GVCPs in Zimbabwe’s Critical Sectors in the Face of Environmental Pollution and Climate Change: The Case of Agriculture and Mining Sectors

Abstract

This study analyses global value chain participation (GVCP) in Zimbabwe’s two critical sectors of agriculture and mining in the face of environmental pollution and climate change. Mining and agriculture are Zimbabwe’s largest export sectors by value, and the later plays a critical role towards food security. However, the two sectors have potential conflicting interests on land as well as environmental pollution. The study employs the Auto Regressive Distributive Lag (ARDL) and ARDL-EC (error correction), to analyse short-run and long-run relationships. The results indicate that, in the short run, lagged GVCP in agriculture exerts positive pressure on GVCP in agriculture by 0.66% at 1% significance level while, climate change (droughts) and pollution (CO2 emissions) exert negative pressure on GVCP in agriculture at 5% and 1% level of significance, respectively. This implies that higher returns in the previous period’s participation in global value chain positively influence current levels of GVCP in agriculture while droughts and pollution reduce global value chain participation in agriculture. However, GVCP in mining and population growth did not significantly reduce GVCP in agriculture. Moreover, GVCP in mining and population growth increase transport CO2 emissions both in the short run and long run at 5% and 1% level, respectively. Thus, mining is not environmentally neutral. In the long run, interaction between population growth and mining rents reduce transport CO2 levels at 5% level. This supports the induced investment hypothesis, where increased mining rents facilitate the adoption of cleaner technologies, such as fuel-efficient and environmentally friendly vehicles. The study recommends government to raise mineral taxes for those participating in mining and use the revenues to subsidise the agriculture sector. In the agriculture sector, government can remove import tax on agriculture equipment such as irrigation equipment as well as the removal of other restrictions including opening grain price to market forces to increase quality and level of participation. The government should continue enacting and enforcing policies which minimize pollution, such as limits on carbon emissions.