What do we know about Zimbabwe and its economy? When we think about Zimbabwe, we recall the only term – hyperinflation. Zimbabwean inflation is so solid that the central bank of Zimbabwe had to make a 100 billion dollar note. As a result, Zimbabwe suffers from the strongest inflation in the world. There is hardly a country that can compete with it. Thus, many economists have become interested in the economy of Zimbabwe. They want to understand the major cause of this problem. We know that the weak economic condition of Zimbabwe is unnatural and probably artificial. This country is very rich regarding its resources and potential. However, the unskillful government of the current president Robert Mugabe cannot take advantage of the potential of his country. Unluckily, Zimbabwe is among the poorest countries in the world. Let us try to understand why.
Zimbabwe was a very powerful civilization between the 8th and 15th centuries AD. However, we know very little about the economy of that time. When we look at the 17th century, we will see that the majority of people in Zimbabwe, South Africa and other countries did not live in cities or common villages. They lived in the so-called tribes and fed themselves with the help of hunting and gathering. Therefore, it is impossible to speak about any economic flourishing at that time. The 18th century is characterized with the attempt of the creation of a powerful kingdom. In fact, this project was ruined by the growing interest of Europe in Zimbabwe. More and more white invaders came to Zimbabwe in order to settle down there. This land was attractive to them. The local people could not resist the power of the British pressure. What attracted Europeans in Zimbabwe? To begin with, it is land. European farmers moved from Europe to seize vast territories and develop agriculture there. Secondly, it is mining. When Europeans understood that Zimbabwe and surrounding countries are rich in platinum, gold and diamonds, they made it their colony. Thus, agriculture and mining had been the major fields of Zimbabwean economy by the middle of the 20th century.
If we speak about the period of Southern Rhodesia, we should say that the economy was based on production of chrome and tobacco. Unfortunately, the white population was privileged in Zimbabwe. They received land and rights while the rights of the black population were severely limited. They did not have land and equal opportunities in employment. However, the period of Rhodesian rule was useful for the economy of Zimbabwe. The country transformed from the agricultural state into one of the richest industrial giants. Due to the high level of development of the mining industry, the state possessed its own stable currency and experienced gradual economic growth. The rates of social inequality decreased and more and more people could take advantage of education and healthcare.
However, the situation changed cardinally in 1980s. Zimbabwe became an independent state on 18th April 1980. Robert Mugabe became Prime Minister. Later on, he became President in 1987. This personality is quite scandalous whereas his government exists primarily on foreign financial aid. Robert Mugabe is an authoritarian leader who conducts nationalistic policy. He planned to build socialism in Zimbabwe and criticized ‘Western lifestyle’. He began to persecute the white farmers and demonstrated his firm anti-American position. Zimbabwe was no longer a market economy whereas Mugabe chose another way of development. No wonder, the country was supported by the USSR and other socialist states. It received foreign financial aid that supported the rapid economic fall. After the collapse of the USSR the amount of aid reduced considerably. Zimbabwe remained without international support and its economy fell down to the current level.
The new president supported the policy of the total control of economy by the state. He believed that all companies, plants and factories should be nationalized. Private sector was persecuted and treated like a harmful element for economy. In 2000s 4000 white farmers were evicted from their lands. The government believed that their activity caused harm to the state. However, these households were prosperous and brought solid income into the budget. Eviction caused the further economic reduction and inflation.
Nationalized firms were supported by the state. Without doubt, these unproductive companies consumed money and gave nothing to the state. What is more, the corruptive government stole money while donating into nationalized business. No one can control the circulation of money in a nationalized company. Therefore, money is stolen from the budget and no one can accuse anybody of doing something illegal. The only victim is the people. The main idea of the rule of Robert Mugabe was to redistribute wealth from the white to the black population with the help of the means of the government-controlled economy. Doubtless, this plan could not be successful whereas the modern world lives according to the rules of the fair competition and market economy. Social instability and dictatorship of Mugabe frightened all potential foreign investors.
No one wants to invent into the unstable economy. Thus, this instability and inequality determines the current financial condition of Zimbabwe.
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