The Republic of Zimbabwe is endowed with a wealth of natural resources. Water is
ID: 1138752 • Letter: T
Question
The Republic of Zimbabwe is endowed with a wealth of natural resources. Water is scarce, but there is an abundance of mineral resources such as gold, coal, iron, nickel, copper and asbestos. Robert Mugabe became the prime minister in 1980 and presided over an authoritarian regime until 2017. There were widespread human rights violations, several economic crashes and history's worst hyperinflation along the way, due to Mugabe's penchant for financing wars and a lavish lifestyle by printing more money. Currency was quickly rendered worthless. However, due to resource abundance, real goods could be harvested and traded for, say, a loaf of bread. Many Zimbabweans would dig each day in the riverbank to gather enough gold to exchange for bread, which was hard on the very old and very young 1. Discuss the relationship between Nature and the Economy in this context and comment on the implications of Zimbabwe's failed economy on the sustainability of its gold use.Explanation / Answer
The Zimbabwean did more than just underperformed in relation to economic growth compared to its counterparts. It went through a structural degeneration which is characterized as follows;
1) Higher dependence on primary commodities: Zimbabwe was rich in natural resources and minerals. The economic performance was aided by the inflation in a commodity market and its rising global demand without which Zimbabwe would have been worst.
2) Deindustrialisation: The economy was moving in the direction reverse of all the developing nations; the economy was shifting resources from high to low productivity sectors which was accompanied by low wages and increasing poverty levels.
3) Negative saving and investment levels: the structural transformation led to dissaving and depressed investment which were strengthened by weak land reforms and redistribution policies.
The economy was going through major crises suffering from severe liquidity squeeze in the currency market, fiscal deficits ballooning and the situation was unsustainable.
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