The Factors That Affect Economic Growth in Zambia; Research Proposal


1.1. BACKGROUND The causes of economic growth have intrigued economists and policymakers for quite some time. Over time, numerous theories and empirical studies have been generated examining different factors that are presumed to be at the core of Economic growth. Over the last decades the issue of economic growth has attracted increasing attention in both theoretical and empirical research. Yet, the process underlying economic performance and growth is poorly understood (Easterly, 2001), something, which can be partly attributed to the lack of a unifying theory on the subject matter and the reductionist way mainstream economics approach the issue (Artelaris et al, 2006). Despite the lack of a unifying theory, there are several partial theories that discuss the role of various factors in determining economic growth. Two mainstream strands can be distinguished: the neoclassical, formalized by Solow (1956), which emphasizes the importance of capital accumulation and, the more recent, theory of endogenous growth, pioneered by Romer (1986) and Lucas (1988), which has drawn attention to human capital and innovation capacity. Furthermore, important insights on the issues of economic growth have been provided by the new economic geography which pays due respect to the spatial characteristics of development. In addition, other explanations have highlighted the significant role non-economic factors play in promoting Economic growth. These developments gave rise to a discussion that distinguishes between ‘proximate’ and ‘fundamental’ (or ‘ultimate’) sources of growth (Rodrik, 2003). The former refers to issues such as capital accumulation; labour and technology while the latter to institutions, political systems, socio-cultural factors, demography and geography. Economic growth in Zambia underwent long periods of contraction and stagnation especially in the 1980s. The country was able to stabilise under...