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Policy Signals and Market Responses
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Zambia's economy is one of the worst performing in Africa. Despite fortuitous beginnings in 1964, the country's GDP per capita has grown slower than that of any other peaceful African nation. This study examines the contribution of institutional quality to Zambia's economic performance, specifically how institutional exclusivity has restrained economic growth by discouraging foreign investment. The study presents previously unpublished archival evidence to show how President Kaunda steadily raised political and economic exclusivity in Zambia in the early years of Zambia's independence, and how this retarded capital investment by raising policy uncertainty. Despite formal reforms and a new government in the 1990s, this institutional mechanism, established more than 20 years earlier, still dominates and constrains Zambia's political economy today.
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