Date: Fri, 11 May 2001 12:16:30 -0700
From: Brad DeLong [EMAIL PROTECTED]
But the ability to successfully run a developmental state appears to
be confined to (a) East Asia, (b) Northwest Europe, (c) Mauritius,
and (d) Botswana.
Chiming in from this side (3 hours from Gabarone), my colleague Guy
Mhone has contributed part of a chapter that I hope gives Brad some
second thoughts about the difference between growth and
development:
***
Botswana:
Economic Success, Development Failure
Botswana's success story
Botswana has won international recognition for
consistently high rates of economic growth, the
prudence with which the country's
macroeconomic balances have been managed, and
the political-economic stability (including
relatively deep-rooted democratic traditions)
achieved in the process. Under colonial rule until
the mid-1960s, Botswana's large expanse of
underdeveloped, semi-arid land generated very
little of a marketable character, aside from cheap
migrant labour for export to South African mines,
and livestock as a basis for beef exports to
Europe. The Botswana economy had evolved--as
did those of Swaziland, Lesotho and Namibia--
through peripheral dependency upon South Africa,
from which it imported manufactured and
industrial goods as part of the Southern African
Customs Union. Monetary policy was also set in
Pretoria, through the Common Monetary Area.
Thus at Independence the economy of Botswana
was one of the poorest in Africa and the country's
prospects appeared bleak.
Botswana has a small population (about 2
million) but occupies an enormous geographical
area. Population density is 2 per square kilometre,
compared to 24 per square kilometre across Africa
as a whole. However, thanks to three decades of
rapid growth, described below, Botswana's Gross
Domestic Product of about US$4.5 billion is
almost equivalent to Zimbabwe's. Per capita
income, at over US$3,000 is higher than that of
South Africa, and more than five times greater
than Zimbabwe. Botswana ranks seventh amongst
fifty African countries on the UNDP_s Human
Development Index (97th overall), behind the
Seychelles (52), Mauritius (61), Libya (64),
Tunisia (81), Algeria (82), and South Africa (90).
But Botswana's economy remains vulnerable
in a number of ways. Its geographical location in
a semi-arid part of the African continent makes
the country prone to drought. For the rural
majority, scraping out a livelihood is arduous in
the absence of attenuating interventions such as
irrigation. The large expanse of the country,
coupled with the dispersed nature of the
population, also drives up costs (of transport,
service provision and infrastructure construction)
and militates against economies of agglomeration
arising from concentration of population.
Botswana_s economic vulnerability is underscored
by its dependence on mining, particularly
diamonds, which account for about one third of
GDP and about three quarters of export earnings
(and nearly half of government revenue). The
local entrepreneurial class has also developed
based on livestock and particularly on beef
exports to Europe. The economy thus remains far
less diversified than Zimbabwe's notwithstanding
the latter's relative poverty.
As a consequence of the discovery of
diamonds and judicious economic and political
management based on a calculated predisposition
to the market and adherence to democratic forms
of governance, Botswana elevated itself to one of
the fastest growing countries in the world.
Between 1966 and 1980, Botswana_s GDP grew at
an annual rate of 14.5%, while industrial
production grew at 18% per year, manufacturing
at 23% per year, agriculture at 8.3% per year and
services at 14.5% per year. Per capita GDP
quintupled over the first 20 years of
independence. Throughout this period Botswana
managed to escape the fate of many African
countries. During the 1990s, as global integration
intensified, Botswana_s economic growth slowed.
GDP rose at slightly below 10% per year during
the first half of the decade.
Botswana fortuitously benefitted from the
discovery of diamonds, which have enjoyed a
relatively sustained demand in the international
market and whose supply has been adroitly
managed by an international selling monopoly
(DeBeers' Central Selling Organization). But
many developing countries also enjoy similar
bonanzas in the form of minerals and oil, for
instance, and others in terms of other non-mineral
commodities, and yet have not been able to
manage such windfalls judiciously to sustain high
levels of increases in GDP and reasonable levels
of social development over such long periods. For
many developing countries with similar windfalls,
the stream of income flows has, soon or later,
been interrupted by secular declines in export
prices of their valued commodity or by declining
terms of trade. Alternatively, the benefits of
primary products have been offset by weak
domestic policies, endemic corruption and
