Causes and consequences of corruption: Mozambique in transition

This article attempts to measure the level of corruption in Mozambique at a particularly important point during its economic transition programme (1995-96), to examine what might account for the presence of corruption, and to assess the effect of corruption on the economy. While data on corruption in Mozambique (as anywhere) are scarce, there is partial evidence to point to a dramatic increase in the level of corruption in recent years. This seems attributable to a change in the basic conditions for deterrence of corruption highlighted by principal-agent theory: bureaucrats retain extensive control rights over economic activity, structures for monitoring bureaucrats have been weakened during the recent political transition, and trends in wages have created incentive problems. The effects of corruption on the Mozambican economy involve both a distorting effect on government trade and tax policies and a disincentive effect with regard to investment, particularly for smaller firms. It underlines the implications of poor economic reform on state performance and income if, as is discussed elsewhere in this volume, the state is to be in a position to respond to the expectations of democratisation.