Botswana is a landlocked country in southern Africa with a population of about 2 million people. It used to be one of the poorest countries in Africa, but after it gained independence from the United Kingdom in 1966, it went on a transformation to a middle-income country with a per capita GDP of $16,800 in 2012 (cf. Central Intelligence Agency 2013). Today, Botswana is a multi-ethnic and multi-party representative democracy with “inclusive institutions” and the least corrupt country in Sub-Saharan Africa (cf. Transparency International 2012). It is ranked by Freedom House as “Free” and has a very high HIV rate of 24.8%.
Botswana has been framed as an exceptional economic success story in Africa and the following essay will explore whether institutions are the only cause of Botswana’s economic success and if Botswana is experiencing modern economic growth.
Table of Contents
1. Introduction
2. Analysis
2.1 Causes of Botswana’s Success
2.2 Is it Modern Economic Growth?
3. Conclusion
Research Objectives and Key Topics
This essay evaluates whether institutional frameworks alone account for the economic success of Botswana, as proposed by Acemoglu and Robinson, and investigates whether the country has genuinely achieved modern economic growth or merely experienced resource-driven expansion.
- The sufficiency of institutional explanations for Botswana's growth.
- The role of "Good Governance, Good Policies, and Good Luck" in economic development.
- The impact of the resource curse and the management of diamond revenues.
- The criteria defining "modern economic growth" and industrialization.
- Challenges related to economic diversification and future resource exhaustion.
Excerpt from the Book
2.1 Causes of Botswana’s success
Acemoglu and Robinson write in their book “Why Nations Fail” that extractive political and economic institutions are a recipe for a state to fail and hence that it needs inclusive political and economic institutions for lasting and sustained economic success. In addition to that, Acemoglu/Robinson state in their model in essence that inclusive political institutions, which came into being due to centralization of the state, create inclusive economic institutions that in turn bolster the inclusive political institutions through economic success (see Acemoglu/Robinson 2012).
It will be argued that in the case of Botswana the Acemoglu/Robinson thesis for economic growth is not sufficient to explain Botswana’s economic success, because other indispensable factors, which are not covered by their thesis, contributed to Botswana’s growth explosion. Lewin explains Botswana’s success based on “Good Governance, Good Policies, and Good Luck” (Lewin 2011: 81). “Good Luck” in his explanation hints to Botswana’s economic success that depends largely on its diamonds, a natural resource and geopolitical contingency, and some other minerals. Botswana used to be only a “protectorate” under the British colonial regime and got lucky that their diamonds were discovered just one year after the country’s independence from the UK. Geopolitics matter and Botswana was not as harmfully influenced by a colonial regime as other African countries, which saved them from the usual vicious circle of other African countries (cf. Acemoglu/Robinson 2012: 408).
After the discovery of the diamonds, Foreign Direct Investment poured into the country and Botswana closed a deal with the founders of the diamonds, the international dominant diamond seller “De Beers”, who acted remarkably socially responsible in Botswana (cf. Nocera 2008). Today, the diamonds account for 1/3 of Botswana’s GDP and 70-80% of Botswana’s export earnings are from the diamond trade (cf. Central Intelligence Agency 2013). Clearly, “the discovery of diamonds was the most important catalyst in Botswana’s economic growth” (Nocera 2008) and not only its inclusive institutions.
Summary of Chapters
1. Introduction: Outlines Botswana's transformation from a poor nation to a middle-income country and introduces the central debate regarding institutional versus resource-based growth.
2. Analysis: Examines the limitations of the Acemoglu/Robinson institutional thesis and analyzes the country's development through the lens of resource dependency and the definition of modern economic growth.
3. Conclusion: Summarizes that while institutions are important, they are insufficient to explain Botswana's trajectory, noting that the country remains vulnerable to future resource exhaustion.
Keywords
Botswana, Economic Development, Institutions, Modern Economic Growth, Resource Curse, Diamonds, Acemoglu, Robinson, Industrialization, Governance, Geopolitics, GDP, Inequality, Economic Diversification, Sustainability
Frequently Asked Questions
What is the central focus of this research paper?
The paper evaluates Botswana's economic success, specifically questioning if inclusive institutions—as theorized by Acemoglu and Robinson—are the sole drivers of this development or if other factors play a more critical role.
What are the primary themes discussed in the work?
Key themes include institutional economics, the impact of natural resource wealth (specifically diamonds), the phenomenon of the "resource curse," and the distinction between raw GDP growth and true modern economic growth through industrialization.
What is the main objective of the essay?
The objective is to challenge the sufficiency of the Acemoglu/Robinson model by demonstrating that geopolitical fortune and natural resource management were indispensable to Botswana's economic narrative.
Which methodology does the author employ?
The author uses a comparative analytical approach, juxtaposing the "Why Nations Fail" institutional theory against alternative explanations, such as Lewin’s concept of "Good Governance, Good Policies, and Good Luck," backed by data from the World Bank and IMF.
What is covered in the main section of the paper?
The main section investigates the specific causes of Botswana's success beyond institutional factors and evaluates whether the nation's economic trajectory satisfies the formal definition of "modern economic growth."
Which keywords best describe this study?
Relevant keywords include Botswana, Institutions, Economic Development, Resource Curse, Diamonds, and Economic Diversification.
How does Botswana's reliance on diamonds affect its economic classification?
The author argues that because Botswana relies heavily on the export of raw diamonds without significant domestic industrialization, it represents a case of "growth without development" rather than modern economic growth.
What risk does Botswana face regarding its future economy?
The paper highlights that the expected depletion of diamond reserves by 2025-2030 poses a severe threat, potentially leading to a significant drop in GDP as the country struggles to achieve necessary economic diversification.
Does the author consider the Acemoglu/Robinson model entirely incorrect?
No, the author posits that the model is not necessarily wrong, but it is incomplete, as it fails to account for critical geopolitical context and external trade patterns.
- Quote paper
- Christopher King (Author), 2013, Botswana’s Economic Success, Munich, GRIN Verlag, https://www.grin.com/document/262782
