Lindani B. Ndlovu - The System of Protection and Industrial Development in Zimbabwe

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THE SYSTEM OF PROTECTION AND INDUSTRIAL DEVELOPMENT IN ZIMBABWE

The System of Protection and Industrial Development in Zimbabwe

Lindani B. Ndlovu
Department of Rural and Urban Planning
University of Zimbabwe

First published 1994 by Ashgate Publishing

Reissued 2018 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
52 Vanderbilt Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright Lindani Bornfirst Ziyapapa Ndlovu 1994

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notice:
Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

Publishers Note
The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.

Disclaimer
The publisher has made every effort to trace copyright holders and welcomes correspondence from those they have been unable to contact.

A Library of Congress record exists under LC control number: 94018857

Typeset by Chiedza Venekai Madanire PO Box MP 203 Mount Pleasant Harare Zimbabwe

ISBN 13: 978-1-138-36550-6 (hbk)
ISBN 13: 978-0-429-43071-8 (ebk)

Contents

Guide

The System of Protection and Industrial Development in Zimbabwe

Keywords:

Trade restriction; manufacturing performance; effective protection; economic efficiency; domestic resource cost; total factor productivity; conversion factors; Zimbabwe

Zimbabwe was isolated from the international community when economic sanctions were imposed following UDI. The limited trade opportunities under sanctions dictated that trade be controlled A system of control was devised based on administrative allocation of foreign exchange. Sanctions were lifted and normal trade with the rest of the world was restored when Zimbabwe gained independence in 1980. The independence government maintained foreign exchange allocation, and introduced other measures, not directly related to trade but that may have increased distortions.

Economic literature predicts that these policies raise protection to domestic production and undermine the efficient performance of industries. The main objective of this thesis is to analyse the extent to which trade restrictions, managed trade and other intervention measures protected manufacturing activity and whether performance was also affected, in the context of Zimbabwe.

The study outlines the development of the Zimbabwe economy and the manufacturing sector in the 1980s, comparing performance with before independence. Attention is given to structure and factor productivity in the sector. Theoretical and empirical literature on protection and economic efficiency provide a basic methodology for this study.

Effective protection (along Corden and Balassa approaches) and domestic resource costs are estimated for sample firms data and form the basis of our analysis. The findings show that although there are some cases of high effective protection and inefficiency among sample firms, on the whole these are generally lower than is expected in situations where trade is controlled through the use of quantitative restrictions. A large number of sample firms are generally unprotected but efficient earners or savers of foreign exchange. We conclude that the price control regulations and wages controls, designed to reduce inflation and rent-seeking, had important influence on levels of effective protection and efficient performance of sample firms.

This research benefited immensely from the valuable contributions of several organisations and individuals that I wish to acknowledge and thank.

My study programme was made possible by the generous sponsorship from the Commonwealth Scholarship Commission. The department of Rural and Urban Planning at the University of Zimbabwe supported my fieldwork. Several people at the Central Statistical Office and at the Confederation of Zimbabwe Industries provided assistance. I am grateful to all this support and assistance.

I would like to express my very sincere thanks to my supervisors, doctors Steve Curry and John Weiss. Through their guidance, comments and supervision, I have matured.

Thanks axe also due to Gwyneth, Christine and Jean, staff of DPPC library. They were prepared to help and deal with the never ending problems of this research student. The library was a welcoming place for the conduct of research at all times.

Within DPPC, other members of staff were not spared the trouble of listening to or dealing with my problems. Roland Clarke, Richard Lucking and Patrick Ryan provided input in computing and statistical problems. Behrooz Morvaridi read my draft. Judith Jaques, Wendy Taylor, Sue Mackrill, Pearl Golden, Lesley Knight, Carolyne Dennis, John Cusworth and Frances Cleaver made me feel like a permanent member of the department and helped with my various problems.

My brother, Garainashe was as part of this research as myself and proved a useful source for missing data. I wish I had learnt some of your ways when I was in the field.

It is difficult to imagine what research life could have been without the support and inspiration from my wife Juliet Tutsirai. I am grateful to her too for all this including typing parts of the thesis.

My son Tapiwanashe Mufaro learnt from a very early age that dad goes to the office. Play time and football with dad was difficult to schedule. Thanks for accepting to be neglected at times and for giving up your play time for my work.

• BOP balance of payments
• BPC Building Projects Committee
• CCFEA Cabinet Committee on Financial and Economic Affairs
• CIPs commodity import programmes
• CPC Commercial Projects Committee
• CSC Cold Storage Commission
• ELCC External Loans Coordinating Committee
• EPP export promotion programme
• ERF Export revolving fund
• FEAC Foreign Exchange Allocating Committee
• FIC Foreign Investment Committee
• FYNDP five year national development plan
• GFCF gross fixed capital formation
• IDC Industrial Development Corporation
• IIC Industrial Import Controller
• IPC Industrial Projects Committee
• ITC Import tariff committee
• JAC Joint Allocation Committee
• MFEPD Ministry of Finance Economic Planning and Development
• MGO Manufacturing gross output
• MIT Ministry of Industry and Technology
• MTC Ministry of Trade and Commerce
• MVA Manufacturing value added
• PTA Preferential Trade Area
• RBZ Reserve Bank of Zimbabwe
• RISCO Rhodesia Iron and Steel Corporation
• TFP total factor productivity
• TNDP transitional national development plan
• UDI unilateral declaration of independence
• ZISCO Zimbabwe Iron and Steel Corporation

Zimbabwe has placed the manufacturing sector at the centre of its development strategy considering it as "the key sector for changing the structure of the economy and for achieving rapid and sustained overall growth and development" (Zimbabwe 1988:17). However, the extent to which the sector will play the development role seems to be constrained by foreign exchange shortages, balance of payments focus in the control of trade and government policies.

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