Sources of Growth: ZIMBABWE

The four elements of economic growth

The sources of growth in a developing economy are no different from those in the advanced industrialized countries. There are four basic requirements: Natural resources, Human resources, Physical capital and technological factors, and Institutional factors.

Economic growth is cause by improvement in the quantity and quality of the factors of production (land, labor, capital, and enterprise) the country has available and use them in the most efficient way.    

Natural resources - land, minerals, fuels, climate. Increasing the quantity of land available for agriculture will increase economic growth however it is hard since there are limited resources. Agriculture is essential in most developing economies because it is their main source of income as farmers.

Zimbabwe’s natural resources:

Mineral exports (coal, gold, platinum, copper, nickel, tin, and clay) and agriculture (corn, cotton, tobacco, wheat, coffee, sugarcane, peanuts; sheep, goats, pigs) are Zimbabwe’s main foreign currency earners. It holds the world’s largest platinum reserves and it is the biggest trading partner of South Africa on the continent. Zimbabwe maintained positive economic growth throughout the 1980s (5.0% GDP growth per year) and 1990s (4.3% GDP growth per year) a positive economic growth but the economy showed a rapid decline from 2000 and has not improved since as they are suffering a hyper inflation. Moreover the CIA states that the countries exports dropped from $1.396 billion in 2008 to 1.09 billion in 2009, this indicates that Zimbabwe’s economy has a decrease in revenue as there are less foreign consumers to hold the market.

Human resources - the supply of labor and the quality of labor. Increasing the supply of labor can increase the number of workers entering the labor force. Moreover, this can increase the economic growth in relation to an increase in the production and consumption. The vital aspect in increasing the quality of labor is education. More skilled laborer’s can produce better quality products that can help improve people’s lives.

Zimbabwe’s human resources:

The labor market is regulated and it suffering though high level or corruption. The adult literacy rate was approximately 90% which is amongst the highest in Africa. However, due to the economic changes in 2000, education in Zimbabwe became under threat and teachers will go on strikes because of low pay and students were unable to concentrate during class because of hunger. Moreover because the government is so corrupted even the CIA only holds data from 2000 and 2003, this shows a lack of aid and is hard for economist to find a clear direction for the economy other than President Mugabe’s self government policies.  

Population- The number of people in a country does not simply improve the production but has different influences such as the supply of food and environment. When looking at each country’s population is import to understand that the younger workers are the main work force for each country.

Zimbabwe’s population:

A total population is 12 million people with the life expectancy for men (37 years old) and women (34 years old), the lowest in the world. (2006) 68% of the people are under the poverty line. (2004) This is a problem as the population growth rate is only 1.53% (low) and the number of citizens living with HIV/AIDS is 1.3 million the 7th highest in the world. Without any proper health care system, at this rate of health and economy the number is only expected to increase as there are major diseases such as malaria, rabies, bacterial and typhoid A fever. They are much in need of financial and medical aid.

Physical capital and technological factors - machines, factories, roads; their quantity and quality. There are two types; Directly productive (plants and equipments, such as factories) and indirectly productive capital (structure that helps capital e.g roads, and rails). The opportunity cost of capital investment is the current consumption foregone. However in the long run, it will improve their economic growth. Furthermore, technology is an another important aspect of development and so countries must keep up with the technology change around the world.

Zimbabwe’s transportation:

Zimbabwe has railways, highways, pipelines, airports, and ports. However with international trade difficulties the fuel to stimulate these machines as Zimbabwe highly relies on export of oil and natural gas and produce zero amount. Thus, this can seen as one of the main reason for Zimbabwe’s external debt increasing from $5.669 billion (2008) to $5.821 billion (2009). Institutional factors

  • Banking system: a good banking system the businesses to flourish and grow.
  •  Educational system: growth requires a high quality and well educated workforce.
  •  Health care: a healthy workforce and population with help the economic growth.
  •  Infrastructure: economic activity needs roads, ports that help the network.
  •  Political stability: without stability, there will be any certainty and businesses.  


The government of Zimbabwe has face a wide variety of economic problems. The land reform that was characterized by chaos and violence has badly damaged the commerical farming sector’s. Moreover, with the Reserve Bank of Zimbabwe repeatly printing money to fund the budget deficit, it has caused hyperinflation and draining the money out of the country. Recently the power-sharing government have formed an organization that has led to some economic improvements such has eliminating the use of the Zimbabwe dollar and remove price controls. Furthermore with the GDP improving from a -14.4% in 2008 to 3.7% in 2009 is it finally back as a positive number and can expected to see greater growth. However with the population struggling through severe lack in medical treatment even if it might seen as a increase it can be only a short-term and larger drop in the long the run. They must organize the health system where the number of people with HIV/AIDS can decrease and led to more labors in the market. The main goal for this country is to changed the corrupted government polices of president Mugabe and apply a fiscal stimulus to generate the country so the productivity can increase enough in order the pay the debts at a faster rate.  

~ by scioneconblog on January 20, 2010.

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