Zimbabwe’s Trade Performance Under Alternative Trade Policy Regimes

This study examines Zimbabwe’s export and import performance under alternative trade policy regimes, from 1976 to 2014. Taking into account export and import volumes, gross domestic product (GDP), price of exports and imports, foreign income, real effective exchange rate and policy changes, log-linear errorcorrection models were adopted to estimate export supply and import demand elasticities. The study concludes that the relationship of exports and imports to GDP is significantly positive, while foreign income has no significant effect. A devaluation is estimated to have a significantly negative effect on imports in the short-term. Though highly inelastic, the effect of prices of imports on import demand is estimated to be significantly negative in the short- and long-term, and that of exports on export supply is positively significant in the short-term. The adoption of outward-oriented strategies was estimated to result in a 13.86 per cent increase in exports in the long-term, and a 32.3 per cent increase in imports in the short-term between 1990 and 1995 alone, and an additional 33.62 per cent between 1996 and 2000. The analysis also reveals that adopting a multi-foreign currency regime will only significantly influence export supply in the long-term.