Maxwell k Mangoro B0823150

8/11/2019 Maxwell k Mangoro B0823150

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BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE

DEPARTMENT OF ECONOMICS

AN EMIPIRICAL MODELLING OF THE ZIMBABWEAN EXPORT

FUNCTION (1980-2008

BY

MAXWELL! " !MANGORO

B082#1$0

SUPERVISOR% MR! DENHERE

A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE

RE&UIREMENTS OF THE BACHELOR OF SCIENCE HONOURS DEGREE

N ECONOMICS OF BINDURA UNIVERSITY OF SCIENCE EDUCATION

AUGUST 2012

i


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RELEASE FORM

NAME OF STUDENT% MAXWELL K MANGORO

DISSERTATION TITLE%

An empirical modelling of the Zimbabean e!port f"nction #$%&'( )''&*+

DEGREE TITLE% ,achelor of Science #-on.+* in Economic.

/ermi..ion i. here b0 granted to ,1N23RA 3N14ERS156 OF S71EN7E E237A51ON

to prod"ce .ingle copie. if thi. 2i..ertation and lend or .ell ."ch copie. for pri8ate9

.cholarl0 or .cientific p"rpo.e onl09 the a"thor re.er8e. other p"blication right. and

neither the di..ertation nor e!ten.i8e e!tract. from it ma0 be printed or otheri.e

reprod"ced itho"t the a"thor:. ritten permi..ion

S1GNE2% ''''''''''''''''''!

AUTHORS ADDRESS ;


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APPROVAL FORM

TITLE%

An empirical modelling of the Zimbabean e!port f"nction #$%&'()''&*+

A% T) *+ ,)./++ * 3+ S4+5!

1 certif0 that thi. di..ertation meet. the preparation g"ideline. a. pre.ented in the Fac"lt0

G"ide and 1n.tr"ction. for 50ping 2i..ertation.+

>>>>>>>>>>>>>>>>>>>>>>?>>>>>?>>>>>?

Signat"re of St"dent 2ate

B% T) *+ ,)./++ * 3+ S4.+67)6!

1 certif0 that@

#a* 5hi. di..ertation i. ."itable for ."bmi..ion to the Fac"lt0+

#b* 5hi. di..ertation ha. been checed for conformit0 ith the Fac"lt0 g"ideline.+

>>>>>>>>>>>>>>>>>>>>>>?>>>>>?>>>>>?

Signat"re of S"per8i.or 2ate

C% T) *+ ,)./++ * 3+ C3:6.+6)5 ); D+.:6+5!

1 certif0 to the be.t of m0 noledge that the reB"ired proced"re. ha8e been folloed and

the preparation criteria ha8e been met for thi. di..ertation+

>>>>>>>>>>>>>>>>>>>>>?>>>>>>?>>>>>?

Signat"re of 7hairper.on 2ate

iii


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DEDICATIONS

5o m0 late father9 re.t in e!ternal peace+

i8


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ABSTRACT

5he re.earch pre.ent. the determinant. of the e!port f"nction of Zimbabe+ E8al"atingthe .ignificance of E!change rate.9 net foreign direct in8e.tment and gro.. dome.ticprod"ct in determining the Zimbabean e!port.+ ,0 ".ing E8ie. to empiricall0

model the e!port f"nction the re.earcher a. able to deri8e the relation.hip beteene!port. the independent 8ariable.+ 3.ing the regre..ion re."lt. the re.earcher a.able to determine that there i. a .ignificant relation.hip beteen e!port andeconomic 8ariable.@ e!change rate and national income both ha8ing negati8erelation.hip ith e!port f"nction hile foreign direct in8e.tment ha8ing a po.iti8eimpact on e!port f"nction+ -oe8er9 the re.earch co"ld not determine the.ignificance of e!port re8en"e in determining e!port f"nction and the .ocio Cpolitical determinant. of e!port f"nction ere e!cl"ded from the model9 b"t the.eare i.."e. orth p"r."ing in in8e.tigating the determinant. of e!port f"nction+5herefore9 the re."lt. are appropriate in effecti8e management of the econom0beca".e if one cannot mea."re .tati.tical relation.hip. he?.he cannot manage theeconom0+

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AC"NOWLEDGEMENTS

1t i. often .aid that Dno man i. an i.land "nto him.elf Dand hence thi. maor "ndertaing

and compilation of thi. proect co"ld ha8e ne8er been a ."cce.. itho"t referenceto the or9 contrib"tion9 enco"ragement and ."pport of man0 indi8id"al. and

organiation. hich 1 hereb0 acnoledge m0 indebtedne.. to them all+

5hi. di..ertation i. the re."lt of the combined effort of man0 patient and dedicated

people+ 1n that re.pect 1 ant to e!tend m0 .pecial than. to m0 academic

."per8i.or Mr+2enhere for hi. e!pert ."pport in all a.pect. of thi. di..ertation+ -i.

contrib"tion to thi. re.earch ent be0ond mere academic d"tie. to incl"de more

paternal or brotherl0 ."pport+ 1 am .incerel0 gratef"l to Mr+ 2enhere for all the

re.o"rce. both mental and otheri.e hich he contrib"ted to m0 re.earch+

A re.er8ed acnoledgement goe. to m0 belo8ed parent. Mr.+Mangoro and the late Mr+

Mangoro for all the financial and moral ."pport a. ell a. their "na8ering ."pport

and "nd0ing lo8e+ 1 al.o ant to .peciall0 than m0 life partner ho ala0. p".he.

me to be the be.t in all that 1 do #God no. ho 1 met him*+ La.t b"t not lea.t 1

acnoledge the contrib"tion of Mr+K"fa9Mr.+ Mat.he and Mr+ Mandaa of

5rinidad ind".trie.+ One a. the0 did not ".t imparted noledge b"t al.o ga8e me

the confidence to "ndertae thi. re.earch proect+

8i


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LIST OF TABLES

5able $ Regre..ion table

5able )2ata collected for e!port. 9e!change rate 9gro.. dome.tic prod"ct and foreigndirect in8e.tment+

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Table of Contents

RELEASE FORM.................................................................................................. i

APPROVAL FORM............................................................................................... ii

DEDICATIONS................................................................................................... iii

ABSTRACT........................................................................................................ iv

ACKNOWLEDGEMENTS......................................................................................v

LIST OF TABLES................................................................................................ vi

CHAPTER I.........................................................................................................1

INTRODUCTION................................................................................................. 1

1.0 Intro!"tion.............................................................................................1

1.1 B#"$%ro!n o& 't!(................................................................................)

1.) St#t*+*nt o& t,* -ro/*+.......................................................................

1. P!r-o'* o& t,* 't!(................................................................................

1.2 R*'*#r", 3!*'tion'.................................................................................4

1. St#t*+*nt o& t,* H(-ot,*'i'...................................................................4

1.4 Si%ni5"#n"* o& 't!(...............................................................................4

1.6 S"o-* o& 't!(.........................................................................................6

1.7 D*/i+it#tion o& t,* 't!(.........................................................................6

1.8 Li+it#tion'............................................................................................... 7

1.10 D*5nition o& t*r+'.................................................................................7

1.11 S!++#r(............................................................................................... 8

CHAPTER TWO................................................................................................10

LITERATURE REVIEW....................................................................................... 10

).0 Intro!"tion........................................................................................... 10).1 P!r-o'* o& Lit*r#t!r* r*vi*9..................................................................10

).) T,*or*ti"#/ Lit*r#t!r*............................................................................... 11

).).1 E:-ort *t*r+in#nt'...........................................................................11

).).) T,* r*/#tion',i- *t9**n *:",#n%* r#t* #n *:-ort'........................1

).). E:-ort; in


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).).2 S-*"i#/i=#tion; *>"i*n"( #n *:-ort'................................................1

).). E:-ort' #n &or*i%n +#r$*t #""*''....................................................14

). E+-iri"#/ /it*r#t!r*................................................................................... 16

)..1 E:",#n%* r#t* +i'#/i%n+*nt #n *"ono+i" %ro9t,...........................16

)..) E:-ort; &or*i%n ir*"t inv*'t+*nt #n -ro!"tivit(............................17

).. W,#t riv*' +#n!"t!rin% *:-ort' in A&ri"#?....................................18

).2 Kno9/*%* %#-......................................................................................... )0

). C,#-t*r '!++#r(..................................................................................... )0

CHAPTER ......................................................................................................)1

RESEARCH METHODOLOG@.............................................................................)1

.0 Intro!"tion.............................................................................................. )1

.1 R*'*#r", *'i%n....................................................................................... )1

.) R*'*#r", in'tr!+*nt'...............................................................................))

. D#t# "o//*"tion #n -ro"*!r*'................................................................))

.2 R*%r*''ion +o*/.....................................................................................)

. !'ti5"#tion o& t,* Mo*/ #n V#ri#/*'....................................................)2

4 D!rin W#t'on t*'t................................................................................... )

.6 E:-*"t* 'i%n'......................................................................................... )

.7 Si%ni5"#n"* o& t,* *rror t*r+................................................................... )4

.8 Evi*9' 'o&t9#r*........................................................................................)4

.10 C,#-t*r S!++#r(..................................................................................)4

CHAPTER FOUR...............................................................................................)6

DATA PRESENTATION; ANAL@SIS AND DISCUSSION.........................................)6

2.0 Intro!"tion.............................................................................................. )6

21 E:-*"t* 'i%n'......................................................................................... )6

2) R*%r*''ion r*'!/t'.................................................................................... )7

2. Di#%no'ti" t*'t..........................................................................................)7

2.2 D!rinW#t'on 't#ti'ti"'........................................................................... )82 V#ri#/* r*/#tion',i-'...............................................................................)8

2.4 S!++#r(.................................................................................................. 1

CHAPTER ......................................................................................................)

CONCLUSION AND POLIC@ RECOMMENDATIONS.............................................)

.0 Intro!"tion........................................................................................... )

i!


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.1 S!++#r( o& 5nin%'.............................................................................)

.) Con"/!'ion.............................................................................................

Po/i"( R*"o++*n#tion'.......................................................................2

2 Ar*#' &or &!rt,*r 't!(.........................................................................

Con"/!'ion'...........................................................................................

REFRENCES.....................................................................................................4

APPENDI....................................................................................................... 7

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!i


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CHAPTER I

INTRODUCTION

I56)4,)5

5he c"rrent .t"d0 foc".e. on the role pla0ed b0 e!change rate.9 G2/9 and foreign direct

in8e.tment in the determination of the e!port in Zimbabe for the period $%&' to

)''&+ M"ltiple regre..ion model i. then ".ed to empiricall0 te.t the f"nction and

de8i.e the relation.hip beteen the dependent and independent 8ariable.+

1nternational trade i. idel0 acnoledged a. an e..ential element in broadening the

pro.pect. for economic groth and de8elopment+ 5o thi. e!tend e!port. and

import. are component. of trade that had been de.cribed a. an engine for economic

e!pan.ion9 "ltimatel0 leading to greater le8el. of global o"tp"t+ 3ndo"btedl09 the

proce.. of global e!pan.ion criticall0 depend. on trade acti8itie.+ 5here i. need for

pro8i.ion of e!tra re.o"rce. to ."pplement economic groth and de8elopment9 th".

e!tra re.o"rce. cannot be .".tained o"t of dome.tic ."ppl0 alone9 impl0ing that

import. of foreign re.o"rce. are nece..ar0 to fill the gap beteen a groing

dome.tic demand and a limited ."ppl0+ 1mport. are therefore introd"ced a. a 8ital

component in international trade and economic de8elopment+

$


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5he 8ital role(pla0ed b0 e!port. in foreign trade and economic de8elopment i. perhap.

hat generated the intere.t in e!plaining the determinant. of e!port f"nction in

Zimbabe+

1!1 B:,


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5he ".tification for the trade and e!change rate liberaliation reflect. the e!pected

efficienc0 gain. that follo from the impro8ed f"nctioning of maret. and i. ba.ed

on traditional trade theor0+ 5raditional trade theor0 and it:. modern 8er.ion.

empha.ie relati8e factor endoment.9 Ohlin #$%HH*9 on .ill de8elopment9 learning

and technological competence and other a"thor. lie N"r.e #$%IH* re8ealed ."n

co.t9 .cale economie. and agglomeration ad8antage. hile Kr"gman #$%%)*

empha.ied tran.port co.t. and concentrating ad8antage. and ,rainnard #$%%H* a.

important .o"rce of and agent:. international competiti8e ad8antage+ good. that fell

"nder the open general import licence #OG1L*+

H


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5he ERS arrangement pro8ed to be a 8er0 effecti8e trade liberaliation polic0 in.tr"ment

G"nning9 #$%%


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5he groth rate of total e!port. a. high in the .econd half of the $%%'.9 b"t then t"rned

negati8el0 .ince the earl0 of )'''.+Zimbabe. e!port performance a. ell abo8e

the a8erage of African co"ntrie. in $%%'. and according to the 71A World fact boo

Zimbabe d"e to it:. comparati8e ad8antage in agric"lt"re hich a. dominated

large commercial farm.9 and man"fact"ring+

-oe8er folloing the increa.ing o8er8al"ation of the c"rrenc09 e!port performance

dropped off .ignificantl0 in )''$()''=9incl"ding relati8e to the a8erage of

de8eloping economie. and neighbo"ring nation. ith the official e!change rate9

fi!ed rate fi!ed from October )''' fir.t at ZII(3S$ and later at Z&)=(3S$

"ntil end )''H9the c"rrenc0 became increa.ingl0 o8er8al"ed9 and the monetar0

a"thoritie. re.ponded ith a .erie. of ad hoc mea."re.9 incl"ding9 the creation of

.pecial regime. for tobacco and gold e!porter.9 5he introd"ction of a managed

foreign e!change tender .0.tem earl0 )''= and grad"al rela!ation of official

e!change rate from Z&)=(3S$ to ZI;''(3S$ b0 end of )''=+-oe8er the

c"rrenc0 became o8er8al"ed again .ince the demand for foreign e!change

contin"ed to pic "p+ A. a con.eB"ence the parallel maret premi"m ro.e from $H

percent in an"ar0 )''= to IH percent b0 end )''=+

1n conte!t9 Zimbabe i. .aid to ha8e initiated a fa.t trac land reform program to

redi.trib"te land+ Abo"t %''' farm. ere li.ted for acB"i.ition b0 end )''=9b"t fe

farmer. ere compen.ated and man0 farm. remain "nallocated to ne .ettler.+ 5hi.

e!ec"tion of land reform a. accompanied b0 .ignificant lo..e. in prod"ction+

Agric"lt"ral o"tp"t declined b0 H' percent and thi. promoted import. to meet the

local demand+ 5hi. .it"ation of decline in national o"tp"t impo.e. donard

pre.."re on the commoditie. a8ailable for e!porting+

I


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1!2 S:++5 ); 3+ .6)*/+

5he rele8ant a"thoritie. tried to implement policie. that facilitate .tr"ct"ral change in the

econom0 and to correct imbalance. of the macro economic obecti8e. in the co"ntr0+ 5he

effecti8ene.. of the.e policie. on the macro economic obecti8e. i. perhap. marginal

"dging from the per.i.tent problem. that the econom0 face. and ha. faced+ 5hi. ."gge.t.

that there ha. been an information gap ith re.pect to e8idence g"ided polic0 de.ign+

With the problem of an e!i.ting information gap in mind9 a .t"d0 of the e!port f"nction i.

orth p"r."ing con.idering that the Zimbabean econom0 i. fairl0 open and hea8il0

e!port dependent to generate foreign c"rrenc09 the demand for e!port. ha. .trong

implication. on o"r macroeconomic obecti8e.+

5hi. .t"d0 therefore aim. at adeB"atel0 e!plain the maor determinant of o"r e!port. the

period $%&' to )''&9 e!plicitl0 .hoing the role of e!change rate.9 foreign direct

in8e.tment9 national income9 ind".tr0 capacit0 "tili.ation in infl"encing e!port f"nction+

Empiricall0 modelling the e!port f"nction a. ell a. the a..ociated polic0 implication.

are important .tep. in pro8iding a fo"ndation of rational9 e8idence g"ided deci.ion

maing9 partiall0 filling the information gap and aiding polic0 maer. to e.timate the

re.pon.e of import demand to macroeconomic 8ariable .hoc.+

1!# P46.)+ ); 3+ 4

5o find o"t to the e!tent of foreign direct in8e.tment. infl"ence on

Zimbabean e!port.+

5o demon.trate the effect of e!change rate infl"ence on e!port. in Zimbabe+


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5o find the e!tent for hich national income impacted on the Zimbabean

e!port f"nction+

1!> R++:6,3 &4+)5

2oe. foreign direct in8e.tment ha. an0 role on the determination of the e!port.

f"nction of Zimbabe+

-o the e!change rate doe. affected e!port f"nction demand d"ring the period

$%&' to )''& in the co"ntr0

2id national income infl"ence the e!port f"nction demand for Zimbabe d"ring

the period $%%= to )''&

1!$ S:++5 ); 3+ H.)3+

5e.t the n"ll h0pothe.i. that e!change rate depreciation gi8e. ri.e to an

increa.ed e!port+

5e.t the n"ll h0pothe.i. that foreign direct in8e.tment enco"rage. increa.ed

e!port. in Zimbabe+

5e.t the n"ll h0pothe.i. that national income increa.e affect po.iti8el0 on the

e!port f"nction of Zimbabe d"ring the period $%&' to )''&+

1!? S=5;,:5,+ ); 4

5hi. .t"d0 help. in polic0 implementation and form"lation beca".e thi. .t"d0 e!plain the

determinant. of e!port f"nction con.idering 8ital role of e!port a. a component of

foreign trade and de8elopment9 E!planation on e!port f"nction beha8io"r contrib"te to

empirical literat"re on Zimbabe+ 5hi. anal0.i. then help. in polic0 de.ign and

implementation b0 .taeholder. and economic planner.+

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Additionall0 gi8en that e!change rate9 foreign direct in8e.tment9 national income9

e!change rate and policie. lined to the.e 8ariable. ere primaril0 p"r."ed to impro8e

the ,O/ po.ition9 th". e!port. fall ithin the e!port re8en"e b"ffer+ 5herefore the

effecti8ene.. of the.e policie. i. orth con.idering+ 5he polic0 implication. dran from

the .t"d0 are therefore .ignificant in term. of their contrib"tion to informal deci.ion(

maing+

5he beha8io"r of e!port. i. an important a.pect in economic. beca".e it i. ".ed for

applied or+ 5hi. mean. that it i. central to ba.ic ta.. ."ch a. G2/ foreca.t. and the

impact of e!change rate 8ariation. on the c"rrent acco"nt+ 5he.e B"e.tion. ari.e dail0 in

the or of central ban9 in8e.tment anal0.i. and m"ltilateral organi.ation. ."ch a. the

1MF+

1!@ S,).+ ); 4

5he .t"d0 ill foc". on the Zimbabean e!port f"nction+ 1t ill be geographicall0

limited to Zimbabean econom0+ 5he re.earch ill be cond"cted d"ring the

re.earcher:. period of attachment+ 5he re.earcher ill mae ".e of p"bli.hed

.tati.tic. and other appro8ed doc"ment. and the re.earch ha. been re.tricted to

period of tent0(eight 0ear.from $%&' to )''&+f"rthermore the re.earch ill "tilie

the econometric model. and doe. not ".e other re.earch method. lie

B"e.tionnaire. and inter8ie.+

1!8 D+/:)5 ); 3+ 4

5hi. part ill o"tline the core or central area of foc". of the re.earch+ 5he.e incl"de the

topic and the parameter. hich act a. g"ideline. to hat the re.earch act"all0 looed at+

5he.e incl"de

&


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5he re.earcher:. foc". ill be on the Zimbabean e!port f"nction from 0ear $%&'

to )''& onl0 and thi. period a. and inflationar0 period and the re.earcher

decided to abandon other 0ear.+ Re.earch ill be limited to Zimbabean e!port f"nction onl0+

5he .t"d0 ill "tilie .econdar0 data onl0+ 5he .t"d0 ill be done beteen an"ar0 $%&' and 2ecember )'$$+

1!9 L:)5

5he re.earch i. capital inten.i8e ."ch that other .o"rce. of data ill not be 8e.ted

d"e to .carcit0 of re.o"rce.+ 5he re.earch can tae long a. the a. data i. different depending on the .o"rce+

2"e to or commitment. the re.earcher might not e!ha".t the librarie. de.pite

the internet and other internal .o"rce.+

1!10 D+;5)5 ); +6

/olic0 A deliberate co"r.e of action "ndertaen b0 manager. or national go8ernment to

infl"ence organiational or national goal. #en+iipedia+org*

E!port f"nction 1 . an idea ".ed in economic theorie. to mea."re e!port.+ 5he total

amo"nt of e!port. in a nation i. mainl0 affected b0 to 8ariable. the total foreign

ab.orption and the real e!change rate+#en+iipedia+org*

Real e!change rate 1. the nominal e!change rate that tae. the inflation differential.

among the co"ntrie. into acco"nt+ 1t. importance .tem. from the fact that it can be ".ed a.

an indicator of the competiti8ene.. in the foreign trade of a co"ntr0 #Anra9 $%%;*+

E!change rate 8olatilit0 i. a mea."re of the fl"ct"ation. in an e!change rate +it can be

mea."red ho"rl09 dail0 or on ann"al ba.i. #ma!iip+com*+ Al.o Ste8en

M+S"rano8ic#)'';* defined it a. the degree to hich e!change rate change o8er and ent

to empha.ie that e cannot e!pect e!change rate 8olatilit0 hen "tiliing a fi!ed

e!change rate beca".e it doe. not 8ar0

%


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1nflation 1. the o8erall "pard price mo8ement of good. and .er8ice. in an econom0

often ca".ed b0 an increa.e the ."ppl0 of mone09 "."all0 mea."red b0 the con."mer price

inde! and the prod"cer price inde! #in8e.torord.+com

7omparati8e ad8antage 7o"ntrie. ha8e comparati8e ad8antage in tho.e good.9 hich

the0 can9 the reB"ired factor. of prod"ction are relati8el0 ab"ndant locall0+ 5hi. i.

beca".e profitabilit0 of good. i. determined b0 the inp"t. co.t.+ #En+iipedia+org*

1!11 S4:6

5hi. chapter looed at hat moti8ated the re.earcher to carr0 o"t a .t"d0 on the

Zimbabean e!port f"nction+ 5he obecti8e. and theB"e.tion.behind the problem

ere al.o highlighted incl"ding the importance of carr0ing thi. re.earch+

F"rthermore the chapter looed at the h0pothe.i. ".ed to te.t the 8ariable.9

limitation. and delimitation. of the .t"d0+ 5he ne!t chapter i. a critical re8ie of

literat"re+

$'


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CHAPTER TWO

LITERATURE REVIEW

2!0 I56)4,)5

White #)''I9 I)* define. literat"re re8ie a. an acco"nt of hat ha. been p"bli.hed on a

topic b0 accredited re.earcher. or .cholar.+ 5hi. chapter re8ie. literat"re and other

finding. related to the e!port f"nction9 ith a ca.e of the Zimbabean econom0+

2!1 P46.)+ ); L+6:46+ 6+7+

5he re8ie of literat"re accompli.he. .e8eral important thing.+ Sharp et al #)'')*

identifie. to rea.on. for literat"re re8ie+ 5he fir.t i. that the preliminar0 .earch help.

0o" to generate and refine 0o"r re.earch idea.+ Literat"re re8ie al.o enable. 0o" to

mae a critical re8ie of the literat"re and identif0 gap. #Sa"nder. et al )''%*+ Literat"re

re8ie .hare. ith the reader the re."lt. of other .t"die. that are clo.el0 related to the

.t"d0 being reported #Fraenel Wallen9 $%%'*+ 1t relate. the .t"d0 to the larger9 ongoing

dialog"e in the literat"re abo"t a topic9 filling in gap. and e!tending prior .t"die.

#Mar.hall Ro..man9 $%&%*+ Sa"nder. et al #)'''* f"rther add. on that literat"re re8ie

pro8ide. a frameor for e.tabli.hing the importance of the .t"d09 a. ell a. a benchmar

for comparing the re."lt. of a .t"d0 ith other finding.+ 1t frame. the problem earlier

identified+

5he re8ie of literat"re pro8ide. the bacgro"nd and conte!t for the re.earch problem+ 1t

.ho"ld e.tabli.h the need for the re.earch and indicate that the re.earcher i.

noledgeable abo"t the area "nder re.earch #Wireman9 $%%I9='


23/59

pre8io".l0 co8ered+ 5he practicabilit0 and integrit0 of the re.earch i. al.o determined

hich pro8ide. a fo"ndation and ".tification for f"rther re.earch challenging the

re.earcher to thin abo"t ho the or e!tend.9 modifie. and ."pport. or e8en challenge.

that of other.+

Literat"re re8ie al.o .ee. to pre.ent a ba.i. for a .t"d0 b0 pro8iding a theoretical and

concept"al ba.i. "pon hich the re.earch i. "ndertaen+ 2oole0 #$%%I@)H* acnoledge.

that re8ieing related literat"re i. of great importance a. it .er8e. in the enB"ir0 of

pre8io". or that acB"aint. the re.earcher ith hat ha. been alread0 done in the field

thereb0 minimiing the po..ibilit0 of "npremeditated d"plication+ F"rthermore9 the

re8ie can be highl0 beneficial to the re.earcher in the attainment of rele8ant theor0 and

pointing o"t to the .trategie.9 proced"re. and in.tr"ment. that ma0 be fr"itf"l in p"r."ing

the problem+

-oe8er9 White #)''I


24/59

comm"nication and other p"blic good. and .er8ice. that are e..ential to .tim"late pri8ate

in8e.tment+ F"rthermore9 go8ernment ha. a deci.i8e role thro"gh ."pport for re.earch and

contract ith foreign b"0er. a. ell a. in facilitating acce.. to credit to both directl0 and

indirectl0 e!porting term.+ F"ne and -oll0 #$%%)* arg"e that the maorit0 of the pre8io".

approache. ha8e empha.ied demand factor.+ S"ch model. ha8e generall0 been rather

"n."cce..f"l in e!plaining long r"n trend. in e!port performance+

5ogan #$%%H* find. that d"ring the $%&'. the le8el of the econom0(ide ."b.id0 rate. and

that of inter(ind".tr0 di.per.ion of incenti8e. ha. ."b.tantiall0 been loered+ 5he

.t"d0 al.o find. that the 5"ri.h e!port( and import(competing ind".trie. ha8e

benefited from the e!port incenti8e. more than the other .ector.+

Al.o Riedel9 -all and Grae #$%&=* ".ed B"antitati8e method. of re.earch to identif0 the

determinant. of e!port performance in 1ndia on the ba.i. of time(.erie. anal0.i.

o8er the period $%


25/59

A more recent .t"d0 of Sharma #)''$* in8e.tigate. e!port. determinant in 1ndia ".ing

ann"al data for $%;'(%&+ 5he .t"d0 ".e. .im"ltaneo". eB"ation frameor+ 5he

re."lt. of .t"d0 ."gge.t that demand for 1ndian e!port. increa.e hen it. e!port

price fall. in relation to orld price.+ F"rthermore9 the real appreciation of the

r"pee ad8er.el0 affect. 1ndian e!port.+ E!port. ."ppl0 i. po.iti8el0 related to the

dome.tic relati8e price of e!port. and higher dome.tic demand red"ce. e!port

."ppl0+ Foreign in8e.tor. appear to ha8e .tati.ticall0 no .ignificant impact on e!port

performance9 altho"gh the coefficient

Of F21 ha. a po.iti8e .ign+ -oeman and 2ano8 #$%%&* hich data are a8ailable9

/oland i. the onl0 one ith a .ignificant po.iti8e a..ociation beteen F21 and

e!port. .tr"ct"re+

2!2!2 T3+ 6+/:)53. *+++5 +,3:5=+ 6:+ :5 +.)6

Since the breadon of the ,retton(Wood agreement9 the trading nation. ha8e embraced

a regime of floating e!change rate determination+ 5hi. i. .aid to ha8e bro"ght "p

the i.."e of e!change rate 8olatilit0 in general and it. impact on foreign trade in

partic"lar9 and it ha. been the ."bect of n"mero". .t"die.+ 1n addition9 the

e!perience of c"rrenc0 cra.h in 5hailand and the A.ian financial cri.i. ha8e led to

e!plo.i8e re.earch on the ca".e. and impact. on temporal e!change rate 8olatilit0+

/re8io". literat"re .t"die. ha8e been inconcl".i8e@ mo.t hold the notion that

e!change rate "ncertaint0 ha. either po.iti8e or negati8e effect. on trade 8ol"me+

According to them9 trade co"ld be con.idered a. an option held b0 firm.9 and the 8al"e of

trade ri.e. ith 8olatilit0 #Serc" and 4anh"lle $%%)*+While Frane #$%%$* de8elop. a

model in hich a firm e8al"ated the e!it co.t. a..ociated ith lea8ing a foreign maret

again.t lo..e. created b0 e!port.9 and 8ice 8er.a+ 3nder a 8ariet0 of beha8io"ral

a.."mption.9 it a. po..ible that an0 gi8en firm o"ld9 on a8erage9 enter .ooner and e!it

later hen there i. a ri.e in e!change rate 8olatilit09 th". increa.ing the a8erage n"mber of

trading firm.+ 5hi. a. ."pported b0 1MF #$%&=*+ 1n line ith thi. finding9 4iaene and de

$=


26/59

4rie. #$%%)* ill".trate9 in the conte!t of theoretical model. or empirical model.9 that

e!change rate 8olatilit0 might benefit trade+

1n contra.t9 according to McKenie #$%%%*9 mo.t of the pre8io". .t"die. appear to fa8o"r

the negati8e h0pothe.i.9 in that real e!change rate 8olatilit0 i. detrimental to e!port.+

1brahim #)''H* fo"nd that depreciation of dome.tic c"rrenc0 increa.e. the co.t. of

imported inp"t. and e8ent"all0 ind"ce. contractionar0 effect. on the econom0+ Some

theoretical .t"die. Arie #$%%I* ha8e pro8ided e8idence to ."pport the h0pothe.i. that an

increa.e in e!change rate 8olatilit0 might ad8er.el0 affect trade@ .ince ri.(a8er.e

e!porter. face greater ri. and "ncertaint0 ith regard to profit earned9 the0 therefore

red"ce the ."ppl0 of traded good.+

A n"mber of empirical .t"die. ha8e fo"nd ca.e. here a ri.e in e!change rate 8olatilit0

ma0 ha8e both po.iti8e and negati8e implication. on e!port. and import.9 depending on

the prod"ct. and co"ntrie. 7ho" #)'''*9 for e!ample9 arg"ed that the 8ariabilit0 of an

e!change rate might either deter or .tim"late bilateral trade+ Sa"er and ,ohara #)''$* al.o

fo"nd that 8olatilit0 ha. .ignificant negati8e effect. on e!port. from the de8eloping

co"ntrie.9 e.peciall0 in Latin America and Africa9 b"t not on e!port. from the le..

de8eloping or ind".trialied co"ntrie. in A.ia+

5he.e concl".ion.9 hoe8er9 cannot be .een a. definiti8e+ 5here are al.o a fe .t"die.9

hich concl"de that e!change rate 8olatilit0 pla0ed no .ignificant role in e!plaining trade

8ol"me #Ari.totelo". )''$*+

2!2!# E.)6 5;/:)5 :5 +,)5), =6)3!

1t need. to be empha.ied at the o"t.et the o8er8al"ation of national c"rrencie. i. not the

.ole po..ible .o"rce of the h0pothe.ied lin. beteen inflation9 e!port. and groth+

$I


27/59

-igh inflation ma0 al.o di.tort prod"ction b0 dri8ing a edge beteen the ret"rn. to real

and financial capital+ 1t ma09 moreo8er9 red"ce .a8ing and B"alit0 of in8e.tment b0

red"cing real intere.t rate9 often far belo ero+ 5h".9 the net depreciation of capital .toc

accelerate.+ F"rther9 high inflation ma0 be a .0mptom of economic mi.management for

e!ample per.i.tent go8ernment b"dget deficit.9 imperfect in.tit"tion. for e!ample fragile

ban. and financial maret. and other factor. lie political "phea8al and .ocial .trife that

together help "ndermine e!port performance and economic groth+

Rapid inflation can retard e!port. and groth one or all of the.e channel.9 #G0lfa.ion9

$%%&*+ E8en .o9 the e!perience of -ong Kong and Korea .ho. that moderate inflation

%percent and ;percent per ann"m on a8erage in $%&I($%%= doe. not precl"de 8igoro".

e!port. and rapid9 .".tainable economic groth+ 5he ca".ation ma0 r"n in both

direction. for e!ample9 rapid groth ma0 contrib"te to price .tabilit0 b0 .trengthening

the ta! ba.e and th". dimini.hing the need for printing mone0 to finance go8ernment

b"dget deficit. and al.o b0 red"cing the ri. that competing claim. for .hare. in the

national income b0 different .ocial gro"p. lead to price increa.e. and co.t inflation+

A high le8el of gro.. dome.tic prod"ct p".he. e!port 8ol"me "pard. indicate. #Og"ledo

and Mac/hee $%%=*+

2!2!> S.+,:/:)5 +;;,+5, :5 +.)6

1n re.pon.e9 recent 0ear. ha8e itne..ed a rapidl0 groing empirical literat"re e!amining

the determinant. of e!porting9 and e.peciall0 the role of prod"cti8it09 at the firm le8el+

From a polic0 per.pecti8e9 thi. line of re.earch appear. to be highl0 rele8ant a. the to

theoretical frameor. #trade theor0 and firm(le8el theor0* ha8e B"ite different

implication.+

1f there are ."b.tantial entr0 co.t.9 for in.tance9 policie.9 hich are ."cce..f"l in

facilitating eno"gh firm. to enter the foreign maret9 ill ha8e effect. on e!port.

$


28/59

e!tending o8er .e8eral time period.+ 9 Me!ico9 and Morocco9 and ,ig.ten et al for

7ameroon9 Ghana9 Ken0a and Zimbabe #)'''* 5here are to main rea.on. h0 thi.

might be .o+ Fir.tl09 efficient firm. ma0 .elect them.el8e. into the e!port maret+

5hi. .eem. to be the ca.e in the 3S ,ernard and en.en #$%%%* and in mo.t .ector. in

7olombia9 Me!ico and Morocco 7leride. et al9 #$%%&* Secondl09 firm. ma0 become

efficient thro"gh e!porting9 the .o(called learning(0 e!porting effect+#Kraa0 $%%;* find.

.ome e8idence of thi. in 7hina ,ig.tenetl #)'''* find both effect. pre.ent for 7ameroon9

Ghana9 Ken0a and Zimbabe+ We attempt to determine hether man"fact"ring firm. in

So"th Africa are more efficient too+ We find that thi. i. indeed .o9 altho"gh it i. dependent

on here the0 e!port to+ 3nfort"natel09 beca".e e ha8e onl0 cro..(.ectional data e

cannot get an idea of hether thi. i. beca".e of .elf(.election9 learning(b0(e!porting or

both+ We al.o find9 in common ith ,ig.ten et al #$%%%*9 that 8er0 fe So"th African

firm. are .peciali.t e!porter.+

Altho"gh9 man0 firm. e!port C ;$J of o"r .ample C the.e firm. do not e!port 8er0 m"ch

C abo"t $&J of their o"tp"t+ Le.. than half the firm. in the .ample e!port more than $'J

of their .ale.9 and onl0 $'J of firm. e!port half or more than half of o"tp"t+ 1n light of

the pop"larit0 in the literat"re of ."n co.t. a. an important factor the affecting the e!port

deci.ion thi. .eem. to be a p"le+

2!2!$ E.)6 :5 ;)6+=5 :6


29/59

negati8el0 related to ."ppl0 capacit0+ -oe8er9 the .ign of the relation.hip co"ld be

arg"able+ ,etter foreign maret acce.. co"ld al.o dra prod"ction re.o"rce. from abroad

8ia foreign direct in8e.tment or labo"r migration+

1n that ca.e9 factor demand pre.."re co"ld be ea.ed and the .ign of the relation.hip co"ld

become "ncertain at lea.t to a certain e!tent Empiricall09 if the fir.t effect #factor price.*

dominate. the .econd #factor. ."ppl0* an e.timate of the ela.ticit0 of e!port performance

ith re.pect to foreign maret acce..9 hich i. le.. than one o"ld be obtained+ 1n other

ord.9 e!port performance o"ld be e!pected to gro le.. than proportionall0 than

foreign maret acce..+ On the contrar09 if the ela.ticit0 of e!port performance ith

re.pect to foreign maret acce.. i. greater than one9 then e!port. o"ld groth

proportionall0 more than foreign maret acce..+

2!# E.6,:/ /+6:46+

2!#!1 E,3:5=+ 6:+ :/=5+5 :5 +,)5), =6)3

Real e!change rate mi.alignment i. negati8el0 related to economic groth9 #Edard.

$%&&*+1n partic"lar9 Gh"ra and Grenne. #$%%H* fo"nd that different mea."re. of real

e!change rate mi.alignment and it. in.tabilit0 ha8e negati8e effect. on the groth rate of

real per capita income9 e!port9 and agric"lt"ral o"tp"t a. ell a. on in8e.tment for .ample

of HH ."b(Saharan African co"ntrie. incl"ding Zimbabe+ Mi.alignment e!change rate

mean. loer profitabilit0 in the .ector. ho.e o"tp"t price. are loered relati8e to price.

in other .ector.+ 4er0 often9 mi.alignment tae. the form of dome.tic c"rrenc0

o8er8al"ation9 hich h"rt. tradable acti8itie.+ 5hi. affect. groth performance ad8er.el0

.ince prod"cti8it0 impro8ement. tend to be concentrated in e!port. or import(competingind".trie.+ Moreo8er9 di.torted e!change rate ha8e negati8e indirect effect. "."all0

referred to a. .m"ggling acti8itie. that ca".e the ."ppl0 of good. to legal or official

maret. to fall+

$&


30/59

5he increa.ing incidence of ethnic conflict. and m"ch(p"blicied con.eB"ence. of the.e

conflict. ha8e led economi.t to mae a connection beteen ethnic di8er.it0 and economic

phenomena lie groth and in8e.tment9 Ea.ter0 and Le8ine #$%%;* fo"nd empirical

e8idence to ."pport their claim that high le8el of ethnic di8er.it0 of co"ntrie. in Africa i.

an important contrib"tor to their poor economic performance +La/orta et al#$%%%* pointed

o"t that ethnic di8er.it0 lead. to corr"ption and lo efficienc0 in go8ernment. that

e!propriate from di.ad8antage

5he diagram of the international monetar0 f"nd #)''=* belo ill".trate. the ann"al

a8erage rate of e!port. groth from $%%I to )''= of the different ."b(Saharan co"ntrie.9

hich incl"de Zimbabe9 Ken0a9 3ganda9 So"th Africa and 5anania+ 1t .ho. that

Zimbabe e!perienced a negati8e e!port groth from )''$ to )''=+

2!#!2 E.)6 ;)6+=5 6+, 57++5 :5 .6)4,7

5hi. empirical literat"re in.pired a n"mber of theoretical paper. that drop the a.."mption

of a repre.entati8e firm and in8e.tigate the beha8io"r of heterogeneo". firm. in general

eB"ilibri"m model. of open economie.+ 5he.e theoretical model. in t"rn generate te.table

h0pothe.i.9 and .er8e a. a catal0.t for a ne generation of micro econometric .t"die. of

international acti8itie. of firm.+ A ca.e in point i. the m"lti(co"ntr09 m"lti(.ector general

eB"ilibri"m model of -elpman9 Melit and 6eaple #)''=* #henceforth9 -M6* that

e!plain. the deci.ion of heterogeneo". firm. to .er8e foreign maret. either tro"gh

e!port. or foreign direct in8e.tment #F21*+5he0 .ho that9 in eB"ilibri"m9 onl0 the more

prod"cti8e firm. choo.e to .er8e the foreign maret.9 and the mo.t prod"cti8e among thi.

gro"p ill f"rther choo.e to .er8e the.e maret. 8ia F21+

5he.e empirical paper. tae the -M6(model a. a point of depart"re+ -ead and

Rie.#)''H*".e data for apane.e firm. @the0 find that firm. that onl0 .er8e the dome.tic

maret tend to be .maller than firm. that onl0 e!port and firm. that do F21 +1n8e.tor.

$%


31/59

ho al.o e!port are generall0 larger than e!porter. ho do not ha8e o8er.ea. in8e.tment+

/rod"ction f"nction re.id"al. 0ield m"ch eaer

2!#!# W3: 67+ :54;:,465= +.)6 5 A;6,:

1t ha. been ."gge.ted that ."b(Saharan Africa ill not be a .ignificant e!porter of

man"fact"red good. beca".e it lac. the nece..ar0 .ill.+ Wood $%%= arg"e that Africa

can onl0 e!port "n.illed labo"r inten.i8e man"fact"re.9 a. "n.illed labo"r i. relati8el0

ab"ndant+ El.ehere it ha. been arg"ed that nat"ral re.o"rce inten.i8e good. ill

dominate African e!port.9 and that man"fact"ring e!port. therefore ill be marginal9

e8en in the labo"r inten.i8e .ector. #Wood and Ma0er $%%&*+ 1n contra.t to thi. line of

tho"ght9 hich i. ba.ed on comparati8e ad8antage theor09 i. the 8ie that firm(le8el

factor. are more important determinant. of e!port. than factor. related to ind".tr0

#Kr"gman $%&%*+ 1n partic"lar9 empha.iing that entr0 into e!porting i. a..ociated ith

.ignificant fi!ed co.t.9 thi. theor0 predict. that onl0 relati8el0 prod"cti8e firm. ith

relati8el0 high ret"rn. to e!porting ill choo.e to inc"r the co.t. and enter the

international maret+

1n re.pon.e9 recent 0ear. ha8e itne..ed a rapidl0 groing empirical literat"re e!amining

the determinant. of e!porting9 and e.peciall0 the role of prod"cti8it09 at the firm le8el+

From a polic0 per.pecti8e9 thi. line of re.earch appear. to be highl0 rele8ant a. the to

theoretical frameor. #trade theor0 and firm(le8el theor0* ha8e B"ite different

implication.+ 1f there are ."b.tantial entr0 co.t.9 for in.tance9 policie.9 hich are

."cce..f"l in facilitating eno"gh firm. to enter the foreign maret9 ill ha8e effect. on

e!port. e!tending o8er .e8eral time period. 2"e to a .hortage of micro data9 there i. not

m"ch empirical e8idence on the c"rrent topic for Africa+

)'


32/59

2!> "5)/+=+ =:.

5he ab.ence of a re.earch on the impact of e!change rate 8olatilit0 on the Zimbabean

e!port. and the debate. on ho the to 8ariable. affect each other ha. moti8ated the

re.earcher to "ndertae thi. re.earch+

2!$ C3:.+6 4:6

5hi. chapter re8ie literat"re gap on the e!port f"nction and other 8ario". determinant.

of e!port. and their applicabilit0 to the Zimbabean ca.e+ 5he maor i.."e. di.c"..ed are

the effect. of e!change rate mi.alignment and the impact of e!change rate 8olatilit0 on

the e!port f"nction+ 5he ne!t chapter i. re.earch methodolog0

)$


33/59

CHAPTER #

RESEARCH METHODOLOGY

I56)4,)5

1n thi. chapter9 the re.earcher gi8e. a de.cription of ho the re.earch a. carried o"t in

order to meet obecti8e. of the .t"d0 that i. to model the Zimbabean e!port

f"nction+5he re.earch attempt. to e.tabli.h the relation.hip beteen e!change rate.9

foreign direct in8e.tment9 gro.. dome.tic prod"ct and e!port. in Zimbabe+ Re.earch

de.ign i. the plan of the .t"d0 that pro8ide. the general plan of ho to go abo"t

an.ering re.earch B"e.tion.+

))


34/59

#!1 R++:6,3 +=5

According to ,r0man #)''H*9 a re.earch de.ign pro8ide. a frameor for collection and

anal0.i. of data+ Leed0 #$%%=* al.o propo"nd. that a re.earch de.ign i. all the

proced"re. .elected b0 the re.earcher to an.er a partic"lar .et of B"e.tion. of the

h0pothe.i.+ anomic #$%%I* define. a re.earch de.ign a. a .0.tematic and orderl0

approach taen toard. the collection of data .o that information can be obtained

from tho.e data+ 5he main obecti8e of the re.earch de.ign i. to pro8ide re."lt.9

hich are "dged to credible and .ho"ld re.emble realit0 and are taen to be tr"e

and rea.onable+ 5he re.earch de.ign to be ".ed i. the correlation re.earch de.ign+

Water. #$%%;* define. correlation re.earch de.ign a. a method of .t"d0 in hich

to or more B"antitati8e 8ariable. from the .ame gro"p of ."bect. in hich one i.

tr0ing to determine if there i. a relation.hip or co(8ariation beteen the to

8ariable.+ 1t attempt. to e!plore relation.hip. to mae prediction.+ 1t e!plore. and

te.t relation beteen 8ariable.9 r"le. o"t alternati8e 8ariable. that co"ld pla0 a role

in relation. beteen 8ariable. #,r"ce $%%=*+ 5he de.ign ha. an ad8antage of being

reliable altho"gh maor critici.m ha. been fo"nd on it. fail"re to bring o"t the

ca".alit0 effect #7re.ell )''H*+ 7orrelation re.earch de.ign i. appropriate to thi.

.t"d0 .ince there i. need to find the nat"re of relation.hip9 regre..ion and co(

8ariation beteen e!port. and e!change rate 8olatilit0+

#!2 R++:6,3 564+5

Walliman #)'''* define. re.earch in.tr"ment. a. tool. ".ed for collecting information and

data need to find .ol"tion. to a problem "nder in8e.tigation+ 5he re.earcher

hoe8er ".ed de. re.earch+ 2e. re.earch in8ol8e. gathering data that alread0

e!i.t. either from internal .o"rce. of the client9 p"blication. of go8ernmental and

non(go8ernmental in.tit"tion. and in profe..ional ne.paper.+

#!# D:: ,)//+,)5 :5 .6),+46+

)H


35/59

5here are ba.icall0 to t0pe. of data that ma0 be ".ed in empirical anal0.i.9 namel09

primar0 data and .econdar0 data+ /rimar0 data or field re.earch in8ol8e. original

data gathering on the targeted 8ariable+ 5he re.earcher hoe8er did not ".e primar0

data beca".e the data reB"ired i. diffic"lt to con.olidate b0 indi8id"al.+

According to Zim"d #$%%$*9 .econdar0 data i. hi.torical9 alread0 a..embled and do not

reB"ire acce.. to re.pondent.+ 5hi. form of data compri.e. of information that ha.

been collected for other p"rpo.e. and not the re.earch "nder re8ie+ For the

p"rpo.e of thi. re.earch .econdar0 data a. gathered from 8ario". .o"rce. ."ch a.

te!tboo.9 o"rnal. and Z1MS5A5+ According to Gha"ri and Gronha"gh #)'')*9 it i.

le.. e!pen.i8e to ".e .econdar0 data to collect data+ 1t enable. the re.earcher to

.pend more time and effort anal0ing and interpreting data+ Secondar0 data can be

collected B"icl0 Ne"man #)'')*+ Secondar0 data pro8ide. a .o"rce of data that i.

permanent and a8ailable in the form that ma0 be checed relati8el0 ea.0 b0 other.

2e".combe #$%%&*+

#!> R+=6+)5 )+/

)=


36/59

5hi. paper ."gge.t. that in modelling the e!port f"nction M"ltiple Regre..ion Model i.

preferable th". de8i.e relation.hip beteen .e8eral independent 8ariable. and a

dependent ? criterion 8ariable+ Regre..ion anal0.i. refer. to the techniB"e. for the

modelling and anal0.i. of n"merical data con.i.ting of 8al"e. of a dependent

8ariable #e!port f"nction* and one or more independent 8ariable. #gro.. dome.tic

prod"ct9 foreign direct in8e.tment. and e!change rate*+

X P Q' Q$ER Q)G2/ QHF21

Where

X P total amo"nt of good. and .er8ice. e!ported9

Q' P con.tant term or the intercept9

Q$ P partial regre..ion coefficient. for # I9+++9$=i *9

ER P real e!change rate

G2/ P gro.. dome.tic prod"ct

F21 P foreign direct in8e.tment

P random error term+

Regre..ion i. appropriate to m0 .t"d0 a. it i. ".ed for h0pothe.i. te.ting and modelling ofca."al relation.hip.+ A d"mm0 8ariable ha. been incl"ded in the model to capt"re the

effect of e!port control policie.9 e!port reg"lation policie. coerce. a certain trend of

e!port demand re."lting in the decline in the e!port demand or an e!port liberaliation

polic0 hich ea.0 o"t acce.. to e!port thereb0 re."lting in a larger aggregate import

demand in the econom0+ 5h". o"r linear model ill be a. follo.

)I


37/59

5he portion Q' Q$ER Q)G2/ QHF21 called the determini.tic portion hile the i.

called the .tocha.tic portion of the model+ 5he random error term i. incl"ded in the

model to repre.ent 8ariation. in the dependent 8ariable not e!plained b0 the

independent 8ariable. being ".ed in the model+ 5hi. i. rational .ince there are a

n"mber of factor. that ha8e been left o"t+

'9 $9 )9 H the.e are partial regre..ion co(efficient. hich e!plain. the rate of change of

the dependent 8ariable hen independent 8ariable change. b0 $''J+

#!$ 4;,:)5 ); 3+ M)+/ :5 V:6:*/+

4ariable. ".ed in thi. re.earch are con.idered d"e to their 8olatilit0 d"ring the )&0ear.+5he.e 8ariable. ere the mo.t acti8e d"ring o"r econom0:. melt don+ 4ariable.

incl"ded in the model are B"antified on 0earl0 ba.i.+

E,3:5=+ 6:+C A fall in the relati8e dome.tic price. d"e to e!change rate depreciation

mae. e!port. cheaper in international maret. re."lting in increa.ed demand for e!port.9

therefore e e!pect the po.iti8e impact of real e!change rate on e!port groth+ E!change

rate being the determinant of import price. ha. a role to pla0 on international trade+

2"ring the period "nder re8ie e!change rate. fl"ct"ated in accordance ith economic

decline in the co"ntr0 therefore it. fl"ct"ation. impacted .omeho on international trade+

7on.ideration of thi. 8ariable enable. to te.t the act"al effect of e!change rate on e!port

f"nction+

)


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N:)5:/ 5,)+ C Groth of the G2/ i. an indicator of f"t"re potential and

.".tainabilit0 of prod"ction le8el+ Groth i. more 8alid determinant of e!port.

a. compare to G2/ beca".e it mea."re. the .".tainabilit0 of o"tp"t le8el.+ So e

e!pect po.iti8e impact of G2/ groth on e!port. e!pan.ion+ + 5herefore

fl"ct"ation. in national income d"ring the period had .ome impact on e!port

f"nction a. there i. a po.iti8e relation.hip of income and import. th". the

relation.hip ha8e to be te.ted+

F)6+=5 6+, 57++5C1n empirical literat"re the role of F21 in e!port. promotion

i. contro8er.ial+ Man0 .t"die. for e!ample /fafferma0r #$%%


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#!@ E.+,+ =5

Alloing all the.e 8ariable. to interact ith e!change rate ill re8eal more information

of ho e!change rate interact. ith other facet. of the econom0+ 5hat i. the

relation.hip re8ealed b0 the literat"re i. e!pected to be re."lt. of thi. re.earch+ 5he0

are al.o room for different re."lt. d"e to different economic c0cle.9 policie. and

other factor.+

#!8 S=5;,:5,+ ); 3+ +66)6 +6

5he error term repre.ent. the magnit"de of other factor. than e!change rate9 gro..

dome.tic prod"ct and net foreign dome.tic prod"ct that infl"ence the dependant

8ariable+ 5he .ignificance of the.e factor. ma0be to .mall that .tati.tical

repre.entati8e ma0 be challenging ."ch that data on the.e 8ariable. ill be diffic"lt

to B"antif0 ."ch that their infl"ence cannot be .tati.ticall0 determined+

#!9 E7+ );:6+

E4ie. pro8ide. a broad introd"ction to B"antitati8e economic method.9 for

e!ample ho model. ari.e9 their "nderl0ing a.."mption. and ho e.timate. of

parameter. or other economic B"antitie. are comp"ted+ 5o model the .tati.tic. l

ill ".e E8ie. .oftare9 E4ie. #Econometric 4ie.* i. a .tati.tical pacage

for Windo.9 ".ed mainl0 for time(.erie. oriented econometric anal0.i.+

#!10 C3:.+6 S4:6

)&
http://en.wikipedia.org/wiki/Statistical_packagehttp://en.wikipedia.org/wiki/Microsoft_Windowshttp://en.wikipedia.org/wiki/Econometricshttp://en.wikipedia.org/wiki/Statistical_packagehttp://en.wikipedia.org/wiki/Microsoft_Windowshttp://en.wikipedia.org/wiki/Econometrics


40/59

5hi. chapter elaborated the re.earch methodolog0 and re.earch de.ign+ Stati.tical te.t. to

be ".ed al.o o"tlined in thi. chapter9 ".tification of the model and 8ariable. a.

al.o o"tlined in thi. chapter+ 5he ne!t chapter9 finding. ill be pre.ented and

anal0.i. and interpretation of the re."lt. i. done in the ne!t chapter

CHAPTER FOUR

DATA PRESENTATION ANALYSIS AND DISCUSSION

)%


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>!0 I56)4,)5

1n thi. chapter data finding. are pre.ented9 anal0.ed and interpreted a. the0 relate to

theor0 that "nderlie. the .t"d0+ Finding. ere anal0ed to come "p ith rea.onable

concl".ion of the Zimbabean e!port f"nction+

>%1 E.+,+ =5

According to the theoretical the e!change rate9 real gro.. dome.tic prod"ct and net

foreign direct in8e.tment are .aid to be po.iti8el0 related to the e!port.+ An e!change rate

appreciation ill lead to an increa.e in e!port. +hile and increa.e in gro.. dome.tic

prod"ct ill p".h "p the ."rpl". a8ailable for e!port. and an increa.e in F21 ill increa.e

o"r o"tp"t a8ailable for e!port.+

>%2 R+=6+)5 6+4/

T:*/+ 1

E P Q Q$ER Q)G2/ QHF21

E P '+)=)%HI Q$


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>!# D:=5), +

2iagno.tic te.t e!amine. the correlation9 normalit0 and f"nctional a.pect of the data and

it i. carried o"t in thi. .t"d0 and the model a. correctl0 fitted .ince it a. clo.er to

$+from the e.timated model 9R)P'+I;;)%$ V:6:*/+ 6+/:)53.

2W te.t for a"tocorrelation .o a. to a.certain that the error term i. not correlated+

Whene8er there i. a"tocorrelation9 the p 8al"e. tend to be different from ero .hoing

dependenc0 beteen the error term and it. lagged 8al"e.+ 1f the 2W te.t fig"re i. greater

than the F(.tati.tic9 therefore error term. are correlated+ 1n addition9 an F Stati.tic of

'+''''


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'+


44/59


45/59

CHAPTER $

CONCLUSION AND POLICY RECOMMENDATIONS

$!0 I56)4,)5

5he main thr".t of the .t"d0 a. to tr0 and e.tabli.h the main ca".e. of the folloedtrend of import demand in Zimbabe ith the obecti8e of finding o"t the

relation.hip of economic 8ariable. inflation9 RG2/9 e!change rate9 inflation and

commodit0 .hortage in e!plaining import demand+ 5hi. chapter therefore

foc".e. on polic0 recommendation. ba.ed on the re."lt. di.c"..ed in the

pre8io". chapter+ 1t di.c".e. .ome polic0 option. that can be p"r."ed

co"ntr0ide and orld o8er+

$!1 S4:6 ); ;55=

According to the empirical and theoretical finding. from the pre8io". re.earch9 foreign

direct in8e.tment9 real gro.. dome.tic prod"ct and e!change rate are po.iti8el0 related to

H=


46/59


47/59

5hi. re.earch pre.ented an empirical anal0.i. of the Zimbabean e!port f"nction from

$%&' to )''&+to .it"ate thi. .t"d0 ithin the conte!t of the e!i.ting one. and again.t the

bacgro"nd of the main obect of thi. paper9 a detailed re8ie of theoretical and empirical

literat"re a. carried o"t+ 5he data "tili.ed prod"ced the re."lt. that ha8e been pre.ented

and anal0.ed and recommendation ere al.o made+

5he data .eem to be prod"cing re."lt. that are different from the theoretical bacgro"nd9

the po.iti8e relation.hip beteen e!change rate and e!port. doe. not compl0 ith the

theoretical literat"re9 and "nreliable data might ha8e been the ca".e and 1 recommend the

re.pon.ible a"thorit0 to f"ll0 f"nd the office. the cond"ct re.earche. for them to acB"ire

the correct data+

On the other hand foreign direct in8e.tment re."lt. do compl0 ith the theor09 b"t F21 i.

not hea8il0 .ignificant to thi. model+ 5he re.earch ."gge.t that more m".t be done

impro8e F21 in order to increa.e o"r e!port ca.h inflo+

$%# P)/, R+,)+5:)5

Economic acti8it0 in Zimbabe ill remain ."ppre..ed "p to ."ch a time that

there i. eno"gh .pace for the a"thoritie. to de.ign and implement policie. that are

de.irable ith long(term benefit.+

5here i. need in other ord. to loo at the po..ibilit0 of re engaging the 1MF

hich .ho"ld in one a0 or the other re."lt in "nlocing other international

financier. ho regard the 1MF a. a .tandard bearer in international finance+

5he fact that the co"ntr0 i. not in a po.ition to boo.t it. prod"ction capacit0 th".

.ho"ld engage the World ,an for finance to boo.t it. prod"ction capacit0+

1n8e.tor confidence .ho"ld be re.tored .o a. to attract in8e.tment and enco"rage

.a8ing. to boo.t prod"ction and gro.. dome.tic prod"ct+

Zimbabe embared on the ".tified land reform program9 thi. .a the co"ntr0

facing ac"te .hortage of food9 therefore the co"ntr0 .ho"ld engage in loan

.cheme. for farmer. accompanied ith collateral a. prereB"i.ite to get a loan .o

H


48/59

that beneficiarie. ".e acB"ired f"nd. for intended ".e9 thi. help. to c"rb farmer.

from the immoral ".age of farming f"nd. and eB"ipment+

At the moment9 d"e to the declining balance of pa0ment ."pport there i. limited

latit"de that can be e!ci.ed b0 the rele8ant a"thoritie. to normalie the .it"ation+

1n partic"lar9 there i. limited .pace for fi.cal9 monetar0 and e!change rate policie.+

$%> A6+: ;)6 ;463+6 4

For f"rther .t"die. the re.earcher ."gge.t. that there i. need to incorporate more

8ariable. in the e!port. f"nction model+ 5he.e 8ariable. incl"de technolog09

international relation. and gro.. dome.tic prod"ct of the trading partner +5hi. o"ld

increa.e the credibilit0 of the model .ince the.e al.o affect the e!port f"nction in

de8eloping co"ntrie.+ Other f"nctional form. of the model ha8e to be te.ted al.o

a..e.. the .ignificance of the determinant. of the e!port f"nction in de8eloping

co"ntrie.+

5he re.earcher al.o ."gge.t. the application of the model in different period. of fi!ed

and fle!ible e!change rate .o a. to effecti8el0 a..e.. the effect of the e!change rate on

e!port f"nction+

$%$ C)5,/4)5

Relation.hip of e!port f"nction and economic 8ariable.9 hich are the e!change rate@

foreign direct in8e.tment and gro.. dome.tic prod"ct9 the relation.hip9 had been

theoreticall0 and empirical e!plored+ 1t i. from the empirical te.t carried o"t that there i.

.ignificant relation.hip beteen e!port. and the afore.aid economic 8ariable. for the

period $%&' to )''&+ -oe8er9 e!port f"nction determinant. cannot be re.tricted .ince

.ocial and political factor. ha8e .ignificant impact on e!port f"nction

H;


49/59

REFRENCES

Albeit Moocheana #)''&*@Z*:*+ B/:,< :6


50/59

ancoic.9 A+29 #)''I*9 UB45+ R++:6,3 P6)+,9 =thEdition9 5homp.on Learning9 Londo

Monetar0 polic0 re8ie .tatement for the fo"rth B"arter of )''I@ Re.er8e ,an of Zimbabe #R

)= an"ar0 )''


51/59

APPENDIX

T:*/+ 2

XER

GDP FDI CPI xg erg fdig

gdph

1980 1876

0.404 784 8.4 6

0.))1478

6.08E0

0.001046

0.)

1981 187

0.616) 7864 .4 12

0.))08))

6.880)E0

0.0004)2

0.12

198 14

0.8412 764 7.8 1

0.17767

0.000108688

0.001014

).2

198

! 142

1.122

) 74 2. 18

0.181

6

0.0001

4)1

0.000

)4 ).)0198

" 1671.0)

2 741 1. 100.)04

710.000162

060.0001

620.68

198# 1681

1.421) 74) ).44 10

0.)064)

0.000180)72

0.000

10.04

198$ 1726

1.4671 7477 .4 1

0.)1)8)

0.0001811

0.0004

20.6

198% 17

1.441 76)1

10.4

4 100.)1)2

640.000180

601

0.001)

)0.6

1988 1670

1.82)8 770

1).4

70.)011

0.000)18

6

0.0012

1.26

1989 168

).)601 7727 1 12

0.18770)

0.000)444

0.0012

6 0.0)199

016 ).44

27672 1) 16 0.188

460.00000

16

0.001 0.6)

='


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6

1991 167

.6)) 7411 27

0.)06)8

0.000262

0.00027

1.84

199 10

.11)1 4622 1 20

0.))4747

0.000670))

0.00)))2

)1.4

199! 182 4.8 4224 ) )0

0.)26)7

0.00106741

0.002842

2.21

199" 16)8

7.761 477 0 )

0.))7)

0.001))42

0.00276

4.07

199# ))16

8.108 61 87 )7

0.0882

0.00101467

0.01601

2.40

199$ )216

10.778 7604 14

0.)664)

0.001)2288)

0.0020)

)1.6

199

% )2)

17.40

71 784 106 )0

0.)61

0.00)066

6)2

0.0118

26

).76

1998 160

6.48) 4)62 24 27

0.)6127

0.0084)

0.04828

)8.8

1999 1802

7.177 842 0 4.))

0.18)28

0.0048274

0.00772

2.82

000 181 22 76

1.44 .))

0.)6)7

0.00628181)

0.00)444

1.)

001 )17 410 0.)8 11).1

0.664

0.008008008

2.6E0

.8

00 1676 460

)).4

187.87

0.)4417

0.007)0)72

0.006

8.7)

00! 14 427 4)2 .)

87.6

0.)4241

0.1041476

0.0004

4.6)

00" 144 1) 2278

7.484

1).6

0.60806

1.12)80)8

0.00186

)7.)

00# 17 17684 )817

101.4

7.7

0.2)28

4.22187)17

0.0274

2.8

00

$ 16)1 702 442 20

1)71.

11

0.)78

8)

7.618

)0)

0.0040

)

1)6

00% 1718 8461 2000

4.724

44)1).

0.226 ).2166

0.01424)

8.7

008 141 0000 2214 1.4

10778

0.4)4

4.68267)41

0.01147 1

=$


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APPENDIX 1

2ependent 4ariable XGMethod Lea.t SB"are.2ate $'?'&?$$ 5ime '=$&Sample $%&' )''&1ncl"ded ob.er8ation. )%

4ariable 7oefficien

t

Std+ Error t(Stati.tic /rob+

7 '+)=)%HI '+'$))


54/59

=H


55/59

==


56/59

=I


57/59


58/59

2ependent 4ariable XGMethod Lea.t SB"are.2ate $'?'&?$$ 5ime '=$&Sample $%&' )''&1ncl"ded ob.er8ation. )%

4ariable 7oefficien

t

Std+ Error t(Stati.tic /rob+

7 '+)=)%HI '+'$))


59/59

R(.B"ared '+I;;)

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