The Dynamics of the Real Sector Growth in Zambia

Abstract

This article examines the main macroeconomic drivers of economic growth in Zambia, covering the period 1960–2013. These drivers have been identified by assessing the growth episodes that occurred during periods of high and low economic growth. The former episodes were driven by mineral booms; while low economic growth was driven by mineral recessions. The study concludes that the accumulation of capital stock, human capital development, international trade, the real exchange rate, and inflation are the main macroeconomic drivers of economic growth in Zambia. The performance of these macroeconomic drivers has also been influenced by the major policy reforms that the Zambian authorities have instituted, especially moving from a command economy driven by nationalist ideologies to a market-oriented economy. The study identifies three major challenges that could affect future economic growth prospects in Zambia. These include: dependence on mineral growth, low human capital development and income distribution, and the deteriorating balance-of-payment position during lean periods.