Prior to 2009, Zimbabwe experienced a decade of negative economic growth. Although there were many causes of these problems, two prominent causes were misguided land reforms that removed considerable agricultural land from production and hyperinflation that destroyed the financial system.
a. Use Table 5.3 on page 163 to explain how a negative growth rate of real GDP per capita can occur.
b. The coalition government that was formed in Zimbabwe in 2009 is apparently making some progress in restoring economic institutions and controlling inflation. If this government’s actions are successful, what would you expect to happen to Zimbabwe’s growth rate?
c. Is Zimbabwe’s situation best described as a case of an economy that has temporarily diverged from its balanced growth path or a permanent change in the growth path?