The economic collapse of Zimbabwe was caused by land reforms that ignored property rights and the rule of law, says Craig J. Richardson, associate professor of economics at Salem College.
Although unconstitutional, Zimbabwe President Robert Mugabe’s government authorised the seizure of nearly all of the 4,500 commercial farms between 2000 and 2003. By 2003, the economy was imploding with increasing speed, at 18 per cent per year. Inflation was running at 500 per cent, and Zimbabwean dollars lost more than 99 per cent of their real exchange value.
Since 2000:
Richardson estimates the independent effect of land reforms, after controlling for rainfall, foreign aid, capital and labour productivity, led to a 12.5 per cent annual decline in gross domestic product (GDP) growth for each year between 2000 and 2003.
Richardson says the lesson learned here is that well-protected private property rights are crucial for economic growth and serve as the market economy’s linchpin.
Source: Craig J. Richardson, How the Loss of Property Rights Caused Zimbabwe’s Collapse, Cato Institute, Economic Development Bulletin, No. 4, November 14, 2005.
For text: http://www.cato.org/pubs/edb/edb4.pdf
For more on International: http://www.ncpa.org/pi/internat/intdex1.html
FMF Policy Bulletin/ 13 December 2005
