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July 2005
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economy. In other words, we may not know exactly
what countries need to do to grow, but we do know lots
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of things they should not do. Unfortunately, Zimbabwe
1000 illustrates this all too starkly.
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Estimating the Costs
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Zimbabwe, once a vibrant and diversified economy,
400 had been a hope for Africa’s future. Today, it is a
Actual GDP per capita at PPP
200 Estimate using EIU growth, base 2001
country in deep crisis and the signs of collapse are
everywhere. The economy has contracted in real terms
0
1940 1950 1960 1970 1980 1990 2000 2010 in each of the past five years, inflation is in triple digits,
Sources: Maddison (2003), EIU, UN
the local currency has lost 99% of its value, and almost
half of the country faces food shortages. Unsurprisingly,
Introduction up to one-quarter of the population has fled the country.
Economic growth is not sufficient for development, but Many of the ‘costs’ of the recent economic collapse in
it is necessary. Most obviously, in countries where humanitarian terms are evident. We assess here, first,
average incomes are very low and poverty rates are the relative impact on incomes for the average
high, income growth is needed to boost consumption Zimbabwean citizen. Second, we also estimate the
and reduce poverty. At the same time there is an additional hidden costs in lost lives from the crisis due to
increasing understanding that growth is also needed to medium-term income effects.
accelerate improvements in health, education, and the
quality of life. This is because an expanding economy How has the crisis affected incomes?
provides the resources, opportunities, and incentives for As shown in Figure 1, Zimbabwe’s recent economic
improving other indicators of welfare, such as schooling crisis is so deep that it has set the country back more
than half a century. In 1953 the average person living
*
Michael Clemens and Todd Moss are Research Fellows at the Center for Global Development.
in then-Southern Rhodesia had an average income of How does this scale compare with HIV/AIDS?
$760 per year (in constant 1990 US$ at purchasing In 1990, largely before the HIV/AIDS epidemic
power parity rates). In mid-2005 the average began to produce disastrous rises in mortality
Zimbabwean had fallen back to that level, wiping out throughout the region, the infant mortality rate in
the income gains over the past 52 years.3 The scale Zimbabwe was 53. By 2001 — by which time the
and speed of this income decline is unusual outside of HIV prevalence in Zimbabwe had grown to among the
a war situation. In fact, the income losses in Zimbabwe highest in the world at 25% of the adult population10—
have been greater than those experienced during the infant mortality rate had risen to 73. If we
recent conflicts in Côte d’Ivoire, Democratic Republic conservatively assume that this rise of 20 in infant
…persistence in of Congo, and Sierra Leone. mortality is due entirely to the pandemic, this suggests
the crisis could that the impact of the economic crisis on child health in
How many additional children will die as a result of Zimbabwe has the potential, within five years, to be at
cause at least the crisis? least half as bad again as that of the AIDS epidemic.
3,900 infant There are many ways in which economic crisis can
deaths per year. directly cause deaths, including starvation, lack of Uncovering the Causes
access to previously available medicines, or If the recent economic crisis in Zimbabwe has set the
economically motivated violence. But beyond these country back half a century in income growth and will
direct and overt channels, there are also strong kill thousands of children per year, the obvious
relationships between income levels and health questions are ‘how did this happen?’ and ‘who is
indicators that suggest losses of income systematically responsible?’ The government’s official position has
create additional deaths that would not occur in higher been that any economic difficulties are the result of a
income environments. In other words, the economic drought and/or economic sabotage by any number of
crisis itself kills people. the country’s enemies. We assess both of these claims
before turning to other possible answers.
Income levels and changes affect a wide range of
quality of life variables. Here, as an illustration, we Are outsiders to blame?
estimate only the impact on infant deaths. The elasticity The government’s frequent claims of external plots to
of infant mortality to income per capita has been destabilize Zimbabwe encompass a long and
estimated by several studies.4 The most conservative increasingly irrational list of saboteurs, such the
. . . the income estimate of this relationship in the literature—that of International Monetary Fund, the British government,
losses in Pritchett and Summers, which isolates the percent and an international gay conspiracy. In occasional
Zimbabwe have change in infant mortality caused by a percent change bouts of official schizophrenia, the government
in real national income—is equal to –0.28.5 This effect sometimes combines these threats, such as President
been greater is realized within five years of the change in income. In Robert Mugabe’s public rant against Tony Blair as the
than those the above figure, real GDP per capita declined in “the gay government of the gay United gay
experienced Zimbabwe by 46.2% between 1998 and 2005. Kingdom.”11 Another recent example is the claim in the
Herald, a government mouthpiece, that the US, at the
during recent In a typical country, this conservative elasticity estimate behest of the UK, is now controlling the weather in
conflicts in Côte means that this drop would produce a 12.9% increase order to cause a drought in Zimbabwe.12 While these
d’Ivoire, in the infant mortality rate within five years. This outbursts suggest either cynical propaganda or
estimate is uncertain; there is a 90% chance that it lies growing paranoia among the leadership, they are
Democratic between 3% and 23%.6 The most recent estimate simply not credible explanations of the crisis.
Republic of available of infant mortality in the middle of this drop is
Congo, and the World Bank’s 2003 figure of an infant mortality A less hysterical version of external blame could be
rate of 78 per 1,000 births.7 This suggests that the related to the cutoff of international aid. Certainly,
Sierra Leone. collapse, if not reversed within five years, will lead to donors have withdrawn hundreds of millions of dollars
an increase of 10 in the infant mortality rate. Taking in aid from Zimbabwe and the government could
this figure combined with the UN forecast of 383,000 plausibly argue that this precipitated the crisis and
births8 in Zimbabwe in 2010, suggests that persistence contributed to any additional infant deaths. Setting
in the crisis could cause at least 3,900 infant deaths aside the reasons for donor withdrawal for a moment,
per year.9 it thus seems fair to examine the scale of lost revenue in
terms of aid from donors compared to lost revenue than at least twelve other recent low rainfall periods.
owing to lower tax revenue because of the crisis. More importantly, Richardson shows that the tight
historical relationship between GDP growth rates and
Figure 2: Lost resources rainfall cycles over two decades no longer held after
350
316 Without crisis
1999.16 Indeed, when rainfall recovered, the
300 With crisis economy continued to decline.
250 US$154 million domestic
Million US$, annual
Annual rainfall, mm
60
50 US$43 million 1,000
17 health aid lost
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0
Government spending on International health sector aid 600
health and child welfare
400
Such an exercise is not difficult. We can compare the
200 Zimbabwe
decline in aid money for health to the volume of
0
domestic resources for health lost from the crisis. 1945 1955 1965 1975 1985 1995 2005
…Zimbabwe’s local peak following which aid flows declined every Source: World Bank (2003) See fn 17 for detail on data.
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even visiting IMF missions),15 is that severe drought is
140 Zambia
primarily responsible for the collapse in output in
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Zimbabwe. On the face of it, this seems possible,
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especially since so much of Zimbabwe’s economy is
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based on rain-fed agriculture and the country faces a Malawi
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regular cycle of rainfall variability.
40
20 Zimbabwe
Economist Craig Richardson, using rainfall data from
0
Zimbabwe’s own Department of Meteorology, has 1999 2000 2001 2002 2003 2004 2005
shown that this argument does not hold up to the Year