Uganda,are not included. A concern about these potential Leopards is that five
of them are resource-rich, and three (Angola, Chad and Sudan) have a long
history of conflict. Mauritius, despite sustained growth, misses out (probably
unfairly) because the definition is predicated on a recent acceleration in
growth.
48 Sources of Growth in the Modern World Economy since 1950
Box 2.1 The revival of Zambia?In Zambia copper and copper products account for almost 80 per cent of exports,
though now only 6–9 per cent of Zambian GDP, and around 10 per cent of formal
employment. After several decades of stagnation, encompassing years of rigor-
ous state intervention and free trade and open markets, Zambia experienced aver-
age growth of nearly 5 per cent per annum in the 2000s. The cause of this growth
is apparent – high copper prices. The price per tonne of copper increased from
US$2,000 in 2002 to US$6,500 in 2007. This was led by demand from China,
now the world’s largest consumer of copper. Increased copper prices boosted the
value of exports and (by Zambian standards) more mining-related foreign direct
investment (FDI) to increase capacity in copper mines. By the mid-2000s Zambia
was the third-largest host of Chinese FDI in Sub-Saharan Africa (and 19th in the
world). Refurbishing mines and expanding capacity helped increase the aggre-
gate investment rate to 27.1 per cent of GDP in 2003. Chinese FDI has included
purchases of mines and the construction of a US$200 million copper smelter.
Chambishi copper mine was bought and re-opened in 1998 and a new Chinese
copper mine opened in Kitwe in late 2007,creating 1,500 jobs at a cost of $100
million. More FDI and expatriate mining engineers and investors brought with
them new spending power. The South African-owned Shoprite supermarket chain
expanded throughout Zambia in response. Initially Shoprite tended to import
South African products, displacing local producers, but later they put an assis-
tance programme in place to help small farmers and now source 90–95 per cent
of their fresh produce from Zambia, although they still import most processed
goods from South Africa. There is some evidence pointing to the fragility of this
growth – specifically the failure of African economies generally to diversify the
structure of their exports. In 2007 the Zambia–Chinese Mulungushi Textile Joint
Venture with the Chinese government was closed down as it could not compete
with cheap Chinese imports. This was the largest textile factory in Zambia,
producing 17 million metres of fabric and 100,000 pieces of clothing a year,
employing 1,000 people directly and around 5,000 cotton growers indirectly. The
government budget has benefited little from the rapid growth of mining. In the
early 2000s the mining sector enjoyed a marginal effective tax rate of approxi-
mately 0 per cent. Recall the work of Anand and Ravallion (1993) who found that
two-thirds of the link between higher incomes and higher life expectancy runs
through higher public spending. If mining profits are not taxed this mechanism is
unlikely to operate in Zambia. More recently the government has started making
some efforts to correct this and in the 2007 budget the mineral royalty tax was
increased from 0.6 per cent to 3 per cent (Carmody, 2009).