This was a really cool very academic book on Botswana's economy. I just read it because I was curious to see what the "Botswanan economic miracle" really was, and it turns out it's based on two economic booms from cattle and diamonds. I think that it further confirms my thoughts on economic growth being identifiable to specific policies and conditions that are not in an sort of cycle. The assumption that there is some kind of "developing" status of high growth that countries can have until they reach a "developed" status and enter lower growth sounds like nonsense to me, and so I like books like this that can trace a country's development to it's specific conditions. Unfortunately for other countries that seek to grow richer, Botswana's path does not seem easily replicable or particularly desirable. The book itself is extremely meticulous in citing sources and is very well-researched.
Botswana's modern population is descended from Tswana groups that moved north in the period known as Difaqane (or Mfecane, meaning "the crushing") in the 1830s and 1840s, displaced by Anglo, Dutch, Zulu, Bakololo, and Amandebele groups in a period of turmoil. They overran the native Basarwa population, turning them into an ethnic minority faced with discrimination. Most of the territory of Botswana is inhospitable, with a large desert dominating the center and west of the country and just a dry plain in the east providing most of the livable area and pasture for livestock.
There is evidence of livestock management in modern-day Botswana for at least the last 2,200 years, but until the 1920s, cattle ranching was restricted by water resources. Ranchers could only keep as many head of cattle as they could support by natural waters and hand-dug natural wells in the hardveld, the rocky and hard terrain that dominated the Botswanan plain. In the 1920s, modern boreholes created reliable sources of water in all seasons that opened up new grazing areas in the dryer western sandveld. But the benefits of cattle ranching were shared by few, and Botswana was an undeveloped backwater at its independence in 1966. The entire country had just twelve kilometers of paved roads, twenty-two university graduates, and 100 students with a secondary degree. But this was due not to extractive policies, as is often the case in colonized regions, but due to dependence on cattle-ranching, a law-value resource with limited opportunities for export. In the 1930s and 1940s there were more calls for development than for independence, and in fact it was Britain that pushed for independence. The major politicians both before and after independence were the large cattle ranchers, including the presidents Sir Seretse Khama and Ketumile Masire, such that there were not major changes in the economy as a result of independence. Botswana's peaceful transition to democracy and independence made it an exception in the region.
In 1967, diamonds were discovered in Botswana, and that sector came to dominate the economy. From Botswana's independence, mining as a portion of GDP has grown from 5% in 1966 to 50% in 1986, declining to about 25% by 2010. Meanwhile, agriculture plummeted from 40% to 3%, with manufacturing stagnant at 5% throughout. Almost all of these changes are attributable to the growth of the diamond mining industry, even the growth of the service sector to 65% of the economy. Services are mostly low-productivity in the public sector, hotels, and restaurants. The diamond boom dwarfed the cattle boom, but unfortunately kept Botswana in a single-resource-dependent economic growth model. Moreover, the inequality that the cattle ranching system perpetuated was only furthered by a reliance on diamond mining. That said, diamond mining has secured large revenues for the government due to a 50/50 contract with De Beers, which have mostly been invested wisely. From 1965-2005, the country's GDP grew at an average annual rate of 9.5%, with a staggering increase of 26% from 1971-72 and a decade-long average of 11% in the 1980s.
Botswana enjoys some advantages in its diamond mining, such as the fact that diamonds are found deep under Botswana's earth rather than at surface levels such as in Liberia and Sierra Leone. These countries are cursed by their plentiful and easy-to-get diamonds because it allows almost anyone to build a profitable and exploitative mining company, encouraging brutalities that have become synonymous with "blood diamonds." Because extraction of Botswana's diamonds requires more investment, Botswana's government has maintained control over the industry and has been able to manage its currency to avoid external debt problems and maintain net export levels. Botswana has also managed to invest as much as 40% of GDP yearly on infrastructure and human capital. The country went from twelve km of paved roads in 1966 to 9,000 km today. Now the country has four international airports, 3.3 million mobile phones, and 870,000 internet users. 96% of the population has reliable access to improved water sources, with adult literacy rates at 88% and 23% having gained some tertiary education. However, diamond mining is not all good, as it only employs a workforce of 8,000 paid employees, or just 2% of the total labor force. It packs a big punch, but most people are not involved in that production.
In sum, Botswana's "economic miracle" is not so miraculous. The real miracle is not that Botswana has grown, but that it was able to maintain democracy while also being a rentier state. Unfortunately, Botswana remains extremely unequal, its Gini coefficient being at .6 while the USA (a fairly unequal country) is at about .4. Now I imagine is the time for Botswana to transition its economy before it runs out of diamonds, and to invest its profits from diamond-mining into some state-supported export industries. If Botswana could build a manufacturing base for electronics or machinery and a well-educated population to produce those goods for export, that would be a huge success.
Miscellaneous Facts:
- While Botswana is a multi-party democracy, it has been ruled by the Botswana Democratic Party (BDP) for its entire post-independence history.
- Botswana is one of the worst-hit countries in the world by HIV/AIDS, with a 22% prevalence in those aged 15-49 as of 2017.
- The book doesn't get into tourism, but I see online that it makes up 12% of the country's economy today.
No comments:
Post a Comment