Zambian governments and policy makers have traditionally theorized that changing copper prices are responsible for economic growth fluctuations. Whenever the nation’s economic situation takes a negative turn, analysts often blame falling copper prices and thus been offering a perfect scapegoat for government economic mismanagement. This investigation into the determinants of economic growth in Zambia has established that international copper prices only influence economic growth in the short-run. This means copper prices do not have a long-run impact on economic growth. With proper policy action and strategy, Zambia can achieve higher economic growth in the long-run even in the presence of falling copper prices.
The fall in copper prices only causes a short-run shock which deviates economic growth from its long run target. Since economic growth is responsive to both fiscal and
monetary policies in the short run; the effect of falling copper prices on economic growth can be fully counteracted. Policy makers in Zambia can strategically respond to eliminate the negative influence of lower copper prices on the economy by implementing expansionary fiscal and monetary policy. It is apparent therefore, that blaming international copper prices for Zambia’s economic mishaps cannot be empirically substantiated. It is poor planning and policies for economic growth and poor responsive action in the short-run which have historically generated low levels of growth in Zambia.
6.4 Conclusion
Zambia is a democratically stable and resource rich land locked nation located in Southern Africa. Due to the fact that the country is one of the world’s leading exporters of copper, many analysts have theorized that Zambia’s economic growth in directly influenced by international copper prices. This supposition has lead to government laxity as most of the economic problems of the country are blamed on external shocks which are beyond government intervention. It has however, been established in this research that the major determinants of economic growth in Zambia include government spending, inflation, exchange rate and agricultural development. Copper prices have been found to only influence economic growth fluctuations in the short-run.
The spotlight needs to turn away from international copper prices to proper economic management. If the nation is to achieve higher sustainable growth in the future, it should focus on increased public investment, agricultural development and currency devaluation. The unmerited focus on external factors is not the source of economic growth but a hindrance to proper goal oriented planning. With sound fiscal and monetary responsiveness, the influence of external shock generated by copper price fluctuations can be managed and Zambia can achieve higher sustainable economic growth.
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