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An Econometric Approach to Exchange Control Liberalization and Economic Growth: The Case of Botswana

Author

Listed:
  • Gaetsewe, Tshepiso
  • Kapunda, Stephen M.
  • Motlaleng, G. R.

Abstract

This study assesses the impact of exchange control liberalisation on economic growth in Botswana. In literature it has been very unclear of how the liberalisation of exchange controls impacts economic growth as there has been mixed results. Botswana liberalised its exchange controls in 1999 and to date there has been no empirical study that assesses how their liberalisation has impacted Botswana’s growth. This study attempts to fill in the gap. It uses quarterly data from 1981 until 2006. Cointegration and VECM methods are used for estimation. The results show that exchange control liberalisation had no impact on economic growth in Botswana for the period studied. Botswana’s government needs to try and develop policies that will promote sectors that spur economic growth. Policies imposed should be in the form which enhance growth such as increasing capital stock and human capital in order to spur economic growth.

Suggested Citation

  • Gaetsewe, Tshepiso & Kapunda, Stephen M. & Motlaleng, G. R., 2015. "An Econometric Approach to Exchange Control Liberalization and Economic Growth: The Case of Botswana," African Journal of Economic Review, African Journal of Economic Review, vol. 3(01), January.
    • Handle: RePEc:ags:afjecr:264370
    DOI: 10.22004/ag.econ.264370
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    References listed on IDEAS

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    3. Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
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    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    6. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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