Does market liberalisation increase total factor productivity? Evidence from the manufacturing sector in Zimbabwe

In this article, we analyse whether Zimbabwe's structural adjustment progra mme (ESAP), implemented from 1991 to 1995, contributed to an increase in to tal factor productivity in the manufacturing sector. To evaluate productivi ty we first estimate indexes of total factor productivity for 31 manufactur ing sub-sectors for the period 1980-1995. We then use econometric methods t o rest for the effects of trade reform and other variables related to ESAP. In general the growth rates vary greatly both over time and across sectors . The overall impression is that there was no growth in total factor produc tivity on average during the whole period of ESAP, although during the last two years most sub-sectors experienced increases in total factor productiv ity. The main result of the econometric analysis is that none of the variab les used as direct measures of trade liberalisation influenced productivity growth, but import growth had some influence. An interesting finding is th at foreign aid inflows had a strong, positive impact on productivity growth .