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Explaining Botswana's Growth: With a comparison to Chile

By Fiona Tregenna

Fall 2006

INTRODUCTION

At independence in 1966, Botswana was amongst the poorest countries in Africa and in the world, with a GDP per capita of just $91. 95% of the population was rural and over a fifth of the total population was dependent on famine relief. The country had just 7km of paved road, 2 secondary schools, 22 Batswana had graduated from university and only 100 from secondary school (Botswana Human Development Report 1995, Acemoglu et al 2003, and World Bank WDI). The only significant “manufacturing” activity at independence was an abattoir that was built in 1954.

Botswana subsequently experienced the highest rates of growth in the world, with average real GDP growth of 9.90% per annum over the period 1966-2004. This compares to average rates of 4.26% for low income countries, 4.19% for middle income countries and just 2.99% for Sub-Saharan Africa. Botswana is currently classified as an upper-middle income country, and its GDP per capita in 2004 was $5,014.00, or $9,267.00 in PPP terms.

This sustained growth record has been spectacular by any standards. Botswana’s developmental record is however less impressive. Botswana has the highest or second highest rate of HIV/AIDS prevalence in the world, at about 40%. Further, Botswana is one of the most unequal countries in the world, and the extent to which the majority of the population has shared the benefits of growth is questionable.

In the first section of the paper I will discuss the record of Botswana’s growth and development since 1966, and explain the economic policies pursued by the state in this. In particular, the extent to which Botswana suffered from Dutch Disease will be discussed. Secondly, I will review and critique the literature concerning the different explanations that have been advanced for Botswana’s rapid growth. Finally, I will put forward some suggestions for what I consider to be the explanations of Botswana’s trajectory since independence.

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