Analyzing the Competitiveness of Zimbabwean Economy against its Neighbouring Countries

Abstract

The purpose of this research is to analyze the impact on economic performance of competitiveness of Zimbabwean economy vis-a-vis its neighbouring countries, namely Botswana, Mozambique, South Africa and Zambia between 2006 and 2015. In this study a panel data model based on random effects model is applied. Results confirm that investment, human capital and overall competitiveness are positive and statistically significant while inflation is negative and insignificant in influencing the economic growth. A 1% increase in investment, human capital and improvement in competitiveness has an expected effect of increasing economic growth by 0.31%, 1.14% and 5.52% respectively. Results further unravel that country’s individual competitiveness contributes to economic performance. However, relative to Zimbabwe, there is overwhelming evidence that South Africa, Botswana and Zambia have higher contributions while that of Mozambique is insignificant. Specifically, a competitiveness index of 3 for South Africa, Botswana and Zambia contributes to economic performance by 3.54%, 3.44% and 2.93% respectively higher than that Zimbabwe could achieve using the same score. In light of the above, it is imperative for Zimbabwe to strive towards improving the performance of nine pillars of competitiveness that exhibit some weaknesses so that higher economic growth can be attained. Besides addressing competitiveness challenges, countries in the sample need to boost investment as well as improving human capital in order to stimulate economic performance.