Agricultural Distortions and Economic Growth in Southern Africa: Evidence from Mozambique, Zambia and Zimbabwe (1970-2011)

The first decade of 2000 was considered Africa’s decade of unprecedented growth as it was the fastest growing region in the world. This growth is believed to have largely been a benefit of the commodity super-cycle which is beginning to tail-off. Analysts perceive that growth in Africa is currently more threatened by global trends and region specific risks around agriculture and politics.

It has been noted that African countries have experienced stagnant or declining agricultural productivity growth rates, increasing rural poverty, hunger and malnutrition coupled with low competitiveness in global markets over the decades.

Using the database on Distortions to Agricultural Incentives, the World Development Indicators and the Penn World Tables, the determinants of economic growth in Southern Africa and the impacts of a pro or anti agricultural policy regime on economic growth were investigated. In this study, three Southern Africa countries were investigated, that is, Mozambique, Zambia and Zimbabwe.

The Panel Data Analysis results suggest that 1% decrease in the degree of anti-agriculture policy bias results in a 0.1% increase in real per capita GDP. Further, 1% increase in the share of gross capital formation in GDP results in 0.04% increase in real per capita GDP.

The study showed that reducing direct and indirect, implicit and explicit taxation to agriculture relative to non-agriculture sector would result in improved economic growth in the three Southern African countries of Zambia, Zimbabwe and Mozambique.