two articles on mozambique:
(first, in defense of the economic order:)
Mozambique is one of the world's poorest countries. It's also an African success story. Here, such things are relative. To the immediate west, Zimbabwe's Robert Mugabe misrules his country toward calamity. Nigeria, Ivory Coast and others are beset by civil conflict and corruption. But Mozambique, scarred by 16 years of civil war and Soviet-style economics, turned itself in the right direction on its own. Optimism, however guarded, and Africa do sometimes go together.
(...) But hyperinflation and a stagnant economy forced leaders of the neo-Marxist liberation movement, Frelimo, to shift their approach. Starting in the early 1990s, the ruling party cut subsidies, opened to outside investment, privatized firms nationalized after independence in 1975 and got a grip on borrowing and the budget. An independent central bank brought inflation into single digits. According to the World Economic Forum's competitiveness index, Mozambique has reformed more than any sub-Saharan African country.
(...) The payoff is the highest average growth rate, at 8% over the last decade, among the continent's non-oil exporters. GDP per capita is a still tiny $320, but that's compared with $178 in 1992. Since 1997, poverty rates decreased more in rural areas (from 71% to 55%) than in urban (62% to 52%), according to the World Bank. Child mortality has declined to 152 per 1,000 live births from 235. And primary-school enrollment has risen to 71% from 43%. Once a leading recipient of food aid, Mozambique now exports maize, with 5.6% average yearly growth in farming in the last 15 years. Banks, telecom and tourist firms, many from neighboring South Africa, have come in.
(...) But neighbors in similar straits haven't put in place Mozambique's fixes. Inflation in Zimbabwe is 1,700%; nearby Malawi and Zambia, their economies distorted by subsidies on commodities, are growing haphazardly. "You need political will" to get it right, says Mr. Baxter. "Starting from a low base" or "being a former colony" -- oft-heard excuses for Africa -- has little impact on economic performance. What matters, as regional dynamo Botswana also shows, is governance.
(...) Erratic "Uncle Bob," as his deferential neighbors call Zimbabwe's 83-year-old Robert Mugabe, is a useful reminder that local politicians pose the gravest threat to Africa's future.
(...) In the meantime, having done the so-called first generation of market reforms, the government is dragging its feet on legalizing land ownership, fighting corruption and loosening a restrictive labor code to bring in more investment. "Now they're stuck," says Mr. Lima. "There is a strong socialist background here. If we want to perform, we need to be different."
(second, in response:)
(...) Africa observers often single out a storyline from one country - sometimes it's cheery, sometimes not - in order to apply lessons to the whole continent. But I'm having trouble seeing what Kaminski and others see.
(...) Kaminski's paean to private enterprise leaves me particularly cold. Because Mozambique's development is heavily concentrated in the southern capital, the vast majority of the country sees few of the benefits of growth. And much of the economic improvement over the last 15 years can simply be chalked up to the peace dividend. When hostilities ended - with one million dead - Mozambique had nowhere to go but up. The country currently ranks tenth from the bottom on the UN's Human Development Index (just ahead of Burundi, and well behind Rwanda). It used to rank as the very poorest country in the world. So, yes, I guess things could be worse.
(...) But, most importantly, all this talk about privatization and foreign investment is very much beside the point. As Kaminski concedes, one in six Mozambican adults is infected with HIV. "Appreciating the change for the better takes some imagination," he writes. But you cannot speak of "the change for the better" unless the discussion starts with HIV. It's the only yardstick that matters in Mozambique, and in the rest of southern Africa as well. Some 37,000 Mozambican children contracted HIV in 2006, a jump of 60% over six years before. Nearly four of every 10 adults in Beira, the country's second largest city, are HIV-positive. Those are apocalyptic figures, however creative your thinking.
(...) The luxury building is full of foreigners here on business; the more posh of the country's two shopping malls is on the ground floor. It looks as if the land where the Four Seasons stood will be developed in much the same way, except that Part of the site will be set aside for a new American embassy. I have yet to meet a Mozambican who cares that the hotel is gone or about what will take its place.

capital gone wild:
Previous Bolivian governments had signed a flurry of bilateral investment treaties that gave foreign investors the right to bypass domestic courts and file such lawsuits through international tribunals. Morales complained that these rules made him feel like a "prisoner" in the presidential palace.
(...) The Bolivian president's predicament is a common one for political leaders around the world. They are caught in an interlocking web of rules and institutions that promote and protect foreign investment -- with little regard for the costs to democracy, the environment, or the public welfare. These increasingly controversial investor protections have become the "get out of jail free" card for corporations in the global economy. They are promoted by the World Bank and other international financial institutions, codified by bilateral investment treaties and free trade agreements, and enforced through the World Bank's arbitration court and other international tribunals.
(...) Argentina has been socked by more than 30 such claims, many of them in retaliation for measures to alleviate the pain of the country's 2002 financial meltdown. A U.S.-based gas company, for example, sued over an emergency law that froze utility rates to protect consumers from runaway inflation. The company, CMS Gas, won $133 million in compensation, money that could have compensated Argentine consumers.
(...) Ecuador is facing a $1 billion suit by Occidental Petroleum, a company widely reviled in that country for alleged human rights and environmental abuses, including using child labor to clean toxic materials, failing to repair pipeline leakages, and operating in protected indigenous lands without authorization.
(...)
In another case with disturbing human rights implications, Italian investors are targeting post-apartheid affirmative action policies in South Africa. They are suing over a law designed to redress historic racism by requiring mining companies to have 26% black ownership and 40% black management by the year 2014. These policies, the investors claim, violate protections against expropriation and discrimination in the Italy-South Africa bilateral investment treaty.
(...) Currently, there are more than 100 cases pending before the World Bank's International Centre for Settlement of Investment Disputes (ICSID), which decides most investor-state disputes. More than 90% have been against developing countries. Meanwhile, these rules are not delivering increased foreign investment. Tufts University researchers recently found that signing bilateral investment treaties with the United States had no effect on Latin American and Caribbean investment flows. In fact, Brazil, which has refused to sign any such deal with the United States, is by far the region's biggest recipient of U.S. investment.
(...) Canada currently faces a case in retaliation for terminating a project to transport garbage from Toronto to an abandoned open pit mine 600 kilometers (370 miles) away. To protest the mega-dump, the nearby Algonquin indigenous community joined with farmers and other local citizens in a railroad blockade that was the largest act of civil disobedience in the history of Ontario province. When the government responding by dropping the plan, it offered some compensation to the mine owners. But one U.S. investor is still using NAFTA to sue for lost potential profits.
(...) Their demand to include sweeping investor protections in the Free Trade Area of the Americas was one factor in the collapse of those negotiations, after 11 years of talks involving 34 countries.
(...) However, over the past 14 years U.S. trade officials have managed to insert excessive investor protections in trade agreements with 14 countries and in pending deals with four additional nations (as of May 1, 2007). The only exception is a 2004 U.S.-Australian deal. That country's negotiators refused to accept investor-state dispute settlement. Worldwide, these rules have proliferated through more than 2,500 bilateral investment treaties.
(...) On April 29, 2007, the leaders of Bolivia, Venezuela, and Nicaragua announced plans to withdraw from the World Bank's arbitration court. Their joint declaration stated that "(We) emphatically reject the legal, media and diplomatic pressure of some multinationals that … resist the sovereign rulings of countries, making threats and initiating suits in international arbitration." This surprise announcement will not be enough, legally, to release the three Latin American countries from the interlocking web of rules and institutions designed to shield foreign investors. Bilateral investment treaties signed by Bolivia and Venezuela would still be in force, and getting out of them could take years. Nicaragua would still be bound by the investment rules of the Central American Free Trade Agreement. And ICSID is the dominant but not the only enforcement option. Foreign investors could instead demand that their cases be heard under similar United Nations arbitration rules.

from envio, september 1992:
Everyone recognizes that this poor showing is primarily due to the country's high degree of instability, but not all sectors agree on what causes that instability. The government and the right wing lay the blame on rebellious Sandinista workers and armed rural groups of impatient and battle-hungry former soldiers. But they do not admit that behind these rebellions lies the government's own economic plan, which is driving these sectors to desperation.
(...) [investment] Some say that foreign investment is good in and of itself: the capital it brings to the country can help in times of crisis of domestic capital; it offers new jobs; and it can bring new technology. But the history of Nicaragua's Atlantic Coast demonstrates the weakness of these criteria. For many years, the coast was at the mercy of foreign companies that exploited the region's natural resources, plowing nothing back into the local economy, then simply picked up and left when the resources were exhausted.
(...) Governments want to attract investment because it will supposedly bring foreign exchange into the country. But this is not guaranteed unless the government takes care to do so: in many cases, investors simply borrow money from the recipient country to build or buy their assets. In addition, there should be control over the repatriation of capital. Nicaragua's law—which curiously only applies to those who choose to accept the rights and obligations it stipulates—allows capital repatriation after three years.
(...) What would be a good investment? On the one hand, raw materials extracted from Nicaragua should not be exported as such; the industry that processes those materials and increases their value should also be located in Nicaragua. And industry, on the other hand, should acquire the majority of its inputs from raw materials produced or extracted in Nicaragua. Instead of operating in isolated enclaves, such integration of economic processes, from raw material extraction to industrial processing, would tie each individual production process into others, producing a multiplier effect in the economy. This means, for example, that cotton itself should not be exported, but that cloth, thread and even clothing should be produced here and exported; and an industry that produces clothing should not import cloth or cotton but purchase its inputs from local producers.
(...) [on a violent culture?] Instability is not caused by those who protest; protest is a predictable response to instability. If the government and big business insist on blaming the Sandinistas for the results of their own policies, they should be more accurate: the FSLN played an important role in heightening the people's capacity to protest in an effective organized fashion. Since Nicaraguan officials often cite Chile as this government's model for economic policy and growth, perhaps they see the "problem" in attracting investment here as simply the lack of an ironhanded Pinochet.
(...) [FTZ at this time] the cost of renting space in the zone is cheaper here than in Honduras; workers' wages are much lower here than in Costa Rica; and Nicaraguan workers have a reputation for being more productive than either Honduran or Costa Rican workers. Zamora also mentioned that problems with electric power in the Dominican Republic are even greater than in Nicaragua. ... The six existing companies together occupy 25,000 square meters, almost all the space currently available. Only 26% of the 57-hectare industrial park has been constructed. New construction and remodeling, which will be undertaken with a $7.6 million loan from the Inter-American Economic Integration Bank, will bring the total to about 35%. The National Penitentiary System, says Zamora, has agreed to abandon the 8,600 square meters within the zone that it is currently using as a prison by the middle of this year.
(...) This means that maquila industry, as a whole, has very contradictory consequences—it can offer jobs where there are none, yet, by nature, it works against any improvement in workers' wages. The Costa Rican example also demonstrates how easily it can pack up and move on if it gets better "advantages" elsewhere.
In addition, investors in maquila prefer authoritarian governments where there are no unions or they have no power. None of the three private companies in the Free Trade zone has a union. Though Latino said that he would accept any "reasonable" workers' organization in Crecen, he had previously referred to workers interested in forming a union as "rebels," who, according to him, "left on their own."
(...) [skills] Zamora also claims that maquila plants will bring free worker training in new technologies and the transfer of technology to Nicaragua. This, however, is a somewhat absurd assertion. Maquila plants by definition only do piecework—one small part of an assembly process—in the host country. If workers learn a new skill, it is one with very limited use, as is any new technology that an industry would import.
(...) [question of integration] Zamora also asserts that over time there will be "vertical integration" with the local economy, that is, that the maquila plants will begin to purchase some part of their inputs from the domestic market. But while this is true in a few cases, there is no vertical integration in the vast majority. Purchasing inputs from the local economy could interfere with mobility, and the very nature of maquila plants is that they are highly mobile enterprises. If conditions suddenly look better in another country, it is easy to move. The kinds of conditions that could encourage such a move include rising wages, active unions or effective worker health and safety laws—conditions to which we would hope Nicaragua aspires. Because of the "attraction" to investors of conditions that could include a dangerous work place or the abuse of workers' rights, many activists are fighting internationally for a "social charter" that would make it more difficult for transnationals to compete "on the backs of the workers."
(...) [the various development plans] Using Chile as its model, the Nicaraguan government's priorities, according to Ramírez, lay in agroindustry and the industrialization of natural resources, such as canning fish and processing lumber into plywood or furniture. Other investments, he says, such as in tourism, transportation and maquila, are complementary but not strategic. The government's priorities, therefore, appear to fall precisely in line with "good investment" as described above. But this is contradicted by a document called "Basic Information for the Investor," written by Ramírez' office. It specifically says that "the highest priority is placed on investments in nontraditional agricultural exports," which are not likely to further the country's industrialization and development. While the director of Nicaragua's Non-traditionals Commission, Alvaro Velásquez, told envío of his hopes for establishing plants for making and canning fruit juices, the most common nontraditional crops grown in Central America—such as melons, snow peas and broccoli—involve no industrial processing whatsoever. In addition, while crop diversification in itself is clearly not a bad thing, nontraditional agriculture generally brings with it excessive agrochemical use, with all the health and environmental consequences that generates, as well as significant economic risks, and should hardly be Nicaragua's top investment priority. The November 1991 preliminary version of another Ministry of Economy (MEDE) publication, "General Guidelines for a National Development Strategy 1991-2000," states that development would be based on both natural resource processing and "production processes not integrated at the local level, which form part of multinational production chains and make intensive use of national labor," in other words, maquila industries.