Trade in Zimbabwe : Changing Incentives to Enhance Competitiveness

In Zimbabwe trade has been a driver of economic growth, rising incomes, and progressive empowerment of Zimbabweans through rising standards of living and the promise of better jobs. Since 1980, through good years and bad years, increases in exports have been positively associated with increases in national income. Zimbabwe's location and resource base, together with a low-cost but relatively well educated labor force, have endowed it with a naturally high trade ratio built on a diversified base that facilitates using trade as an engine of growth. While trade volumes have rebounded smartly from the deep recession of 2007-2008, these do not offset other worrisome longer-term trends: 1) export growth during the last decade has been lackluster and failed to drive high growth; 2) agricultural exports, other than tobacco, have lost their once dominant role in the region, and are no longer a source of diversification; 3) manufacturing has withered in a continuing secular decline; and 4) Zimbabwe's export basket has become less diversified and more dependent on a narrow range of mineral and, to a lesser extent, agricultural products. In short, exports have become less diversified, less-technologically sophisticated, and less labor-intensive, and ever more dependent on a few large mining activities to provide foreign exchange and employment. This report traces the roots of this poor performance to several policy issues: poor predictability of macroeconomic policy and economic governance has created an unfavorable climate for private investment and trade; a tariff structure that dampens export profitability; industrial policies (indigenization policy in particular) that undermine investor confidence and inhibits private investment; and finally, competition-limiting policies toward services that limit connectivity of Zimbabweans and raise trade costs. The good news arising from the study is that the remedies for these policy shortcomings lie in Zimbabwean hands. If the government were to adopt reforms that reconfigure economy-wide incentives and trade and industrial policies, it could promote sustained growth, economic diversification and empowerment of poor people.

Bibliographic Details

Main Authors:	Newfarmer, Richard, Pierola, Martha Denisse
Format:	Book biblioteca
Language:	en_US
Published:	Washington, DC: World Bank 2015-05-22
Subjects:	rail infrastructure, public savings, transport sector, profit margins, excise taxes, transport agreements, railway investment, air tickets, price distortions, air services, international air services, airport, passengers, crossings, air transport association, greenhouse gas emissions, transport management, transport infrastructure, transport corridors, international airport, vehicles, transportation costs, rail lines, property rights, fares, trend, emissions, infrastructure development, rail systems, rail service, environmental benefits, private transport, border crossings, toll, carriers, traffic, road infrastructure, multimodal transport, tax, routes, drivers’ licenses, airports, income tax, road maintenance, wealth, air, greenhouse gas, transport services, international transit, drivers, speeds, price incentives, road system, international air transport, vehicle, road, regional transport, rail transport, costs, airport operations, air travel, freight traffic, training, transport systems, road network, transport, rail links, rebates, excise duty, railway network, rail track, international transport, transport of goods, domestic transport, true, efficient transport, domestic airports, registration fees, rail traffic, transport equipment, air traffic, gas emissions, route, fuel consumption, locomotive, transport policy, transport industry, fuels, subsidies, railway service, air transport system, infrastructure, taxes, buses, traffic control, initiatives, transport facilitation, rail cars, driving, congestion, rail freight, rail services, travel, transportation, inspection, transit, air safety, policies, transparency, costs of transportation, border crossing, trucks, police, road toll, cars, trading patterns, land transport, rail system, infrastructure rehabilitation, trains, commercial trucks, motor vehicle, air traffic control, truck capacity, driving costs, road transport services, motor vehicles, passenger traffic, signals, rail sector, railway, traffic flows, aircraft, transportation equipment, bridge, ministry of transport, traffic volumes, roads, car, crossing, average speeds, railways, railroad, air transport, environmental footprint, road damage, economies of scale, border management, aviation industry, accidents, air transport sector, diesel fuel, high transport, rail, fuel, trip, air passengers, transport system, investments, costs of transport, airways, transport agreement, border infrastructure, urban roads, transport costs, capital investment, air service, high transportation, road transport, diesel, safety, transport policies, derailments, international air transport association, tires, freight, road traffic, bottlenecks,
Online Access:	http://hdl.handle.net/10986/21985
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