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Textbook The Politics of Economic Reform in Zimbabwe Continuity and Change in Development 1St Edition Tor Skalnes Ebook All Chapter PDF
Textbook The Politics of Economic Reform in Zimbabwe Continuity and Change in Development 1St Edition Tor Skalnes Ebook All Chapter PDF
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INTERNATIONAL POLITICAL ECONOMY SERIES
Mahvash Alerassool
FREEZING ASSETS: THE USA AND THE MOST EFFECTIVE
ECONOMIC SANCTION
Robert Boardman
POST-SOCIALIST WORLD ORDERS: RUSSIA, CHINA AND THE
UN SYSTEM
Richard P. C. Brown
PUBLIC DEBT AND PRIVATE WEALTH
John Calabrese
REVOLUTIONARY HORIZONS: REGIONAL FOREIGN POLICY
IN POST-KHOMEINI IRAN
0. P. Dwivedi
DEVELOPMENT ADMINISTRATION: FROM UNDERDEVELOPMENT
TO SUSTAINABLE DEVELOPMENT
Betty J. Harris
THE POLITICAL ECONOMY OF THE SOUTHERN AFRICAN PERIPHERY
Jacques Hersh
THE USA AND THE RISE OF EAST ASIA SINCE 1945
Bahgat Korany, Paul Noble and Rex Brynen (editors)
THE MANY FACES OF NATIONAL SECURITY IN THE ARAB WORLD
Howard P. Lehman
INDEBTED DEVELOPMENT
Matthew Martin
THE CRUMBLING FA<";ADE OF AFRICAN DEBT NEGOTIATIONS
Tony Porter
STATES, MARKETS AND REGIMES IN GLOBAL FINANCE
Alfredo C. Robles, Jr
FRENCH THEORIES OF REGULATION AND CONCEPTIONS OF
THE INTERNATIONAL DIVISION OF LABOUR
Frederick Stapenhurst
POLITICAL RISK ANALYSIS AROUND THE NORTH ATLANTIC
Deborah Stienstra
WOMEN'S MOVEMENTS AND INTERNATIONAL ORGANIZATIONS
Peter Utting
ECONOMIC REFORM AND THIRD-WORLD SOCIALISM
Sandra Whitworth
FEMINISM AND INTERNATIONAL RELATIONS
The Politics of
Economic Reform
in Zimbabwe
Continuity and Change in Development
Tor Skalnes
Research Fellow
Chr Michelsen Institute, Norway
First published in Great Britain 1995 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS
and London
Companies and representatives
throughout the world
A catalogue record for this book is available
from the British Library.
ISBN 978-1-349-13768-8 ISBN 978-1-349-13766-4 (eBook)
DOI 10.1007/978-1-349-13766-4
ISBN 978-0-312-12574-5
Library of Congress Cataloging-in-Publication Data
Skalnes, Tor.
The politics of economic refonn in Zimbabwe : continuity and
change in development I Tor Skalnes.
p. em.- (International political economy series)
Includes bibliographical references and index.
ISBN 978-0-312-12574-5
I. Zimbabwe-Economic policy. 2. Zimbabwe-Politics and
government. I. Title. II. Series.
HC910.S58 1995
338.96891--dc20 94-43719
CIP
10 Conclusion 197
Index 211
v
List of Tables and Figures
Tables
Figures
VI
Acknowledgements
In the course of writing this book, I have received help from many
quarters. The Chr. Michelsen Institute, Bergen, Norway and the Depart-
ment of Political Science at the University of California, Los Angeles,
USA provided very stimulating intellectual environments. The Southern
African Political and Economic Series (SAPES) Trust, Harare, Zim-
babwe, extended practical help during fieldwork in 1991. Thank you.
I would also like to thank the institutions which funded this project.
The Norwegian Research Council for Social Science and the Humani-
ties gave a generous four-year scholarship during 1988-91 as well as
travel grants to the United States and Zimbabwe. Den norske Banks
Jubileumsfond for Chr. Michelsens Institutt funded the writing of a first
draft during 1992. Financial help was also received from the University
of California, Los Angeles.
While the usual disclaimers apply, I wish to express my deep
gratitude to Richard Sklar at UCLA, for offering his unfailing guidance
and friendship. The following individuals also made helpful comments
on the entire manuscript: Edward Alpers, Helge Hveem, Tore Linne
Eriksen, Michael Lofchie, Richard Sandbrook and Timothy Shaw. In
addition, a number of people gave careful and stimulating criticisms of
chapic• Jrafts which I presented at UCLA (December 1990), Uppsala
(May 1992), Bergen (May 1992, October 1993 and February 1994),
Lund (August 1993) and Kampala (April 1994). I want to mention, in
particular, Bjorn Beckman, Nina Byers, Peter Gibbon, Vegar Iversen,
Alhadi Khalaf, Atul Kohli, Guillermo O'Donnell, Lise Rakner, Phil
Raikes, RonalJ Rogowski, Arne Tostensen, and John Toye. Sincere
appreciation is also due to all those Zimbabweans who gave generously
of their time and contributed their valuable insights during confidential
interviews. Inger A. Nygaard did an excellent job turning the manu-
script into a camera-ready copy.
My warmest thanks are nevertheless due to my wife, Gro Beate, and
my three children, Helene, Hakon and Sunniva, for all their love and
support.
vii
List of Abbreviations
ACCOR Associated Chambers of Commerce of Rhodesia
ACCOZ Associated Chambers of Commerce of Zimbabwe
ALB African Labour Bureau
AMA Agricultural Marketing Authority
ARNI Association of Rhodesia and Nyasaland Industries
ARnl Association of Rhodesian Industries
BSAC British South Africa Company
CA Communal Area
CAZ Conservative Alliance of Zimbabwe
CFU Commercial Farmers' Union
CIO Central Intelligence Organisation
CMB Cotton Marketing Board
COMES A Common Market for Eastern and Southern Africa
esc Cold Storage Commission
CZI Confederation of Zimbabwe Industries
DMB Dairy Marketing Board
DRC Domestic Resource Cost
EMCOZ Employers' Confederation of Zimbabwe
EPP Extended Export Promotion Programme
ESAP Economic Structural Adjustment Programme
FPZ Forum Party of Zimbabwe
FRI Federation of Rhodesian Industries
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
GMB Grain Marketing Board
IBDC Indigenous Business Development Centre
ICA Industrial Conciliation Act
ICFA Indigenous Commercial Farmers' Association
IMF International Monetary Fund
IRA Industrial Relations Act
ISA Import Substitution Assurance
lSI Import-Substituting Industrialisation
KADU Kenya African Democratic Union
KANU Kenya African National Union
LRA Labour Relations Act
LSC Large-Scale Commercial
MMCZ Minerals Marketing Corporation of Zimbabwe
viii
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Map of Zimbabwe
ix
1 Introduction
In mid-1990, Zimbabwe joined the swelling ranks of countries
undertaking to liberalise their trading policies and adopt a programme
of macroeconomic adjustment supported by the World Bank and,
eventually, the International Monetary Fund (IMF). President Robert
Mugabe and the dominant political party, known as the Zimbabwe
African National Union (Patriotic Front)- ZANU (PF) - thus formally
abandoned several economic policies identified with their past
professions of socialism, including extensive price, wage and investment
controls, social service additions, and government intervention
generally. Later that year, ZANU (PF) dropped its proposal for legal
status as the country's sole party. These events occurred only months
after the party had won - on a platform calling for Marxist-Leninist
socialism and a one-party state - an overwhelming majority of seats in
the third parliamentary elections to have been held after the negotiated
dismantling in 1980 of the racially-based Rhodesian regime and the
consequent gaining of formal independence from Great Britain.
Zimbabwe has thus joined the global trend towards more liberal
politics and economics. In Africa, as elsewhere, economic and political
liberalisation is partly a response to the failure of authoritarian regimes
of various ideological hues to promote development and establish
popular legitimacy. Economic crisis has played a large part in
encouraging a fundamental reconsideration of ideological tenets of the
past. In the early 1980s, falling world commodity prices, greatly
increased real interest rates, and the continuing difficulty of access to
new lending all combined to bring the economic problems to a crisis
point. Still, most African countries were slow to respond. But Africa's
economic downturn continued to manifest itself in insufficient per
capita agricultural production, stagnating industrial output, loss of
export market shares, severe balance-of-payments problems, debilitating
debt, occasional hunger and starvation. By the late 1980s and early
1990s, change appeared to be engulfing the continent. Although the
crisis was never as deep in Zimbabwe as in much of the rest of Africa,
that country nevertheless faces the twin challenges of economic and
political restructuring in the 1990s.
The often timid reactions of African leaders to new economic
challenges have prompted many analysts to emphasise external factors
in their explanations of African social change. Consequently, decisions
1
2 Politics of Reform in Zimbabwe
rivalry between Europe, North America and East Asia that has
weakened global arrangements and stimulated regional trade pacts in
many comers of the world. Notwithstanding SAOC and COMESA,
however, this tendency is as yet weak in Southern Africa compared,
say, to Latin America.
Uncertainties about the practical economic consequences for the
region of regime change in South Africa are compounded by the diffi-
culties in ascertaining the drawbacks and benefits of global trade
liberalisation under the auspices of the General Agreement on Tariffs
and Trade which is being transformed into the World Trade Organisa-
tion. The liberalisation of trade in agricultural products agreed upon
during the Uruguay Round may be beneficial in some ways to countries
such as Zimbabwe. Nevertheless, fears have also been voiced that
gradually doing away with special tariff rates under the General System
of Preferences and the Lome conventions will work in the other
direction. 3 Whatever that case may be, I submit that the global and
regional changes outlined above do not strongly predict recent
Zimbabwean policy reforms.
In many countries around the world, fundamental policy changes
have been made only in the context of immediate problems with the
balance of payments and government finances. In 1990, however,
Zimbabwe did not face a crisis so deep as to clearly compel change.
According to the government's Frameworkfor Economic Reform ( 1991-
1995), the country's trade balance was in surplus over the years 1985-
90 while the current account deficit was a relatively mild US$89
million in 1989 against a surplus of US$78 million the year before.
Between 1985 and 1990, merchandise exports increased from US$1124
million to US$1688 million, while imports rose from US$922 million
to US$1333 million. External debt service peaked at 34 per cent of
export earnings in 1987 and decreased to about 24 per cent as the
Framework was written. The fiscal deficit was high at 10.6 per cent of
GOP in 1990/1, but could be financed out of a 'healthy savings rate of
about 20% per annum'. 4 Real GOP growth was highly erratic during
the 1980s but picked up in 1989-90. Zimbabwe's problems were of a
more long-term character: prospects for future growth were hampered
by the obsolescence of productive equipment and infrastructure, caused
by long-lasting insufficiency of private and public investment.
Consequently, there had been little employment creation and stagnant
or falling real wages. It is my contention, therefore, that it is this
domestic context and the internal political reactions to it which are most
important to explaining the adoption of structural adjustment in
Introduction 5
Notes
12
Political Institutions and Economic Policy 13
trade liberalisation, argue against the idea that this would entail the
establishment of a 'minimal state' .9
The key question for development may not be the optimal extent of
government intervention in the economy, but rather the proper form of
such intervention. 10 Within the context of stabilisation and structural
adjustment, trade and exchange rate policies have been dominant
concerns, as have supporting macroeconomic policies of curbing
inflation through the reduction of excessive government budget deficits.
Setting realistic exchange rates and achieving more uniform levels of
protection imply to a large extent a change rather than a reduction in
the role of government. Limiting government budget deficits through
increased cost-recovery or through cuts in excessive levels of public
employment similarly do not necessarily imply 'rolling back' the state.
Limitation of the government's role is, on the other hand, the issue
where privatisation or liquidation of public enterprises is contemplated
and where producer and consumer subsidies are reduced. Some forms
of such reduced intervention may be propitious for effective market
development, while others may not be. For instance, it may, on the one
hand, be necessary to encourage private trading where agricultural state
marketing boards have become inefficient and exploitative. But on the
other hand, agricultural producer price increases may easily be
cancelled out by input subsidy reductions.
That the form rather than the extent of state intervention may be the
crucial issue is further illustrated by the experience of the East Asian
'newly industrialising countries' (NICs). Not only is it the case that the
governments of South Korea, Taiwan and Singapore have actively
intervened through credit controls, the setting up of public manufac-
turing enterprises and the like, but quantitative restrictions and other
import control measures have been used so as to shield some products
from competition on the domestic market. Price controls and restrictions
on foreign direct investment have also been extensively applied. But the
way policies were used to encourage exports remains a crucial
difference between East Asian NICs and Latin American and African
countries. Outward orientation led to a strong exposure to competition
even in cases where the domestic market was oligopolised. 11 East
Asian governments not only set export targets for firms and channelled
investment towards them, but made it possible for these firms to
compete on world markets through active exchange rate management.
Overall, the trade regimes in East Asia were more liberal than in Latin
America and Africa. According to Sebastian Edwards, 'the successful
outward-oriented countries have generally had lower coverage of prior
16 Politics of Reform in Zimbabwe