Zambia’s 50-year Relationship with Foreign Capital

Stuart John Barton
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Stuart John Barton: University of Cambridge

Chapter 9 in Policy Signals and Market Responses, 2016, pp 177-192 from Palgrave Macmillan

Abstract: Abstract This book has presented a fresh interpretation of the past 50 years of Zambia’s economic history by showing how institutional exclusivity has hindered economic growth. Chapters Three and Four argued that President Kaunda’s increasingly exclusive control of Zambia’s policy machinery intensified both formal and informal expectations of him, resulting in a shortening of Zambia’s policy horizon and thus an increase in external (investor) perceptions of policy volatility. Chapter Five argued that this rise in perceived policy volatility restricted foreign investment so much so that by 1972, under-capitalisation had lowered productivity levels to below consumption, triggering in 1976 Zambia’s first balance-of-payments crisis. Chapter Six presented Kaunda’s calculated relationship with the IMF and argued that by selectively implementing monetary reform ahead of fiscal reform Kaunda was able to maintain political exclusivity by using the popular reaction of Zambians to help manage IMF demands, until the Movement for Multi-Party Democracy (MMD) emerged in 1989 to challenge Kaunda’s exclusive control. Chapter Seven argued that despite the MMD’s commitment to reform, institutional inertia tied up in informal practices and beliefs impeded real reform and continued to constrain the economy, even after formal reform had been completed.

Keywords: Foreign Capital; Market Response; Policy Signal; Complete Independence; Policy Uncertainty (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psitcp:978-1-137-39098-1_9

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DOI: 10.1057/9781137390981_9

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