Taking Stock of the Impact of Sanctions on Livelihoods and Poverty in Zimbabwe

Abstract

ABSTRACT This article draws on the established empirical literature to assess the impact of United States sanctions on livelihoods and poverty in Zimbabwe. Using time-series data spanning from 1980 to 2015, the findings from a linear specification in sanctions duration show no evidence to support the negative impact of sanctions on formal employment and poverty. The results, however, portray a quadratic relationship between sanctions duration and livelihoods. Sanctions reduced formal employment during the initial stages but the negative relationship changed over time. Subsequently, informality increased during the sanctions period. Similarly, the relationship between sanctions duration and poverty is also non-linear. The turning point of the poverty quadratic curve coincides with the implementation of indigenization policy. Indigenization policy magnified sanctions’ negative impact instead of offsetting the impact. In this view, the government should consider addressing the indigenization policy which it has control over while at the same time continue re-engaging USA for the removal of sanctions.