Chapter

Blocking human potential: how formal policies block the informal economy in the maputo corridor <sup>*</sup>

Fredrik Söderbaum

in Linking the Formal and Informal Economy

Published in print September 2006 | ISBN: 9780199204762
Published online September 2006 | e-ISBN: 9780191603860 | DOI: http://dx.doi.org/10.1093/0199204764.003.0009

Series: WIDER Studies in Development Economics

 Blocking human potential: how formal policies block the informal economy in the maputo corridor *

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This paper deals with one of the most interesting cross-border micro-regions in Africa: the Maputo corridor. In the mid-1990s, the governments of South Africa and Mozambique agreed to reconstruct the Maputo corridor through the implementation of the Maputo Development Corridor (MDC) and its gigantic portfolio of large-scale private investment projects. The analysis shows that the MDC is designed for the purpose of crowding-in external capital in order to build industrial and infrastructural mega-projects such as the USD 2 billion Mozal aluminium smelter, whereas the endogenous capacities and entrepreneurship of the people living in the corridor are largely neglected or even seen as problematic. Hence, the fundamental problem with the MDC lies in its bias towards a capital-intensive industrialization strategy, which fails to utilize and unlock the human potential of Mozambique’s population and its informal economy.

Keywords: informal economy; informal trade; Maputo Development Corridor; MDC; Spatial Development Initiative; SDI

Chapter.  6274 words. 

Subjects: Economic Development and Growth

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