Estimating the size and trends of the second economy in Zimbabwe

Makochekanwa, Albert (2010): Estimating the size and trends of the second economy in Zimbabwe.

Abstract

The second economy in Zimbabwe have grown from a low level of less than 10% of official GDP at independence in 1980 to an all time higher share of 70 percent in 2008 before subsiding to a still higher percentage share of 52% by end of 2009. Overall, the estimates obtained from this study are considerably higher than those obtained by most studies on African countries and this is not a surprise given that the country has experienced a prolonged decade long economic decline which resulted in GDP falling by more than 50 percent between 1999 and 2008. The existence of such a sizeable sector of unrecorded domestic and international economic transactions has several implications relevant for policy. First, it suggests that cconsiderable efforts will need to be made by the national accounts section in the Central Statistical Office (CSO) to establish systematic estimates of the major components of the second economy with a view of incorporating these into the official national accounts series. Second, coexistence of informal, parallel and black market activities in the second economy casts doubt on a blanket policy for the economy. Finally, the results suggest that the real total economy is healthier than the gloomy picture painted by official statistics.

• Item Type: MPRA Paper
• Language: English
• Keywords: Second economy; trends
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance

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