The Political Economy of Political Regimes and Trade Flows: A Case of Zimbabwe 2005-2020

Abstract

This thesis delves into the intricacies of the political economy of trade within the context of Zimbabwe. Similar to numerous other developing African nations, Zimbabwe experienced a persistent trade deficit from 2005 to 2020, thus being categorised as a net importer due to consistently higher import volumes compared to exports. Presently, Zimbabwe grapples with one of the most severe crises among countries in the Global South. The economic and political crises situation actually calls into question the fact that Zimbabwe had a Government of National Unity (GNU) between 2009 and 2013 aimed at serving as a transitional authority overseeing the economic and political governance of the nation. This study examined the interaction between political regimes and trade flows in Zimbabwe from 2005 to 2020 and how political regimes affect economic policies, institutions and economic management. This study contributes to extant literature by deepening an understanding of the relationship between politics and trade in the Zimbabwean context. The study was organised into three periods, and was intended to answer the three research questions: What was the state of political relations in Zimbabwe from 2005 to 2020? What was Zimbabwe's trade-flow level between 2005 and 2020 and why? Ultimately, what are the characteristics of the import and export concentrations in Zimbabwe between 2005 and 2020? The first period covered the years 2005 to 2008, i.e. the period before the formation of the Government of National Unity (GNU). The second period analysed the years 2009 to 2013 - A period under GNU. The third period covered the period after the dissolution of GNU, the years 2014 to 2020. The study was premised on an exploratory design; this mixed-methods research relied on secondary data to investigate the above three research questions. To answer the first research question, the study relied on documentary and historical data analysis to determine the status of political relationships in Zimbabwe. To answer the second research question, the study deployed descriptive analysis to describe the evolution of trade flows, taking into account the underlying theoretical frameworks of the political economy namely neopatrimonialism and political settlement framework. Finally, the third research question was based on time trend analysis. The study concludes that political instability had a huge impact on the economy as Zimbabwe faced political and economic challenges for several decades, which negatively affected its trade with other nations. These challenges can largely be attributed to the political and economic decisions made by the ruling ZANU-PF elites. This study also contends that the heterodox economic planning of the ruling government from 2005 to 2020 led to a mix of redistributive and indigenisation policies on the one hand and the acceptance of neoliberalism on the other, which iii has negatively impacted on trade. Zimbabwe’s political environment has also been characterised by severe restrictions on political freedoms as evidenced by the dominant political relationship themes between 2005 and 2020. Some of the identified themes in this study are political tensions, economic challenges and power struggles, factions within the ruling ZANU-PF, protests, and post- election violence, to name a few. All these factors were an obstacle to attracting investors and gaining access to more trading partners. For example, export growth was rather weak during the period analysed. The export basket exhibited reduced diversification and heightened reliance on a limited array of products, indicating a decline in both diversification and technological sophistication of exports. This study attributes the causes of this poor performance of the trade sector to various political economy challenges such as poor economic governance, neopatrimonialism, weak political settlement in the form of GNU that created an unfavourable climate for private investment and trade, and industrial policies (especially indigenisation policies) that undermine investor confidence and discourage private investment. While trade volumes recovered from the deep recession of 2007-2008, this cannot compensate for other worrying longer-term trends unveiled in this study. With regard to recommendations, the good news from this study is that the rectification of these policy deficiencies rests within the hands of the Zimbabwean government. To achieve significant transformation in trade, the Zimbabwean government should consider collaborating with international partners and stakeholders to redefine itself as a major player in the global economy. However, this will pose a significant challenge to the Zimbabwean government as research reveals that democratic governance promotes economic growth and prosperity, while autocratic regimes stifle progress, with China being an outlier in this case. Further to that, literature suggests that authoritarian governments are reluctant to reduce distorting red tapes and other unofficial trade barriers. Another recommendation is that Zimbabwe needs to adopt effective policies to leverage and harness its abundant natural and human resources for increased production and export earnings. The current focus on raw materials exports needs to shift to value-added goods and services. The government should actively attract local and foreign investors to set up production facilities in Zimbabwe that cater aiming for both the domestic and international markets. It is important that the government does not make abrupt policy changes to gain political advantage, as this creates uncertainty and deters investment.