Working Paper: NBER ID: w21029
Authors: Brian McCaig; Margaret S. McMillan; Iñigo Verduzcogallo; 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?
Keywords: Botswana; Structural Change; Productivity Growth; Economic Diversification
JEL Codes: O55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structural change (1970-1990) (L16) | labor productivity growth (O49) |
| labor reallocation from agriculture to higher productivity sectors (J49) | labor productivity growth (O49) |
| structural change (1990-2010) (L16) | labor productivity growth (O49) |
| lack of diversification and persistent poverty (Q32) | structural change (1990-2010) (L16) |
| trade liberalization (1994) (F13) | structural change (L16) |
| trade liberalization (1994) (F13) | labor productivity growth (O49) |
| demographic changes and migration patterns (J11) | labor allocation across sectors (J29) |