Foreign Investing in Zimbabwe Essay

Foreign Investing in Zimbabwe Essay

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Currencies such as the South African rand, Botswana pula, pound sterling and the United States dollar are now used for all transactions in Zimbabwe. The government decided to use the U.S. dollar as the official currency.
A country’s “GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States” (“Zimbabwe GDP,” n.d., p.1). This measure is used to compare living conditions or use of resources across countries. Below are the GDP and PPP of Zimbabwe from 1980 through 2013 (including the years in which currency devaluations occurred).
Dollarization slowly caused a change in economic behaviors and boosted confidence in the country’s financial institutions. The introduction of the U.S. dollar eventually ensured increased stability and credibility for businesses and investors.
Yet independent economist, Daniel Ndlela states that “under any form of currency, including dollarization, the strength of the country’s currency will depend of the value and level of its exports of goods and services, the level of foreign inflows, including Foreign Direct Investments, making up or building the level of the country’s net domestic and foreign assets” (Sandu, 2013, p. 2)
With its current external debt of over US$10 billion, Zimbabwe mineral resources does not mean anything until the country is able to dig them up, value-add and sell them.
Economic freedom is defined as “the freedom to choose how to produce, sell, and use one’s own resources, while respecting others' rights to do the same” (What, n.d.). It plays a very large role in the economic success of a country, and directly correlates to economic stability. With higher economic freedom...

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...sparent regulations and policies. They also need to reconstruct their trade barriers to harmonize with foreign traders and have higher qualities of their geological surveys. Zimbabwe will not present itself as an attractive investment until it creates a friendly policies and a stable business environment.
Zimbabwe is in a perilous situation on the world stage, Africa is seemingly leaving Zimbabwe behind as the continent as a whole progresses. An unstable economy, a history of economic crisis, and political strife makes Zimbabwe a risky country to invest in or launch any kind of business venture in. Given its generous amount of natural resources and its stabilization of inflation thanks to the United States dollar, Zimbabwe has potential moving forward. However, the country is still quite far from being an attractive location for the business and economic world today.

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