The shift from a corporatist to liberal economic policy regimes in Zimbabwe led to the crisis in the late 1990s. What were the rationales for both regimes, what were their major successes and failures and how did they contribute to the dysfunctional policies of the late 1990s? This paper by the Crisis States Programme at the London School of Economics analyses the shift from corporatism to liberalism in Zimbabwe, arguing that the failures of both these regimes were avoidable, and the outcome of ‘political’ rather than economic variables.
Africa’s capacity to maintain its political, economic and social institutions and to provide for its people is in crisis. This crisis can only partly be explained by people exploiting a political economy of disorder for personal or group benefit. The intensification of the politics of disorder in Africa is more likely to stem from the nature of policy regimes and institutional arrangements than by a particularly African set of values and experiences.
Zimbabwe adopted a corporatist programme between 1980 and 1990 and rapidly switched to a liberal one in 1991. In the late 1990s, political and economic elites exploited political disorder using clientalistic processes. Corporatists argued that free markets would inhibit industrialisation and intensify uneven development, and liberals that state controls would lead to inefficiency, corruption and predation. Corporatism was in crisis by the mid-1970s, producing a shift towards liberalism implemented through Structural Adjustment Programmes (SAPs). Liberalism has since also been discredited by its failure to generate sustainable political and economic reforms. Both corporatist and liberal strategies produced positive as well as negative outcomes in Zimbabwe, and could have delivered better results had they been managed with greater flexibility and skill. Overall, the liberal experiment produced worse results than its predecessor.
- The corporatist experiment in Zimbabwe performed reasonably well thanks to the relatively developed nature of both state and capitalist institutions left by its predecessors, such as healthy state services, relatively high per-capita income and well developed industries.
- By using licensing, administered prices, subsidies, redistributive transfers and protectionism to keep private firms under tight control, the corporatist control regime ended up inhibiting the dynamism of the domestic economy.
- The results of this inhibition were the constraints on foreign and domestic investments, chronic budget deficit, foreign exchange shortage and the suppression of the emergence of an entrepreneurial African business class.
- The need for a fundamental change in policy regime led to the introduction of the Economic Structural Adjustment Programme (ESAP) involving the removal of restrictions trade, credit, foreign exchange, investment and labour.
- The positive results of ESAP included capital formation, increase in percentage of exports in GDP and the decrease in urban-rural inequality.
- Reasons for poor performance of the liberal experiment were negative externalities (droughts, negative trends in trade), the failure to bring fiscal deficits under control and the errors of policy-makers in imposing an over-rapid liberalisation on a weak and highly protected economy.
Political factors were central in explaining not only the failures of both liberalisation and capitalism, but also their impact of the capacity of the regime to generate long-term stability and sustainable froth. This is never a simple function of technical efficiency, but a function of the way in which any economic policy regime sustains or threatens political support from the ruling coalition.
- Ultimately, the success of any structural change is highly contingent on the nature of the political regime within the country.
- Any significant shift in policy regimes is likely to threaten the interests of different parties, and therefore lead to resistance and conflict, increasing the likelihood of a breakdown.
- Performance is always a contingent matter that will depend on the ideological orientation of the regime, the nature of its relationship with civil society, and the capacity of the state apparatus.
- Liberalisation could have produced better results given more attention to sequencing, support for industry and assistance to government in bringing down its deficit.
