Mechanism between mining sector and economic growth in Zimbabwe, is it a resource curse?

The study investigates the role of mineral resources in economic development and sees how the extractive sector impacts the overall performance of the economy of a country endowed with a diverse minerals and metals. We analyzed the economic growth model using human capital, population growth, property rights, and political rights, share of mineral exports to total exports, real growth of mining, real growth of agriculture, real growth of manufacturing and growth in foreign direct investments for the period 1970 – 2008. In addition, the study employed the Ordinary Least Squares (OLS) since it is the widely used model in the field of study. The empirical results showed that real manufacturing growth, real mining growth, share of mineral exports to total exports, property rights and political rights are important determinants of economic growth. Of major importance the study accepts the hypothesis of the presence of a resource curse in Zimbabwe. Actually for the period under review the study could not reject the hypothesis that mineral resources have a negative impact on growth using both variables used to proxy resource abundance. The policy makers therefore ought to improve the management of mineral resources to realize economic gains from these endowments.

Working paper 499
1 February 2015