| Issue 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| THE RISE AND FALL OF ZIMBABWE EXPORTS COMPARATIVE ADVANTAGE: ESAP THROUH TO ZIMPREST
Prepared Sylvester Madzvova & Dr. Moses Tekere
November 2000
===================== The changing patterns of economic activity under the momentum of globalisation. demand that Zimbabwe understands and concentrates in production and exports of products where it has comparative advantage. It is important that Zimbabwe defines the sources of such advantage, the shifts. causes and consequences of loosing and gaining comparative advantage to enable it to take advantage of globalisation and trade liberalisation. Further. the new economic dispensation imposed by globalisation also demands that Zimbabwe depart from the traditional primary and commodity production and exports which no more have the potential to support sustainable income growth due to falling prices, rents and increased competition. To maximise benefits from globalisation and trade, emphasis must be placed into areas of high value production and commodity chains and exports in which it enjoys some comparative advantage. Zimbabwean firms need to escape from production where competitive pressures drive down their rents, terms of trade and drive them into patterns of immiserising growth. The key towards this is to develop the ability to identify emerging areas in which Zimbabwe has comparative advantage and areas of high rent and then the capacity to appropriate those rents that are realistically with in grasp and to develop the capacity to adjust quickly to changing circumstances of rent maximisation and comparative advantage. Zimbabwe in the 1990’s experienced serious poor export performance of its commodities and goods originating from practically all the sectors of the economy agriculture mining and manufacturing. Prices of her export commodities (agricultural and minerals) in the world market slumped and external demand for g6ods from the manufacturing sector (especially the clothing industry) was low. This triggered the occurrence of disequilibrium in the foreign exchange market, which in turn affected all operations in the economy as a whole. Poor export performance brought about chronic balance of payment problems. Cognisant of the foregoing, it becomes imperative for Zimbabwe to know her position in terms of the comparative advantage of her main export products in the world market. It is against this background that Trade and Development Studies Centre [TRADES CENTRE] and FES —Harare Office initiated a study of Zimbabwes comparative advantage. The aim of this study is to define areas where Zimbabwe has comparative advantage, determine shifts and the sources of such comparative advantage during the reform period and identify rising and falling stars. An empirical proof of the existence of comparative advantage of Zimbabwe’s products could then become the basis of policies to intensify export activities. It is our hope that this study will be helpful to all those concerned about economic and export growth of Zimbabwe.
====================== The results show a general deterioration in RCA indexes from 1991 onwards meaning loss in Zimbabwe’s comparative advantage. This pattern is particularly noticeable for agricultural exports than for manufactured exports. The study shows that some products have positive indices e.g.. tobacco, refined sugar jewelry, furniture and leather products while the rest have negative signs. Products that gained comparative advantage in terms of turning from negative RCA indices to positive RCA indexes are refined sugar and honey, dairy products and jewelry. A more disturbing observation is the falling trend in RCAs indexes with some of them turning from being positive to negative e.g. for textiles and footwear. Generally many products whose RCA indices were negative in 1991 have failed to turn around the position but rather they have gotten worse. Tobacco stands out as one most important product in which Zimbabwe has significant rising comparative advantage as shown by high and positive RCAs indexes. Since globalisation rewards those who adjust quickly to market signals then it will be advisable that Zimbabwean exporters desist from concentrating on production of natural resources based and labour intensive traditional primary and agricultural products and start specialising on production of high value commodities. Manufactured and processed products are highly competitive with 88% majority of them being rising stars show beyond reasonable doubt that a venture into such specialised industries will be highly rewarding. |
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