Foreign aid, debt and growth in Zambia

Abstract

This study first discusses the structural problems of Zambia and the policies of adjustment that have been tried. It then uses a computable general equilibrium model to analyse the impact of various strategies with regard to external resource transfers. It compares the impacts of foreign loans or grants to the private and the public sectors, as well as the impact of a turnaround of the country's fortunes with regard to its external terms of trade. The results of the policy analysis show that the scope for growth is highly dependent on the tightness of the external resource constraint.