The costs and benefits that developing countries could. Currency substitution, dollarisation and possibility of dedollarisation in zimbabwe doi. Pdf the impacts of dollarization on zimbabwes tourism industry. How dollarisation has contributed to the zimbabwean economy. This paper examines the economic impact of the inception of the full dollarization 1 in zimbabwes economy after the effects of hyperinflation and an unprecedented depreciation of an exchange rate. Dollarization, the holding by residents of a significant share of their assets in the form of foreigncurrencydenominated assets, is a common feature of developing countries and transition economies and is thereby typicalto a greater or lesser extentof many countries that have imfsupported adjustment programs. Chidakwa management college of southern africa mancosa, south africa this study examined the effects of dollarization on business in zimbabwe focusing on economic indicators such as inflation rate, gdp, employment and ease. As surprising as it may sound, zimbabwe was one of subsaharans most successful countries. The establishment of the government of national unity gnu saw the dollarization of the zimbabwean economy and the shelving of the zimbabwean dollar in march 2009. Pdf is dollarisation the panacea for zimbabwes economic. This paper examines the economic impact of the inception of the full dollarization 1 in zimbabwe s economy after the effects of hyperinflation and an unprecedented depreciation of an exchange rate. Was dollarization a success in zimbabwe free essays. How zimbabwes economy was brought to the brink of collapse.
The results gathered from this research shows that dollarization has enhanced the performance of the zse. However, this loss is not a social waste, but rather a redistribution between the countries. This paper is a bird s eye view on the pros and cons of dollarisation on the zimbabwean economy. The small african nation of zimbabwe gained independence in 1980, and it was in the same year that the zimbabwean dollar replaced the rhodesian dollar at par rate as the official state currency. In zimbabwes case, dollarization was the official replacement of the zimbabwean dollar with the u. What are the advantages and disadvantages of dollarization. Pdf this paper examines the economic impact of the inception of the full dollarization 1 in zimbabwes economy after the effects of.
How zimbabwes economy was brought to the brink of collapse regime brought hyperinflation, bankrupt state enterprises and chaotic land reform people in harare queue at banks to withdraw precious. In fact, the allocation of seignorage can be part of com pensation schemes between anchors and clients. At independence in 1980 the zimbabwe dollar replaced the rhodesian dollar at par at a rate which was higher than the american dollar. Pdf dollarization and the zimbabwes economy researchgate. Zimbabwe suspended its local currency on the 9th of april 2009 and adopted a basket of multiple currencies such as the south african rand, british pound. The paper argues that in complete contrast to the teaching sector, the banking sector boomed during the crisis, and the zimbabwe congress of. File a man counts zimbabwean dollar notes and coins next to a ten us dollar note on the streets of harare, june 25, 2019. Dollarization, human resources, hospitality industry, zimbabwe. This case study of zimbabwes hyperinflation and subsequent dollarization provides lessons for other developing economies about conducting monetary policy and the impact of full dollarization. Unbundling zimbabwes journey to hyperinflation and. Zimbabwes moves to end dollarization challenged in court.
Investigating the impact of dollarisation on economic. In principle, the anchor could return the seignorage to the client. The study investigated the effects of dollarization on economic growth in zimbabwe from. Dollarization can be defined as the situation in which a foreign country or its citizens decide to use a foreign currency such as the u. Shares prices have stabilized as compared to the predollarization era where they would change a number of times in one day. As a result of this dollarization and the installation of a. Dollarization and the monetary policy of a country ize and parrado 2006 talk about real dollarization, financial dollarization, and how these relate to the monetary policy of a country. Pdf this paper examines the economic impact of the inception of the full dollarization 1 in zimbabwes economy after the effects of hyperinflation and an. Monetary policy in dollarized economiesimf occasional. Zimbabwes moves to end dollarization challenged in court voice of america. The lavenes test, independent samples test and anova analysis are employed to compare means, before and after dollarization, as well.
Three years after dollarization the zimbabwean economy is on the recovery path. Chidakwa management college of southern africa mancosa, south africa 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. The impact of dollarization on the zimbabwe economy essay. The impacts of dollarization on zimbabwes tourism industry. The government has introduced an interim currency, the rtgs dollar, in. Investigating the impact of dollarization on economic growth. The impact of dollarisation on zimbabwe book, 2017. This paper tells the story of zimbabwe s hyperinflation period from 200009, and examines the inflationdepreciation in terms of purchasing power parity and the quantity theory of money. Challenges and policy options after hyperinflation 4 exchange trading takes place in u. Dollarization started off as unofficial dollarization until a time government decided to make it official and save the country from imminent collapse. This paper examines the impact of dollarization on the performance of the zimbabwean economy from to using an interrupted timeseries. Numerous and frequentlyupdated resource results are available from this search. In 2008 in an 18month experiment, foreign currency was accepted as legal tender for transactions with a set. The first impetus to zimbabwes drive to hyperinflation and official dollarization predates the disruption in production caused by the fasttrack land reform.
Unbundling zimbabwes journey to hyperinflation and official dollarization by. Unbundling zimbabwes journey to hyperinflation and official. Dollarization brought about some sanity in the economy and some relief of economic recovery to zimbabwe as a. The question is whether this economic growth is also being experienced in the tourism industry and whether it can be linked to dollarization.
Secondary data from published journals and text books was used as a complement to primary. Tourism was examined due to its reach into the zimbabwean economy and as the fastest growing industry worldwide. Zimbabwe made its interim currency the countrys sole legal tender on monday, ending a decade of dollarization and taking a another step towards. Introduction in what has become known as the lost decade of development, the zimbabwean economy lost 52% of its gross domestic product gdp between 1999 and 2008. Background zimbabwe is a landlocked country with a population of approximately thirteen million people, and 80 percent of them live in the rural areas zimstat, 2012. University of zimbabwe dollarization and economic growth in. This research sought to critically analyze the survival strategies used by commercial banks in zimbabwe post dollarization 20092015.
A critical analysis of the survival strategies used by. Dollarization is a situation where a country, either officially or unofficially, uses a different countrys currency as legal tender for conducting transactions. This paper examines the impact of dollarization on the performance of the zimbabwean economy from 2003 to 2014 using an interrupted timeseries analysis. In the end, the government was forced to scrap the zimbabwean dollar, because zimbabweans simply refused to use it. This paper tells the story of zimbabwes hyperinflation period from 200009, and examines the inflationdepreciation in terms of purchasing power parity and the quantity theory of money. The chief advantage to dollarization is that rampant inflation has been dramatically stabilized. The actions taken by the inclusive government to end the tyranny of hyperinflation are outlined, and the consequences of the decision to allow choice in currency are analyzed. There has been general speculation that zimbabwes economic problems are due to dollarization. Evidence from zimbabwe stein masunda department of agriculture economics and development, midlands state university, p. Dollarisation in zimbabwe and the death of an industry. On january 29, 2009 zimbabwe fully legalised the use of foreign currency for domestic transactions releasing the economy from the grip of the reserve bank which had printed enough money to drive the country into hyperinflation. In january 2009, the government formally declared the u. In 2009 the country adopted a multicurrency 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.
The effects of dollarization on human resources in the. However, the dollarization of the zimbabwean economy turned the tables on this once prosperous sector, as bank workers like the bank tellers and other clerical workers found themselves being laidoff, as most banks struggled to remunerate. Investigating the impact of dollarization on economic. An interrupted timeseries analysis raphael tabani mpofu abstract this paper examines the impact of dollarization on the performance of the zimbabwean economy from 2003 to 2014 using an interrupted timeseries analysis. Dollarization was defined by havrylyshyn and beddies 2003 as the use of any foreign currency for transactionary purposes whilst winkler et al.
Approximately six years after dollarization1, the zimbabwean. It is therefore important from the onset that we start off by distinguishing. At its inception, the zimbabwean dollar had an exchange rate of one to 1. Reliable information about the coronavirus covid19 is available from the world health organization current situation, international travel. Pdf lessons from zimbabwes hyperinflation and dollarization. An investigation into dollarisation and its impact on. This study investigated the effects of dollarization, which began in 2009, on the zimbabwe. Another cost of dollarization is the loss of sei gnorage for the client country. This has, in turn, stabilized the overall economy, sustained the buying power of the zimbabwean. Problems arising from a lack of financial integration, an error in the choice of currency to dollarize under, and the inability of the government to enter into a formal.
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