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Multinational enterprises, political institutions, and violence: a case study from Mozambique

Published online by Cambridge University Press:  30 July 2020

Carlos Mairoce ,
Magdalene Silberberger  and
Joachim Zweynert
Carlos Mairoce
Affiliation:
Department of Capacity Development, Monitoring and Evaluation, PLASOC, Chimoio, Mozambique
Magdalene Silberberger
Affiliation:
Department of Philosophy, Politics, and Economics, Institute for Social and Institutional Change (ISIC), Witten/Herdecke University, Witten, Germany
Joachim Zweynert*
Affiliation:
Department of Philosophy, Politics, and Economics, Institute for Social and Institutional Change (ISIC), Witten/Herdecke University, Witten, Germany
*
*Corresponding author. Email: [email protected]
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Abstract

Based on the concept of limited and open access orders (LAO/OAO), this paper explains what appears to be a paradox: how was it possible that a former civil war country, Mozambique, which had been extremely successful in attracting foreign direct investment (FDI) and which the International Monetary Fund praised as a great Sub-Sahara African success story in 2007, only a few years later found itself on the brink of a new civil war? We argue that the destabilization of the country was the result of a toxic mix of domestic politics and a massive inflow of FDI. FDI provided rents to an increasingly dominant state party, FRELIMO, which could be appropriated one-sidedly. It then used these rents to oppress RENAMO, its previous civil war enemy and currently its main opposition party, to monopolize power. This strategy seemed to be successful until RENAMO, faced with the risk of being politically marginalized (and of losing its rents accordingly), returned to armed conflict in 2013. By analyzing the links between the macro-level of national politics and the micro-level of an enterprise and by embedding the interplay between polity and economy into an international context, the paper also makes a theoretical contribution to the LAO/OAO concept.

Keywords

FDImultinational enterprisespolitical institutionscivil warlimited/open access ordersextractive institutions
Type
Research Article
Information
Journal of Institutional Economics , Volume 17 , Issue 1 , February 2021 , pp. 133 - 151
Copyright
Copyright © Millennium Economics Ltd 2020

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