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Audio Interview: From Dollars to Donuts

Professor Robert Buckley is a senior fellow in the Graduate Program in International Affairs at The New School. Previously, he was an advisor and managing director at the Rockefeller Foundation and a lead economist at the World Bank, focusing largely on issues relating to urbanization in developing countries. He has written extensively on urbanization, policy, housing, and development issues. On October 14, 2014, Samanatha Plesser interviewed him about Tafadzwa Chigumira’s World Policy Journal Fall 2014 story, "From Dollars to Donuts," detailing Zimbabwe’s February 2009 abandonment of its national currency and move to adopt the U.S. dollar. What follows below are key excerpts of the interview. Please click on the link below for the full audio. 

Is this an extreme situation in Zimbabwe?  Does it occur often in developing nations?

"Of countries who have experienced massive hyperinflation, Zimbabwe is the archetype. Zimbabwe has experienced the highest case of hyperinflation in world history.” However, what occurred in Zimbabwe is not unusual. Zimbabwe experienced such a staggering change in its economy because "it is under the leadership of Robert Mugabe."  It is a kleptocracy, a form of political and government corruption where the government exists to increase the personal wealth and political power of its officials and the ruling class at the expense of the wider population, often with pretense of honest service. "Mugabe does what he wants and does so without regard to anything, including the best economic interests of the nation."

Thus "Zimbabwe has become a failed state." It is now fragile and vulnerable. Yet "around the world, over 800 million people are in similar situations" to the one explained in the piece "From Dollars to Donuts." Hyperinflation and a failed economy are usually not the cause of mismanagement of a country’s economy." Usually, the failure of a country’s economy is "caused by crook, an autocrat, a killer, or all of the above running a nation."

Did Zimbabwe have other options in 2009 other than to move towards dollarization?

In 2009, Zimbabwe had reached a state where they had no other options." Zimbabwe moved towards the dollar because their system currency "had no credibility anymore."  The American dollar "is the international world currency. Most international transactions occur using the U.S. dollar. However, when a country dollarizes, they also lose the ability to control their own economic policies, as well as manage a good portion of their own economy." Moving towards the American dollar "is a short-term solution for a long-term problem."

Please comment on the state of affairs in Zimbabwe today.

"A long legacy of unfairness [racial and otherwise] exists in Southern Africa." At one point "Zimbabwe was relatively well managed. It had an income per capita that was 75% of the world’s average." Now "it is less than 10 percent of the world’s average." Zimbabwe has destroyed itself post apartheid."

Is there a way forward for Zimbabwe?

In order for any real change to happen, "the government must transition from a kleptocracy to a more representative democracy. It is incomprehensible how that can occur with Mugabe still in power."  With Mugabe ruling Zimbabwe it is difficult to say what Zimbabwe’s next steps should be "as Zimbabwe has shown the world it cannot manage its own affairs.  

"The World Bank has provided technical assistance and acted in an advisory capacity for Zimbabwe." However]"Zimbabwe is in arrears to the World Bank.  This unto itself would not be an issue",  because the World Bank has forgiven debts to other countries but will not forgive Zimbabwe’s debts as long as Mugabe is in control of the nation. "To illustrate just how corrupt Zimbabwe is, every year Zimbabwe holds a state lottery.  Guess who won it this year?  Mr. Mugabe.  

"In a country once rich with educated peole and resources, those people have either fled with their resources or left those resources behind and simply fled without them. Without a change in rule, even the move towards  dollarization is a short-term solution to a long-term problem."

We would like to thank Adam Curry for his use of the image associated with this interview.

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