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Relationship between mining revenue, government consumption, exchange rate and economic growth in Botswana

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  • Kegomoditswe Koitsiwe

    (Akita University)

  • Tsuyoshi Adachi

    (Akita University)

Abstract

This study empirically investigates the dynamic relationships between mining revenue, government consumption, exchange rate and economic growth in Botswana. Quarterly data from 1994 to 2012 were analysed through the use of unrestricted vector autoregressive (VAR) modelling consisting of impulse response functions, variance decomposition and VAR Granger causality. The impulse response functions showed the positive and negative response to mining shocks while variance decomposition indicates that mining revenue defines the variability in economic growth and government consumption. The empirical results also suggest that mining revenue and exchange rate granger cause economic growth while government consumption is caused by mining revenue and economic growth. These observations reveal how vulnerable the economy of Botswana is to external shocks. We conclude that, although mining sector has a significant role in the economy of Botswana, it is necessary for the government to adopt further structural reforms that promote non-mi¬ning sector development to diversify the export.

Suggested Citation

  • Kegomoditswe Koitsiwe & Tsuyoshi Adachi, 2015. "Relationship between mining revenue, government consumption, exchange rate and economic growth in Botswana," Contaduría y Administración, Accounting and Management, vol. 60(5), pages 133-148, Octubre-D.
    • Handle: RePEc:nax:conyad:v:60:y:2015:i:5:p:133-148
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    2. Li, Shanshan & Long, Fang & Long, Litao, 2022. "Resources curse and sustainable development revisited: Evaluating the role of remittances for China," Resources Policy, Elsevier, vol. 79(C).
    3. Galadima, Mukhtar Danladi & Aminu, Abubakar Wambai, 2019. "Shocks effects of macroeconomic variables on natural gas consumption in Nigeria: Structural VAR with sign restrictions," Energy Policy, Elsevier, vol. 125(C), pages 135-144.
    4. Ampofo, Gideon Kwaku Minua & Cheng, Jinhua & Asante, Daniel Akwasi & Bosah, Philip, 2020. "Total natural resource rents, trade openness and economic growth in the top mineral-rich countries: New evidence from nonlinear and asymmetric analysis," Resources Policy, Elsevier, vol. 68(C).
    5. Ben-Salha, Ousama & Dachraoui, Hajer & Sebri, Maamar, 2021. "Natural resource rents and economic growth in the top resource-abundant countries: A PMG estimation," Resources Policy, Elsevier, vol. 74(C).
    6. Dogan, Eyup & Majeed, Muhammad Tariq & Luni, Tania, 2021. "Analyzing the impacts of geopolitical risk and economic uncertainty on natural resources rents," Resources Policy, Elsevier, vol. 72(C).
    7. Topcu, Ebru & Altinoz, Buket & Aslan, Alper, 2020. "Global evidence from the link between economic growth, natural resources, energy consumption, and gross capital formation," Resources Policy, Elsevier, vol. 66(C).
    8. Nawaz, Kishwar & Lahiani, Amine & Roubaud, David, 2019. "Natural resources as blessings and finance-growth nexus: A bootstrap ARDL approach in an emerging economy," Resources Policy, Elsevier, vol. 60(C), pages 277-287.
    9. La Saidi & Pasrun Adam & Rostin & Zainuddin Saenong & Muh. Yani Balaka & Gamsir & Asmuddin & Salwiah, 2017. "The Effect of Stock Prices and Exchange Rates on Economic Growth in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 527-533.
    10. Huang, Yongming & Raza, Syed Muhammad Faraz & Hanif, Imran & Alharthi, Majed & Abbas, Qaiser & Zain-ul-Abidin, Syed, 2020. "The role of forest resources, mineral resources, and oil extraction in economic progress of developing Asian economies," Resources Policy, Elsevier, vol. 69(C).
    11. Tariq Hussain & Khizra Rana, 2022. "Rent Seeking Policy, Institutions and Corruption in Specific Countries of the World," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 283-291, December.
    12. J. Fernando Larios-Meoño & Benoit Mougenot & V. Josué Álvarez-Quiroz, 2021. "Short-Run and Long-Run Effects of Copper Mining on Peru’s Recent Economic Growth," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 27(2), pages 131-145, May.
    13. Mamoudou Camara, 2023. "Bauxite mining and economic growth in Guinea over the period 1986–2020: empirical evidence from ARDL and NARDL approaches," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(1), pages 157-179, January.
    14. Muhammad Atif Khan & Muhammad Asif Khan & Kishwar Ali & József Popp & Judit Oláh, 2020. "Natural Resource Rent and Finance: The Moderation Role of Institutions," Sustainability, MDPI, vol. 12(9), pages 1-23, May.

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