
Source: World Bank Institute. Kaufmann, D., A. Kraay, and M. Mastruzzi. 2005. “Governance Matters IV: Governance Indicators for 1996–2004,” World Bank Policy Research Working Paper 3630.
Documents for export
Signatures for export
Time for export
Documents for import
Signatures for import
Time for import
Country (number) (number) (days) (number) (number) (days)
Mozambique 6 12 41 16 12 41
Botswana 6 7 37 9 10 42Ghana 6 11 47 13 13 55India 10 22 36 15 27 43Madagascar 7 15 50 9 18 59South Africa 5 7 31 9 9 34Tanzania 7 10 30 13 16 51Uganda 13 18 58 17 27 73
Source: Doing Business in 2006 , World Bank.
Trading across borders
Business Costs [1]
Business Costs [4]
Procedures Time CostCountry (number) (days) (% of debt)
Mozambique 38 580 16.0
Botswana 26 154 24.8Ghana 23 200 14.4India 40 425 43.1Madagascar 29 280 22.8South Africa 26 277 11.5Tanzania 21 242 35.3Uganda 15 209 22.3
Source: Doing Business in 2006 , World Bank.
Enforcing contracts
Electricity Costs
0
2
4
6
8
10
12
Eth
iopi
a
Moz
ambi
que
Uga
nda
Zam
bia
Ken
ya
Mad
agas
car
Mor
occo
Chi
na
Energy, % of f irm costs (average) Pow er Outages, % output lost (average)
Source: Benn Eifert, Alan Gelb, and Vijaya Ramachandran, “Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data,” CGD Working Paper #56, 2005.
Access to finance and collateral requirements
Source: Benn Eifert, Alan Gelb, and Vijaya Ramachandran, “Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data,” CGD Working Paper #56, 2005.
0
20
40
60
80
100
120
140
160
180
% of firms with loan Average cost of loan, % Collateral as % of loan