Economic Management in a Hyperinflationary Environment: The Political Economy of Zimbabwe, 1980-2008

Economic Management in a Hyperinflationary Environment: The Political Economy of Zimbabwe, 1980-2008

Economic Management in a Hyperinflationary Environment: The Political Economy of Zimbabwe, 1980-2008

Economic Management in a Hyperinflationary Environment: The Political Economy of Zimbabwe, 1980-2008

Synopsis

This volume provides an accessible and up-to-date account of the difficulties that the Zimbabwean economy and its population experienced during the crisis which peaked in 2008. It details the suffering and chaos that befell the country with dramatic socio-economic consequences on growth, macroeconomic stability, service delivery, livelihoods, and development. The volume seeks to provide a political economy analysis of leadership and economic management in developing economies based on Zimbabwe's experience. It examines the triggers of the crisis, and the negative impact on productive sectors such as manufacturing and agriculture, social sectors such as education and health, and on financial services. The volume will be of interest to students of policy and economic management, as well as to government departments, central banks in developing countries, development agencies, donors, and NGOs.

Excerpt

Zimbabwe enjoyed a vibrant economy with well-functioning economic sectors in the early years after gaining independence from Britain in 1980. It had positive economic growth inspired by a robust agriculture sector, well-oiled industries, and efficient and effective economic management inspired by desirable macroeconomic policies. The financial and capital markets also served the vibrant economy well. However, the economic gains of the 1980s and 1990s began to decline at the turn of the century due to a combination of factors. Following the economic downturn from around 1997, Zimbabwe was faced with several economic challenges. Economic growth became stunted, inflation reached record highs, and the financial system nearly collapsed. A number of policy measures and instruments were enforced to correct the economic malaise, but some of these measures seem to have aggravated the situation. Examples of policies that seemed ill-informed include the quasi-fiscal activities (such as subsidized farm equipment, direct subsidies to farmers, and provision of basic commodities to households under the basic commodities supply side intervention facility (BACOSSI)), the restriction of foreign exchange transactions, and the unreasonable limits on commercial banking transactions which led to long queues in the banking halls every single day.

To understand the evolution of development policy in Zimbabwe, there is need to appreciate the political economy actions, processes, and circumstances that may have led to the quagmire that Zimbabwe found itself in over the years since independence. This is the approach adopted by the authors in this volume. Political economy here encapsulates the interplay between economics, law, and politics, and how institutions develop or evolve in different directions and with different and sometimes unpredictable developmental outcomes. These dynamics have implications for the distribution of national income and wealth as well as the ways services are provided/accessed and the ‘commons’ such as forests, pastures, water resources and other environmental assets are cared for. For example, the post-independence government in Zimbabwe invested enormous resources in social development—especially in health and education—yet this is an aspect of . . .

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