Botswana - a case study of economic policy prudence and growth

Botswana is one of a very small group of countries in the contemporary era that has sustained rapid economic growth over an extended period. The purpose of this review is to help the interested observer understand the Botswana experience. Chapter I begins with a review of the record to date. It includes not only growth of per capita GDP, but also several measures of human and social development. This review of both the accomplishments and the disappointments provides a setting to evaluate the country's past economic policies. Chapter II analyzes the key economic policies that underpin this record in an effort to assess whether Botswana's growth performance is really exceptional. The conclusions are summarized in Chapter III. The review arrives at the conclusion that the role of Botswana's policy regime is central to an explanation of the country's growth performance: 1) minerals policy generated the rents which initiated the growth; 2) government's long term development planning was crucial in channeling funds into investments that promoted both growth and human developments; 3) fiscal discipline enables the independent central bank to accumulate substantial foreign exchange reserves and pursues a disciplined monetary policy, which made possible for trade policy to keep the economy open. Botswana still faces two key challenges: a) the high poverty and employment rate; and b) the rapid increase in the prevalence of HIV/AIDS.