This paper assesses the extent to which Cape Verde and Mozambique reveal a
positive interaction between globalization and governance in the orientation and
predictability of economic policies, as well as the accompanying institutional arrangements.
Economic success under globalization involves market perceptions regarding outcomes such
as export diversification and narrowing of the income gap with the frontier. Economic success
is in turn sustained by good governance and political and economic freedom. The context is
provided by cooperation agreements to which Cape Verde and Mozambique belong, notably in
their respective sub region of Africa, where a convergence-diversification regime and a
divergence-specialization regime can be defined. Comparing regimes across sub regions, we
find that West Africa countries are becoming more diversified whilst in Southern Africa they
are becoming more specialized. Opening up to trade is also an important driver of both
convergence and diversification for the former, especially in the range of 45-75% of GDP, but
not for the latter. Finally, in the Southern Africa convergence-diversification regime,
economic and political freedom drive convergence, suggesting effective institutional
arrangements.