Macroeconomic and Structural Adjustment Policies in Zimbabwe

322 Pages·2002·70.93 MB·English

by  Clever Mumbengegwi (eds.)

International Political Economy Series
General Editor: Timothy M. Shaw, Professor of Commonwealth Governance
and Development, and Director of the Institute of Commonwealth Studies,
School of Advanced Study, University of London
TitZes include:
Glenn Adler and Jonny Steinberg (editors)
FROM COMRADES TO CITIZENS
The South African Civics Movement and the Transition to Democracy
Glenn Adler and Eddie Webster (editors)
TRADE UNIONS AND DEMOCRATIZATION IN SOUTH AFRICA, 1985-1997
Einar Braathen, Morten B0as and Gutermund S<ether (editors)
ETHNICITY KILLS?
The Politics of War, Peace and Ethnicity in Sub-Saharan Africa
Deborah Bräutigam
CHINESE AID AND AFRICAN DEVELOPMENT
Exporting Green Revolution
Gavin Cawthra
SECURING SOUTH AFRICA'S DEMOCRACY
Defence, Development and Security in Transition
Jennifer Clapp
ADJUSTMENT AND AGRICULTURE IN AFRICA
Farmers, the State and the World Bank in Guinea
Neta C. Crawford and Audie Klotz (editors)
HOW SANCTIONS WORK
Lessons from South Africa
Susan Dicklitch
THE ELUSIVE PROMISE OF NGOs IN AFRICA
Lessons from Uganda
Kevin C. Dunn and Timothy M. Shaw (editors)
AFRICA'S CHALLENGE TO INTERNATIONAL RELATIONS THEORY
Kenneth Good
THE LIBERAL MODEL AND AFRICA
Elites Against Democracy
Kees Kingma
DEMOBILIZATION IN SUBSAHARAN AFRICA
The Development and Security Impacts
Vijay S. Makhan
ECONOMIC RECOVERY IN AFRICA
The Paradox of Financial Flows
Clever Mumbengegwi (editor)
MACROECONOMIC AND STRUCTURAL ADJUSTMENT POLICIES IN
ZIMBABWE
Nana Poku
REGIONALIZATION AND SECURITY IN SOUTHERN AFRICA
Howard Stein, Olu Ajakaiye and Peter Lewis (editors)
DEREGULATION AND THE BANKING CRISIS IN NIGERIA
A Comparative Study
Peter Vale, Larry A. Swatuk and Bertil Oden (editors)
THEORY, CHANGE AND SOUTHERN AFRICA'S FUTURE
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Editorial matter and selection © Clever Mumbengegwi 2002
Chapters 1-14 © Palgrave Publishers Ltd 2002
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Library of Congress Cataloging-in-Publication Data
Macroeconomic and structural adjustment policies in Zimbabwe /
edited by Clever Mumbengegwi.
p. cm. - (International political economy series)
Rev. papers selected from an international conference entitled:
"Zimbabwe: macroeconomic policy, management and performance
since independence: lessons for the 21st century."
Includes bibliographical references and index.
1. Structural adjustment (Economic policy)-Zimbabwe
-Congresses. 2. Zimbabwe-Economic policy-Congresses.
I. Mumbengegwi, Clever. 11. Series.
HC910 .M333 2001
338.96891-dc21
2001021732
10 9 8 7 6 5 4 3 2 1
11 10 09 08 07 06 05 04 03 02
To my late father Chivandire, my late mother Dzivaidzo, my mother
Haruperi and my beloved daughter Ndinatsei Rumbidzai Nathalie,
in memory of her late mother

Contents
List o(Tables ix
List o( Figures xi
List o(A bbreviations xiii
Notes on the Contributors xvi
Pre(ace xx
Part I Introduction and Overview
1 Macroeconomic and Adjustment Policies in Zimbabwe (1980-2000)
an Introduction and Overview
Clever Mumbengegwi and Ramos Mabugu 3
Part 11 Macroeconomic Policy and Performance
2 Macroeconomic Performance under the Economic Structural
Adjustment Program: an Essay on Iatrogenic Effects
Peter Robinson 23
3 Distributive Policies and Economic Growth
Mudziviri T. Nziramasanga and Minsoo Lee S3
4 Inflation During Structural Adjustment
Dick Durevall and Phineas Kadenge 71
S Labor Market Policies and Outcomes
lohn Knight 91
Part 111 Financial Liberalization, Monetary Policy and
Currency Crisis
6 Financial Liberalization and the Adoption of Indirect
Instruments of Monetary Policy
Obert Nyawata and Clever Mumbengegwi 113
7 From Liberalization to Financial Crisis
Chandima Mendis 14S
8 The Crisis in Asia: Are there Lessons for Zimbabwe?
lames Gordon 164
vii
viii Contents
Part IV Trade Liberalization: CGE Analyses
9 Macroeconomic Imbalances, Adjustment Reforms and
Sustainability: a CGE Model Simulation
Ramos Mabugu 181
10 Trade Liberalization and Investment Response in Zimbabwe
JrJrn RattsrJ, Ragnar Torvik and Halvor Mehlum 195
11 The Income Distribution Effects of Trade Liberalization:
a CGE Analysis
Margaret Chitiga-Mabugu 221
Part V Sectoral Perspectives
12 Macroeconomic Policies and Agricultural Performance
Clever Mumbengegwi 237
13 Macroeconomic Policies and the Manufacturing Sector
Hans Bjurek, Dick Durevall and Daniel B. Ndlela 265
14 Macroeconomic Policies and the Health Sector
Gladys Mutangadura 284
Index 301
List of Tables
1.1 Zimbabwe: GDP growth, inflation, employment,
investment and factor shares (%) 6
1.2 Planned growth targets vs actual growth rates 7
2.1 Macroeconomic performance indicators under various
national development strategies and political regimes 26
2.2 Key macro indicators for 1986-1990 and the ESAP
period (1991-1995) 27
2.3 Salient features of national budget 1985/86-1989/90
and the ESAP period (1990/91-1994/95) 31
2.4 Loans to the Zimbabwe Iron and Steel Company
(ZISCO) 1990/91-1996/97 36
3.1 Real government expenditures on selected items,
1978/79, 1990/91 (Z$ million, 1980 prices) 56
3.2 Production function estimates: dependent variable:
non-agricultural GDP 66
4.1 General monetarist model 1985:1-1991:1 80
4.2 Preferred parsimonious pre-ESAP model 1985:1-1991:1 81
4.3 Pre-ESAP model estimated over 1985:1-1995:12
with lending rate and real exchange rate added 83
4.4 ESAP model 1991:2-1995:12 85
6.1 Zimbabwe: early monetary reform policy measures 119
6.2 Zimbabwe: financial indicators 132
6.3 Zimbabwe: selected nominal and real interest rates,
1990-1997 (end of period, per cent per annum) 136
7.1 Variables used in currency crises literature 152
7.2 Sources of international contagion 158
7.3 Logit regression results 160
8.1 Changes in the exchange rate and the stock market
index up to August 1998 167
9.1 Effect of a 5 per cent increase in minimum wage and
government expenditures in a model with foreign
exchange rationing (percentage changes from base values) 185
9.2 Stepwise impact of reform policies in a liberalized regime
model (percentage changes from base values) 187
9.3 Actual vs model predicted performance
(average percentage change) 191
10.1 Economic development indicators 1990-1997 201
10.2 Model simulation results 206
ix