TY  - JOUR
AU  - McMillan,Margaret
AU  - Rodrik,Dani
AU  - Welch,Karen Horn
TI  - When Economic Reform Goes Wrong: Cashews in Mozambique
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9117
PY  - 2002
Y2  - August 2002
UR  - http://www.nber.org/papers/w9117
L1  - http://www.nber.org/papers/w9117.pdf
N1  - Author contact info:
Margaret S. McMillan
Tufts University
Department of Economics
114a Braker Hall
Medford, MA 02155
Tel: 617/627-3137
Fax: 617/627-3197
E-Mail: margaret.mcmillan@tufts.edu

Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu
AB  - 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.
ER  -