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Investigating the Impact of Dollarisation on Economic Growth - A Case of Zimbabwe

Author

Listed:
  • Ruby NGAMANYA MUNHUPEDZI

    (Management College of Southern Africa (MANCOSA), South Africa)

  • A.M. CHIDAKWA

    (Management College of Southern Africa (MANCOSA), South Africa)

Abstract

This study examined the effects of dollarization on business in Zimbabwe focusing on economic indicators such as inflation rate, GDP, employment and ease of doing business during the period 2009-2015. Zimbabwe experienced a very difficult economic phase characterised by hyperinflation, negative economic growth, unavailability of basic commodities and negative economic growth rates during the period 1998-2008. In 2009 the country adopted a multi-currency system whereby the Zimbabwean dollar was in circulation alongside various other currencies, with the United States Dollar and the South African Rand being the dominant ones. There has been general speculation that Zimbabwe’s economic problems are due to dollarization. Through analysing data from interviews and secondary sources, the research established that dollarization brought about stability in the economy, arrested inflation, and caused a marginal increase in GDP. However, the response of the employment rate was independent of the dollarization and may be attributed to other factors such as Economic Structural Adjustment Programme (ESAP) in 1992, the global economic crisis in 2008 and the absence of reliable data.

Suggested Citation

  • Ruby NGAMANYA MUNHUPEDZI & A.M. CHIDAKWA, 2017. "Investigating the Impact of Dollarisation on Economic Growth - A Case of Zimbabwe," Expert Journal of Finance, Sprint Investify, vol. 5, pages 11-20.
    • Handle: RePEc:exp:finnce:v:5:y:2017:i::p:12-20
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    References listed on IDEAS

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    1. Sebastian Edwards & I. Igal Magendzo, 2003. "Dollarization and economic performance: What do we really know?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 8(4), pages 351-363.
    2. A.M. CHIDAKWA & Ruby NGAMANYA MUNHUPEDZI, 2017. "Investigating the Impact of Dollarization on Economic Growth: A Case of Zimbabwe," Expert Journal of Finance, Sprint Investify, vol. 5(1), pages 12-20.
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    7. Lula G. Mengesha & Mark J. Holmes, 2013. "Does Dollarization Alleviate Or Aggravate Exchange Rate Volatility?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 99-118, June.
    8. Ruby NGAMANYA MUNHUPEDZI & A.M. CHIDAKWA, 2017. "Investigating the Impact of Dollarisation on Economic Growth - A Case of Zimbabwe," Expert Journal of Finance, Sprint Investify, vol. 5, pages 11-20.
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    Cited by:

    1. Ruby NGAMANYA MUNHUPEDZI & A.M. CHIDAKWA, 2017. "Investigating the Impact of Dollarisation on Economic Growth - A Case of Zimbabwe," Expert Journal of Finance, Sprint Investify, vol. 5, pages 11-20.
    2. A.M. CHIDAKWA & Ruby NGAMANYA MUNHUPEDZI, 2017. "Investigating the Impact of Dollarization on Economic Growth: A Case of Zimbabwe," Expert Journal of Finance, Sprint Investify, vol. 5(1), pages 12-20.
    3. Varaidzo Denhere & David Mhlanga, 2021. "The Use of Surrogate Currency to Address Liquidity Crisis: The Zimbabwean Experience," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(3), pages 159-169.

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    More about this item

    Keywords

    Dollarization; Commodities; Multi-Currency System;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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