Zimbabwe's Experience With Trade Liberalization

Albert Makochekanwa, Hurungo T. James and Kambarami Prosper

Working Papers from African Economic Research Consortium

Abstract: The paper investigated Zimbabwe's experience with trade liberalization for the period 1980 to 2004. The study used three approaches, namely changes in policy, changes in quantities and changes in price to analyse the country's trade policy during this period. These approaches indicated that the country's trade liberalization was not consistent with policies that the government implemented between 1980 and 2004. The study also found out that the country's liberalization process was credible and sustainable during the Economic Structural Adjustment Programme (ESAP) period (1991 through to 1995), after which credibility was lost when the liberalization process became unsustainable. Reduced credibility was a direct result of policy reversals that were instituted after 1995 while a combination of accumulated balance of payments (BOP) deficits and budget deficits resulted in payments incompatibility, making trade liberalization unsustainable. The study also found that the political economy of the whole trade liberalization process was largely dominated by government (and to some extent individual politicians) with minimal input from the private sector (that is, producers and consumers). The analysis therefore pointed to one main policy recommendation, that is, for the country to reap the benefits of trade liberalization, it has to be consistent in its trade policy. Whilst in the short term, negative effects (in the form of reduced government revenue, for example) maybe experienced, it is in the long run that benefits start to accrue. Policy makers also need to be reminded that trade liberalization should be a process not an event and therefore a long time horizon is required when formulating and implementing trade liberalization policies.

Date: 2012-11
Note: African Economic Research Consortium
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Citations: View citations in EconPapers (1)

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