Exports-led growth or growth-led exports: Zimbabwe’s experience and lessons for the future

Abstract

While other countries are drifting away from an export led growth strategy, Zimbabwe is taking the same route. The Zimbabwean export strategy is premised on the National Trade Policy, promulgated by the Ministry of Industry and Commerce on the 29th of March 2012, which states this strategy as one major growth strategy. At the same time, the industrial development policy presented the same day outlines the various industries that will facilitate this strategy. The aim is to increase exports to stimulate growth. These policies again are supported by the government’s move to try special economic zones. There is no consensus on the lead-lag relationship between exports and economic growth. Based on this argument, the current research seeks to study whether an exports-led growth or a growth led exports strategy is applicable to the Zimbabwean situation. A Granger causality methodology was employed to test for the direction of causality. Findings indicate independence between the export variable and GDP. The Zimbabwean government is therefore advised not to rely on exports as an engine for growth. The policy maker is recommended to find other strategies to stimulate growth other than using exports.