Question

Please provide a summary of this case and answer ALL posted questions. Thank you so very much in advance!

closing case The Decline of Zimbabwe wew the lowest econom 2000. Between 1999 and 2009 I 1980. the southern Ac e of imbabwe gained independence growth rate ever recorded with an ecline of 6.1 percent in from colonial master, Great Britain. Speaking of the time, the late The decline occurred after Mugabe launched a "fast-track and room Tanzania President, Julius Nyerere, described Zimbabwe as "The wel program that encouraged the secure by the state without compensation of Africa was a country that boasted a strong economy, abundant land owned by white farmers. At the time, some 4,000 white farmers were al resources and a vibrant agricultural sector As part of the inde the backbone of the country's strong agricultural sector. The land was pendence process, the British bequeathed Zimbabwe will democratic political thin gives to members of the ZANU-PF party and other supporters of Mugabe cutone. In 1965, who lacked experience with modern agricultural practices and had never Zimbabwe both as an independentation as a the in t ers of what was then known as Rhodesia terally formed at all in the wake of the land reform program, agricultura po declared independence from Britain seting up an apartheid state where it slumped and the country is now a net importer of food blad e caded tompo Theth powerment and majority Another dragon the country's growth was the 2008 Indigeniscono stated that the declaration of independence was an el rebellion Economic Empowerment Act, which required that enterprises congue and imposed sanctions on Rhodesia Other nations that followed suit in ness in Zimbabwe have at least 51 percent local ownership in practice cluded the United States. An armed confidensed with two guerrilla is often meant high-ranking ZANU PF party members. Alter the act was movements waging war against Rhodesia's white government One at passed a number of foreign corporations doing business in the country thote que movements the abwe Alican National Union (ANU) pulled out was headed by Robert Mugabe, who aligned him and his movement The country's mining sector remains potentially lucrative, with large with the Maoist version of comu m A combination of international pain and diamond deposits mined by private enterprises, but almost Sanctim and m a y even forced the white misty rulers of the licensing revenues due to the state have reporte y disappeared of Rhodesia to end their rebellion. In 1979, Rhodesia reverted to British into the hands of my officers and ZANU-PF politicians. Taxes and tarifs colonial status are high for private enterprises, which discourages private business forma The following year Dimbabwe gained legal independence. Robertsion, while state-owned enterprises are strongly subsidized, Tourism, once Mugabe was elected as the country's first prime minister Thirty Seven a big revenge anet has declined as Zimbabwe's wildlife has been deci years later Mugabe was in power, now as President. His ZANU-PF paymated by poaching and deforestation. As economic activity slumped, the had won every election since independence. Once a largely ceremonial country's for position, Mugabe had statically consolidated power in the Presidency unemploymente reached a staggering 80 percent and restricted his poc opponents. He was re-elected as President in to complicate matters, Zimbabwe was devastated by the AIDS epi 2013 in a general election which demic, with HIV infection rates hitting a high of 40 percent of the popula- many in the Mugabe era was widely seen as rigged. The country has also bees best by endemic corruption tion in 1998. Due to AIDS and other pubic health problems, life expectancy Corruption watchdog Transparency International recently ranked Zibe roll to just 43.1 years in 2003, down from 61.6 years in 1986. By 2014 bwe as one of the most corruptions in the world with HIV prevalence down to 15 percent. I expectancy had risen back to Zimbabwe's economic performance in recent years ranks among the worst in the word Amough the economy maintained a positive economic wth tax revenues collapsing. Mugabe funded government programs growth rate through the 1960s and 1990s. It has deteriorated rapidly since by printing money. Inflation quickly spiraled out of control, reaching 231.000.000 percent in 2008 and requiring the Central Bank to introduce 54 years 100 illon Zimbabwe dollar otel in April 2009. the Zimbabwe dollar was suspended at the time the lion dollar note was worth around $040 USO imbabwe allowed trade to be conducted using other curren cies, particularly the US dollar, the South Africa Rand, the euro, and the British pound Despite the country's economic implosion, the World Bank still believes that Zimbabwe has enormous potential for sustained economic growth genis generous endowment of natural resources, existing stock of structure, and comparatively s ed tuman resources. Ataining that potential will require a change in leadership and policies Mugabe showed no signs of giving up there of power in February 2017, he held a lavish 93rd birthday party for himself and stated that he ed to stand for another veya ten as presidentin 2018. However much to the surprise of many observers, in November 2017, Mugabe was forced to resign from her his own party started impeachment pro- Cees against him. He was replaced by his former vice presi dort. Enmerson Mnangagwa, whom Mugabe had fired on November fit Chan 56 Punto National D rences

Answer 1

a) Zimbabwe once had a remarkable economic growth because of its natural resources and agricultural sector. This was aided by tourism revenue as tourists were flocked because of its wildlife. It is no surprise that the country has been referred to as 'Jewel of Africa'. However, President Robert Mugabe in his tenure completely destroyed the economy through his wrong policies and weak administration.
Zimbabwe had a minority white population but they owned more than 75% land and the Mugabe government forcibly snatched that land from whites and distributed it among the local people. The majority of them were workers of the ruling political party ZANU-PF. The people were unaware of modern techniques and they could not use the land efficiently and wasted resources which led to a decline in agricultural production.
Another condition of mandatory 51% local ownership for any firm doing business in the country also proved to be disastrous as many firms left off the country and investment dried up.
A high level of corruption in the country resulted in plummeting government revenue through mining licenses.
As agricultural and industrial output declined then so as the economic growth while inflation and unemployment exploded.

b) Zimbabwe government under the leadership of Mugabe resorted to value destruction in the economy through the wrong policies. Zimbabwe has a democracy which is right as it is the form of government that helps to develop a market-based economy.
However, Zimbabwe had a rigged democracy and further, it intervened in the economy that proved to be disastrous. Any interference in the economy by the government creates an unnatural distortion that destroys the efficient allocation.
Zimbabwe would have been far better in the market-based system as it ensures the resources are allocated on the basis of utility. This also means an efficient allocation of resources and greater benefits to the society or economy as a whole.

c) Zimbabwe will have to go back to the root of the crisis and that is government interference in the economy. It will need to win the trust of the investors by abolishing the mandatory 51% local ownership rule. This will attract international investors and with that will flow the technical knowledge and management expertise.
The farming land will need to be allocated to the real farmers because they have skills to cultivate and develop farming techniques which could again propel the agricultural output in the economy.
Zimbabwe will need to adopt a market-based economic policy with low taxes, deregulation and minimum government intervention in the economy.