Makochekanwa, Albert (2010): Estimating the size and trends of the second economy in Zimbabwe.
Download (250kB) | Preview
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|
|Original Title:||Estimating the size and trends of the second economy in Zimbabwe|
|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
|Depositing User:||Albert Makochekanwa|
|Date Deposited:||03. Apr 2012 12:41|
|Last Modified:||12. Feb 2013 19:52|
Ahumada, H., Alvaredo, F and A. Canavese, (2006), “The Demand for Currency approach and the Size of the Sahdwo Economy: Critical Assessment”.
Alanon, A. and M. Gomez-Antonio, (2005), “Estimating the size of the shadow economy in Spain: a structural model with latent variables”, Applied Economics, 37 (9): 1011 – 1025.
Bagachwa, M. S. D. and A. Naho (1995), “Estimating the Second Economy in Tanzania”, World Development, 23(8): 1387-1399.
Bevan, D. L., P. Collier and J. W. Gunning (1989), “Black markets: Illegality information and rents”, World Development, 17(I2): 1963-1989.
Chiumya, C. (2007), “The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options”, MPRA Paper No. 9860.
Chipeta, C (2002), “The second economy and tax yield in Malawi”, African Economic Research Consortium (AERC) Research Paper 113, Nairobi, Kenya
De Soto, H. (1989), The Other Path, New York: Harper and Row.
Dhemba, J (1999), “Informal Sector Development: A Strategy for Alleviating Urban Poverty in Zimbabwe”, Journal of Social Development in Africa, 14(2): 5 – 19.
Dobozi, I and G. Pohl (1995), “Real output declines in transition economies: Forget GDP, try power consumption data”, Transition, (6): 1-2.
Giles, David, E.A. (1999a), “Measuring the hidden economy: Implications for econometric modeling”, The Economic Journal, 109/456, pp.370-380
Gutmann, P. M. (1977), ‘Subterranean Economy,” Financial Analysis Journal, 34(1): 24 – 27.
Hartzenburg, G.M. and Leimann, A. (1992), “The Informal Economy and its Growth Potential”, In: Adebian, E. and Standish, B. (eds.) Economic Growth in South Africa , Oxford: Oxford University Press, pp. 187-214.
Hanke Steve (2008). Zimbabwe: From hyperinflation to Growth. Cato Institute (Centre for Global Liberty and Prosperity Development Policy Analysis).
Hesam, N. (2003), “Measuring the size of underground economy in Iran with emphasis on the incentives for evasion of insurance premium payment (1961 – 2001)”, Munich Personal RePEc Archive.
International monetary Fund (IMF) (2009). Preliminary Conclusions of the IMF Article IV Consultation Mission (Facsimile addressed to Zimbabwe’s Minister of Finance, 23 March 2009).
International Labour Organization (ILO) (1991), The Dilemma of the Informal Sector. (Geneva: The ILO).
Jamal, V. and J. Weeks. 1988, “The vanishing rural-urban gap in sub-Saharan Africa,” International Lobour Review, 127(3): 27 l-292.
Lindauer. D. L. (1989), “Parallel, fragmented, or black? Defining market structure in developing economies”, World Development, 17(I2): 1871-1880.
Loots, A.E. (1991), “Die be;angrikheid van die informele sector in Suid-Afrikaanse ekonomie”, Masters dissertation, Rand Afrikaans University, Johannesburg, South Africa
Malaba, J. (2006), “Poverty measurement and gender: Zimbabwe’s experience”, paper presented at the Inter-Agency and Expert Group Meeting on the Development of Gender Statistics 12-14 December 2006, United Nations, New York
Mogensen, Gunnar V.; Kvist, Hans K.; Körmendi, Eszter and Soren Pedersen (1995, “The informal economy in Denmark 1994: Measurement and results”, Study no. 3, Copenhagen: The Rockwool Foundation Research Unit.
Ocran, M. K. (2009), “Estimating the size and trends of the second economy in Ghana”, final report presented at the AERC Biannual Workshop, November 29 – 3 December 2009, Nairobi, Kenya.
Ocran, M.K. (2007), “A Modeling of Ghana’s Inflation Experience, 1960-2003”, Studies in Economics and Econometrics, 33 (1), 110 – 129.
Saunders, S and E. Loots (2005), “Measuring the informal economy in South Africa”, South African Journal of Economic and Management Sciences, 8(1): 92 – 101.
Schneider, F and D.H. Enste (2003), “Shadow Economies: Size, Causes and Consequences”, Journal of Economic Literature, 38(1):77 - 114.
Schneider, F (2002), “Size and measurement of the informal sector in 110 countries around the world”, paper presented at a Workshop of Australian National Tax Centre, ANU, Canberra, Australia.
Schneider, F. (2005), “Shadow economies around the world: what do we really know?” European Journal of Political Economy, 23(1): 598–642.
Sookram, S., Watson, P. K. and Schneider, F. (2008), Characteristics of households in the formal sector of an emerging economy, Journal of Applied Economics, 99(1): 1 – 15
Smith, J.D (1985), “Market motives in the informal economy”, in: Gaertner, W. and Wenig, A. (eds.): The economics of the informal economy, Heidelberg: Springer Publishing Company, pp. 161-177.
UNDP/Ministry of Public Service, Labour and Social Welfare (MPSLSW-Zimbabwe). (2006), Poverty Assessment Study Survey (PASS)
Tanzi, V. (1982), (Ed.), The Underground Economy in the United States and Abroad, Lexington, MA: Lexington Books.1982.
Thomas, J.J., (1999), “Quantifying the Black Economy: ‘Measurement without Theory’ Yet Again?” Economic Journal, 109(456): 381 - 389.
Yeats, A.J. (1990), “On the accuracy of economic observations: Do sub-Saharan trade statistics mean anything?,” The Worm Bunk Economic Review, 4(2) (1990):135-156.