Integration into Global Markets: Opportunities and Challenges for Mozambique Steven Radelet Center...

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%



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


(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


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


Perceptions ofGovernment Effectiveness

Government Effectiveness (percentile rank), 2004

0%

10%

20%

30%

40%

50%

60%

70%

80%



Regulatory Quality

Regulatory Quality (percentile rank), 2004

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



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


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


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)


Access to finance and collateral requirements


0

20

40

60

80

100

120

140

160

180

% of firms with loan Average cost of loan, % Collateral as % of loan

Integration into Global Markets: Opportunities and Challenges for Mozambique Steven Radelet Center...

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