Zimbabwe’s Trade: Implications For Industrial Development in the Southern African Development Community Free Trade Area

Abstract

The Southern African Development Community Free Trade Area (SADC FTA) came into effect in January 2008 with at least 85 percent of intra-SADC trade free. Full liberalisation by all countries is expected to be completed by 2012. In analysing Zimbabwe’s trade with the SADC region, results show that irrespective of product category, Zimbabwe’s exports are currently dominated by land-intensive and labour-intensive goods while its imports are mainly composed of capital-intensive and skilled labour-intensive goods. This is consistent with the Heckscher-Ohlin theory since Zimbabwe is relatively more abundant in land and unskilled labour than it is in capital. If the economic and political situation in Zimbabwe returns to normal; the country could develop its industries further to overcome supply sided constraints and experience dynamic comparative advantages. Trade creation which results from the SADC FTA would enable the country to strengthen its current specialisation and increase both its land-intensive and labour-intensive exports. Furthermore, Zimbabwe’s exports of skill-intensive and capital-intensive goods to SADC countries that have less capital and skilled labour than Zimbabwe would rise, thus contributing to diversifying Zimbabwe’s exports. Zimbabwe’s ability to utilise provisions for industrial development in the SADC Protocol on Trade is currently constrained by the unstable political and economic situation which creates a less investor friendly environment; exodus of skilled labour and expertise; and the severe strain the manufacturing sector has been experiencing.