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Mozambique, Economy

Under Portuguese rule Mozambique was a major exporter of sugar, copra (the meaty lining of coconuts), cotton, rice, tea, and cashews. Mozambique also exported labor in enormous quantities, as the colonial government received compensation for the hundreds of thousands of Mozambicans who traveled to work in the mines of South Africa and Southern Rhodesia (now Zimbabwe). Railroads, ports, and tourism also provided significant income and made services an important part of the country’s economy before independence.

In 1975 the first government of independent Mozambique established a Marxist state, in which most economic production was controlled by the government. Plantations and businesses that had been owned by Portuguese firms were collectivized, and the government made large investments to boost productivity. Western investors, especially the Portuguese, were antagonized by these and other changes, and vital foreign investment in the young republic dried up. Output soon stagnated and with the onset of the civil war in 1980 the economy quickly collapsed. For a decade, all economic life effectively came to a standstill. Railroads and industrial installations were destroyed, export trade stopped, and more than one million people died. Infusions of foreign aid staved off complete economic decimation.

In the late 1980s the government loosened its controls on what was left of the economy—it dismantled collective farms, encouraged foreign investment, and cut government subsidies. After a peace accord ended the civil war in 1992, the United Nations (UN) coordinated a large program to restore the economy; the program’s priorities were the resettling of refugees and reopening of ports and communication facilities. Reconstruction efforts, fueled by foreign aid, continued throughout the 1990s. In 2000 Mozambique’s gross domestic product (GDP) was $3.75 billion. Mozambique’s per capita income was estimated to be about $210 per year, making Mozambique one of the world’s poorest countries. Agriculture accounted for 24 percent of the economy. Industry, including mining, manufacturing, and construction, generated 25 percent of the GDP. The broad services category, which includes trade, produced 50 percent of the GDP in 2000.

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