Elasticity of motor-vehicle imports with respect to variations in customs duty in Zimbabwe (2009-2012)

Abstract

The research looks at the extent to which the import duty-factor may be influencing the volume of motor vehicle imports in Zimbabwe. The methodology adopts a survey research design with use of questionnaires; interviews and direct observations. The analysis culminates in the calculation of the import elasticity. The findings indicate that the car imports are inelastic with respect to changes in customs duty. Indications are also strong from the findings that the car manufacturing industry in Zimbabwe may not possess, at least in the short-term, the capacity to cater for the domestic demand for motor vehicles. The study advocates for the government of Zimbabwe to effectively use customs duty as a key revenue source since the inelastic nature of vehicle imports provides such scope. However, the reliance on the use of customs duty as a protectionist policy instrument is unlikely to yield the desired result. The findings thus severely weaken the lobbies by the local car manufacturers to get a veil of protection whilst getting established.