Impact of Hyperinflation on Investors and Citizens - Essay Example

3. Research Methodology 3 Introduction The research aims to explore the impact of hyperinflation on the investors and ordinary citizens of Zimbabwe. In order to accomplish that distinct objectives have been framed so that the investigation can be run in a systematic way and consequently arrive at the research result. The theoretical aspect of the concerned issue has also been presented in the previous chapter. In this chapter, a research methodology will be developed that will direct the pathway of achieving research objectives. Research methodology can be defined as the systematic approach for collection of data and determination of the process for analysing the accumulated data and information in order to arrive at a realistic solution of the research problem (Alexander and Dhumale, 2012). Such research methodology will be framed on the basis of the theoretical framework and ongoing economic circumstances in Zimbabwe. 3.2. Research Philosophy, Approach and Strategy 3.2.1. Research Philosophy Research philosophy strikes an association between the theoretical aspects of the study with its practical exposure. Therefore, selection of appropriate research philosophy holds utmost importance for the successful completion of a research work. According to Alexander and Dhumale (2012), in order to derive the best research philosophy, its three distinct attributes should be analysed, such as; ontology, epistemology and axiology. The concept of ontology deals with realism and thus, it tends to analyse the social entities and social variables associated with the research objective so that research outcome becomes highly correlated with the practical world. Epistemology concentrates on the study of knowledge and attempts to apply the conjectural aspect for understanding the real world situation. Finally, axiology indicates the importance of value judgements (Alexander and Dhumale, 2012). As this particular research is conducted for academic purpose, epistemology is considered to be the most relevant philosophy for analysing the impact of hyperinflation on the general inhabitants of Zimbabwe. Under the research epistemology, interpretative research paradigm will be adopted. Excellence of interpretative research philosophy is reflected in its ability to study the accumulated data and information explicitly and interpret the inherent implications of such theoretical information as well as the underlying the responses of the selected sample group accordingly, through application of the credible knowledge level (Maxwell, 2012). 3.2.2. Research Approach Research approach aids the researcher to precede the research work in a comprehensive manner. Conventional research methodology involves multiple research approaches such as abduction, deduction, induction etc. In order to analyse the effect of hyperinflation on the investors and individuals of Zimbabwe, deductive research approach will be incorporated. Deductive approach will tend to analyse all the cause- effect relationship among various hypothesis and consequences that has taken place in the economy of Zimbabwe due to the effect of hyperinflation (Corbin and Strauss, 2007). 3.2.3. Research Strategy Analysis of the prevailing economic and financial circumstances of Zimbabwe, the situation of hyperinflation and its impact on the employment, price level and functioning of the individuals and investors involves evaluation of the intrinsic connotation behind the movement of micro-economic variables. Therefore, for the purpose of analysis, qualitative research strategy will be adopted. Qualitative research aims to derive the fundamental conscience, underlying the obtained information. Qualitative analysis also allows the researcher to examine various contradictory arguments proposed by different connoisseurs accordingly to develop their own understanding. Moreover, as qualitative research strategy is not confined to any limitations as to restrictions in terms of access to numeric data, it provides the researcher to carry out the research work independently and puts forward multiple dimensions of the research problem (Corbin and Strauss, 2007). 3.3. Sampling Design Sampling design indicates the process of selection of the sample size from the large population associated with the research problem. Efficient selection and designing of sample size helps the researcher to conduct the research in a simplified manner, through deriving the exact conviction of the total population. Incorporation of sample size that does not reflect the implication of the total population may result in deceptive research result. As these academic research papers are also used for future purpose of study, such misleading reports may deviate many scholars from the actual state of condition in the concerned economy. Therefore, superiority of the research paper largely depends of the sampling design (Creswell, 2013). 3.4. Research Methods Research method attempts to derive the exact answers of the research questions formulated by the researcher in order to provide definite and realistic solutions to the research problems. Under the research method, the content analysis will be done in order to determine the extent of impact of hyperinflation on the economy of Zimbabwe. On the basis of the content analysis, a relational analysis will also be drawn between hyperinflation and its probable determinants as well as the nature and source of collected data will also be specified. 3.4.1. Content Analysis Content analysis indicates the process of running the research in such a way that can produce a valid conclusion to the associated literature. The method also helps the researcher to determine the outlook of the individuals, groups, institutions and the society at large regarding the research problem (Creswell, 2013). Therefore, content analysis acts as a disclosure of the research problem, derived from utilising the deductive approach. Considering the particular research requirement, as the research strategy is qualitative, the content analysis will be done through incorporating three distinct approaches such as conventional, directed, or summative. All the three approaches together will decode or interpret the underlying context of the obtained literature and information. Such systematic way of data interpretation also ensures the trustworthiness of the research undertaken and obtained outcome (Culiuc and Walton, 2004). 3.4.2. Testing the Relationship between Hyperinflation and Its Possible Determinants   In order to test the relationship between hyperinflation and its possible determinants, various economic models and associated theoretical framework should be put forward in order to draw the association between the two. Such theories will help to determine the direction of the relationship of the determinants with hyperinflation. For instance, the quality theory of money indicates the proximity of the money supply as a motivation behind creating fluctuation in the price level and as a result can be considered as a determinant of hyperinflation in the economy (Hanke, 2008). The cost push theory of inflation indicates that, as the cost of production rises due to increment in the price level of factors of production such as labour wages. In such circumstances, the price of final goods and services also rises, increasing the overall price level of the economy as well. Such increment in the price level affects the concern of the labourers as well, creating a situation of hyperinflation into the economy. As per the demand pull theory, according to which the excess demand and supply of goods and services that poses to be the cause for creating expansionary pressure on fiscal and monetary policies also tends to create hyperinflation. In the next segment, the determinants, specific to the economy of Zimbabwe, probably that had caused for hyperinflation will be brought into notice (Dashwood, 2000). As per the reports of Central Statistical Office (CSO) in 2001, Zimbabwe, there were two types of determinants that had contributed to the formation of the state of hyperinflation in the country such as monetary expenditures and non- monetary expenses. Shortage in foreign currency reserves and misalignment in the exchange rate further ignited the increasing trend in the general price level. However, many economists are of the opinion that the shortage in the foreign exchange reserve had been a recurring problem in Zimbabwe since its independence. However, the severity of the problem became prominent when the official exchange rate showed clear distinction as compared to the market-determined rates. Such shortage was further deepened when the country continues to import raw materials using the scarce foreign currencies. Therefore, cost push inflation created huge impact on the economy and caused for hyperinflation (Hanke, 2008). Some of the economists have identified structural factors such as faulty pricing policies of the government as an important determinant for hyperinflation in the Zimbabwe economy. Though, apparently, the rationale of the government behind incorporation of such pricing policies was to protect the interests of the general consumers, controlled consumer prices resulted in decrease in the price level below the cost of production in many industries, especially in the food products manufacturing industry. In such circumstances, the producers started compromising the quality of the products and created the provisions for black market that had multiplied the inflationary pressure on the economy to several extents. Therefore, shortage in the production and distribution of the basic commodities led to create demand pull hyperinflation (International Monetary Fund, 2014). Moreover, the drought that had occurred in 2000 and defective land reform policies had automatically declined the production level and created shortage in the locally produced products for consumption that also acted as determinants of the hyperinflation in Zimbabwe. Therefore, all the determinants such as crunches in foreign currency reserves, faulty government policies and public finance, defective production and pricing policies, draught, black market etc. had contributed positively and sufficiently to the hyperinflation in Zimbabwe (Hart and Sharp, 2014). 3.4.3. Measurement of Variables and Sources of Data Collection Under the qualitative research strategy, the data and information will be collected from both primary and secondary sources. In this particular research, the total population of Zimbabwe, including those who have been migrated to other countries can be considered as the population. However, it is impossible to investigate the outlook of the whole population of the country regarding the effect of hyperinflation on their lives. Moreover, as the researcher is situated in Dubai, a city in the United Arab Emirates, it will be hardly possible for the researcher to reach a large chunk of inhabitants of the African country. Therefore, interview will be conducted involving 13 Zimbabwean, aged between 30 and 60, who have migrated to Dubai with a hope to gain employment and a secured future. The rationale behind conducting interview is to capture the holistic view of the citizens of Zimbabwe regarding the prevailing hyperinflation in the economy of Zimbabwe (Popkewitz, 2012). For this purpose, both telephonic and face-to-face interview has been conducted, depending on the appointment obtained from the interviewees. However, emphasis has been given on one-on-one interview so that the researcher can observe the gestures and appearance of them while asking questions and develop a better understanding regarding the research objective. Considering the secondary information, in order to understand the actual reasons behind hyperinflation in Zimbabwe, the researcher is required to study various journals and research papers proposed by different economists and scholars who are working upon this recent problem in Zimbabwe. The researcher should also undergo various economic and financial reports published by the monetary authority of the economy as well as from the internationally recognised institutions such as International Monetary Fund (IMF), World Bank etc. 3. 5. Summary The entire chapter of research methodology can be summarised in the following manner. The research work is conducted following the interpretative research philosophy under epistemology research paradigm. Deductive and inductive research approach has been adopted so that the intrinsic rationale behind such hyperinflation in Zimbabwe can be interpreted. In order to derive all possible determinants of such hyperinflation, qualitative research strategies have been incorporated. Sampling design has been done carefully so that the sample of Zimbabwean taken can reflect the viewpoint of the general investors and citizen of Zimbabwe in aggregate. Validity analysis also ensures the acceptability of the research paper in the real world and its ability to add value in the field of academics and research in the upcoming future. Read More