Critically Assess Zimbabwe’s Present (Post Z$) Economic Recovery Programmes. in Your Opinion, What Are the Chances of Their Success?

Topics: Economics, Economic growth, Macroeconomics Pages: 12 (4098 words) Published: January 31, 2013
The beginning of 2009 marked the end of over a decade of economic decline in Zimbabwe. The economic indicators decline cut across all key sectors, despite Zimbabwe’s rich resource endowment. Inflation, initially at 100 percent annually between 2001 and 2006, increased to over 1500 percent (McIndoe, 2009). According to IMF estimates, real GDP growth recorded a cumulative contraction of 48% (nearly 5% per year) between 2000 and 2009. Agriculture value added contracted by 86% during the period 2002-2008. Gross national income per capita in 2008 was estimated to be US$360 (compared to sub-Saharan Africa average of US$1,428), making it one of the poorest countries in the world (African Development Bank, 2010). The poverty rate which was already on an increase since 1995 (42 percent) was recorded at 63 percent in 2003 and was estimated to be over 70 percent in 2010 (African Development Bank Group, 2011). According to the economic policy reform proposals announced by the coalition government formed in February 2009, other symptoms of the economic crises as negative GDP growth rates, low productivity capacity, loss of jobs in the formal sector, food shortages, massive deindustrialization and general despondency (STERP, 2009). This paper uses ‘developmental state theory’ as a basis of assessing economic reform policies proposed and currently being implemented by the Zimbabwe’s coalition government after the demise of the Zimbabwe dollar (Z$) in 2009. The paper considers STERP in March 2009, Medium Term Plan (MTP) in July 2010, and the Three Year Macro-economic Policy and Budget Framework 2010-2012 (STERP II) in the context of this economic theory with a view to assessing the extent to which they bring Zimbabwe closer to the key elements of a develop-mental state. This is taken from the premise on which these policies are anchored. For example, the sixth point in STERP says: “STERP is an emergency short term stabilization program, whose key goals are to stabilize the macro and micro-economy, recover the levels of savings, investment and growth, and lay the basis of a more transformative mid-term to long-term economic program that will turn Zimbabwe into a progressive developmental State,” STERP, 2009: point no. 6)

The paper begins with a summary of the key elements of the economic reform proposals. It then looks at the key elements of a developmental state after which it assesses the extent to which Zimbabwe’s key reform proposals would enable it to meet the minimal requirements of a develop-mental state. The paper concludes by offering an assessment of the chances of success for the economic reform measures.

Key elements of Zimbabwe’s economic reform measures
All reform programs are anchored on economic stabilization, increasing productivity and turning Zimbabwe into a developmental state. In the key policy pronouncements announced in STERP (February 2009) and the Medium Term Plan, Government of Zimbabwe (GoZ) had two principal objectives. First, it set out to use domestic savings and foreign finance to carry out public investment projects and to mobilize and channel scarce resources into areas that can be expected to make the greatest contribution towards the realization of long term economic objectives. These include measures “to stabilize the macro and micro-economy, recover the levels of savings, investment and growth, and lay the basis for transformation from mid-term to long-term economic programs that will result in economic growth and reduction of poverty levels. In so doing, the reform programs, as espoused in article 3 of the September 2008 Global Political Agreement (GPA) seek to address the key issues of economic stabilization and national healing, whilst at the same time laying the foundation of a more comprehensive and developmental economic framework. The second is to ensure that economic policy (e.g. taxation, industrial licensing, the setting of tariffs and the manipulation of wages, interest...

References: African Development Bank Group, 2011, Infrastructure and Growth in Zimbabwe- An Action Plan for Sustained Strong Economic Growth, Tunis, Tunisia

African Development Bank Group, 2010, Zimbabwe Country Brief, Regional Department, South Region A, January 2010.

Castells, M., 1992 ‘Four Asian Tigers with a Dragon Head: A Comparative Analysis of State, Economy and Society in the Asian Pacific Rim.’ in Applebaum R, Henderson J (eds)

Chang, H-J (1999) ‘The Economic Theory of the Developmental State’ in M

Downs, A., 1957, An economic theory of political action in a democracy

Edigheji, O., 2005, A Democratic Developmental State in Africa? Centre for Policy Studies, Research Report No

Medium Term Plan, 2010, Medium Term Plan January 2010- December 2015, July 6, Harare: Government Printers

IH Securities, 2011, Zimbabwe Equity Strategy: Bullish macro story amidst potential turbulent waters, Equity Research, March 2, 2011.

Johnson, C., 1982, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975

Leftwich, A., 1995, ‘Bringing Politics Back In: Towards a Model of the Developmental State’, Journal of Development Studies, vol

McIndoe, T., 2009, Hyperinflation in Zimbabwe: money demand, seignorage and Aid shocks

Mkandawire, T., 2001, ‘Thinking About the Developmental States in Africa.’ Cambridge Journal of Economics, Pp 289- 314

Zulu, J.J., 2003, Leaning Against Economic Winds: Zambia’s Problems with HIPC, Lusaka: Jubilee- Zambia Debt Project
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Critically assess Zimbabwe's present economic recovery and reform programmes. In your opinion, what are their chances of success? Essay
  • what economics is and how you may use economics in your future career and/or your daily life Essay
  • What Is Your Opinion About Marriage Essay
  • Essay about Japanese Economic Success Post Wwii
  • What Is Your Opinion On Modern Music Essay
  • Essay on What is Economics
  • Economic Recovery Essay
  • Essay on Economic Recovery Post-Depression: The New Deal

Become a StudyMode Member

Sign Up - It's Free