A research report submitted to the Graduate School of Public and Development Management, University of the Witwatersrand, Johannesburg, in partial fulfillment of the requirements for the degree of Master of Management (in the field of Public and Development Management). / The purpose of this study was to assess the effect of international capital flows on economic growth and employment in Mozambique, a country that is heavily dependent on foreign assistance. The aggregate expenditure sector was employed to develop a model that is consistent with specific features of the Mozambican economy. Annual aggregate time series data from 1980 to 1996 period was primarily used to estimate of single equations which are components of the model, employing modem time series techniques. The sample size is rather small to generate anything other than tentative conclusions. Nevertheless, foreign capital flows appear to have had a far-reaching effect in fuelling economic growth in Mozambique for the period studied. The effects were largely dependent upon the magnitude of international capital flows. However, there was a significant lag between economic growth and employment generation. Due to high level of aggregation applied in the analysis, the impact of foreign resources at a sectoral impact was not captured. In particular a more desegregated analysis is required to discern the effect of intemational capital flaws on economic growth and employment. / Andrew Chakane 2018