Challenges in the Era of Globalization - iaabd

Proceedings of the 12th Annual Conference © 2011 IAABD
Abstract
The Dollarization of the Zimbabwe Economy in the Era of Globalization.
Zuvarashe Judith Mushipe, jzmushipe@yahoo.com
Assistant Professor: Institute for Professional Studies, St Thomas University, Miami, Florida
This paper discusses the experiences of the Zimbabwean people as the country introduces a system of multicurrency
from 2009. The country that experienced an economic meltdown from 2000-2008 found itself with no choice to
salvage the economy, but to introduce the use of multicurrency that included the Botswana Pula, the South African
Rand and the US Dollar. The major currency used however has been the US Dollar. The dollarization of the
economy has led to the practice of barter system particularly in rural Zimbabwe where about 80% of the population
is found and is also not earning the dollar. This has been a major set back in the history of the country in this Era of
Globalization.
Introduction: Zimbabwe’s Brief History
Zimbabwe a Southern African country got its Independence beginning of 1980 after 90 years of British
colonial rule. At independence the economy flourished as the country got help from the international
community under the 1981 Zimbabwe Conference on Reconstruction and Development (ZIMCORD)
agenda. The funds donated were meant to address the 4Rs of development then which were:
• Reconstruction of the infrastructure that had been destroyed during the war of liberation that was
staged from 1963 through 1979.
• Resettlement of the so many people who had been displayed during the war of liberation.
• Rehabilitation of the war veterans that had been injured and traumatized during the war
• Reconciliation with the white population that was prepared to remain in Zimbabwe after the war.
During the first decade the economy grew at 2.7% while the population grew at 2.8%. (GOZ 1991).
Apparently, by the end of the first decade the Gross Domestic Product continued to lag behind as the
economy was spending more than it was earning the revenue. During the same period the central
government’s fiscal deficit was in excess of 10% of GDP. At that point in 1995 the World Bank IMF
recommended that the Zimbabwe government embark on an Economic Structural Adjustment Programme
(ESAP) that was meant to stimulate economic growth as government liberalized the labour laws and open
up the economy to competition.
ESAP was a daunting task for government to implement since it infringed some of the benefits such as
free education and medication that the people were used to having. Besides the employers had the liberty
to hire and fire. Of course with the opening up of the economy, inflation also became uncontrollable and
the unemployment rate went up. With the advent of Economic Structural Adjustment Programme, labour
laws were liberalized and employment security previously granted to labour was taken away in the spirit
of promoting flexibility in the labour market (Raftopoulous and Sachikonye 2001, Ncube, 1998). The
Zimbabwe economy was aligning itself with the dictates of globalization.
Era of Globalization
To begin with globalization is the process by which regional economies, societies and cultures have
become integrated through a global network of political ideas through communication, transportation and
trade (Global encyclopedia, 2011). It is the shift toward a more integrated and interdependent world
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