But while many problems cited by the IMF and others are important, they do not provide a full explanation for how a country can lose fifty years of economic progress in only five years. In fact, Zimbabwe’s collapse can be traced to a single policy: its fast track land reform program, under which the Mugabe government, beginning in 2000, seized thousands of white-owned commercial farms, leading to a sharp drop in agricultural output. The other “inappropriate” policies adopted by the Mugabe government exacerbated the damage, but they were not the underlying cause.
...As Christopher Dell, U.S. ambassador to Zimbabwe, has noted, “Nothing rattles investor confidence more than the prospect of expropriation. The [February 2000] constitutional amendment striking down the right to redress for victims of land expropriation sent a shockwave through the community of investors who keep an eye on the climate in Zimbabwe.” Between 1998 and 2001, foreign direct investment dropped by 99 percent. In addition, the World Bank risk premium on investment in Zimbabwe jumped from 3.4 percent in 2000 to 153.2 percent by 2004.