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Stuck in the Middle? Structural Change and Productivity Growth in Botswana

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  • Brian McCaig
  • Margaret S. McMillan
  • Iñigo Verduzco-Gallo
  • Keith Jefferis

Abstract

This paper decomposes Botswana’s growth from the late 1960s through 2010 into a within-sector and a between-sector (structural change) component. We find that during the 70s and 80s Botswana’s rapid economic growth was characterized by significant structural change with the share of the labor force employed in agriculture dropping from more than 80 percent to around 40 percent. Between 1990 and 2010 growth was also rapid, but structural change detracted from growth. We hypothesize that this is one of the reasons for persistent poverty and very high income inequality in Botswana today. This leaves us with the following puzzle: why is it that a country with such an impressive track record marked by good governance and prudent macroeconomic and fiscal policy is having so much trouble diversifying its economy?

Suggested Citation

  • Brian McCaig & Margaret S. McMillan & Iñigo Verduzco-Gallo & Keith Jefferis, 2015. "Stuck in the Middle? Structural Change and Productivity Growth in Botswana," NBER Working Papers 21029, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21029
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    References listed on IDEAS

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    3. Gaaitzen de Vries & Marcel Timmer & Klaas de Vries, 2015. "Structural Transformation in Africa: Static Gains, Dynamic Losses," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 674-688, June.
    4. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2002. "An African Success Story: Botswana," CEPR Discussion Papers 3219, C.E.P.R. Discussion Papers.
    5. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    6. Lewis, W Arthur, 1979. "The Dual Economy Revisited," The Manchester School of Economic & Social Studies, University of Manchester, vol. 47(3), pages 211-229, September.
    7. BIDPA & The World Bank, 2006. "Prospects for Export Diversification in Botswana," Books, Botswana Institute for Development Policy Analysis, number 121, december.
    8. repec:dgr:rugggd:gd-136 is not listed on IDEAS
    9. Lawrence Edwards, 2005. "Has South Africa Liberalised Its Trade?," South African Journal of Economics, Economic Society of South Africa, vol. 73(4), pages 754-775, December.
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    Cited by:

    1. Patricia Lindelwa Makoni, 2015. "Foreign Direct Investment – The Case of Botswana," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(4), pages 160-173, August.
    2. Resnick, Danielle, 2019. "Strong democracy, weak state: The political economy of Ghana’s stalled structural transformation," IFPRI book chapters, in: Ghana’s economic and agricultural transformation: Past performance and future prospects, chapter 3, International Food Policy Research Institute (IFPRI).
    3. Mensah, Emmanuel B. & Owusu, Solomon & Foster-McGregor, Neil, 2020. "Productive efficiency, technological change and catch up within Africa," MERIT Working Papers 2020-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Mensah, Emmanuel B. & Owusu, Solomon & Foster-McGregor, Neil, 2023. "Productive efficiency, structural change, and catch-up within Africa," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 78-100.

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    More about this item

    JEL classification:

    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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