Policy and Institutional Dynamics of Sustained Development in Botswana

Abstract

Botswana represents one of the few
 development success stories in Sub-Saharan Africa. Real
 Gross Domestic Product (GDP) growth averaged almost 9
 percent between 1960 and 2005, far above the Sub-Saharan
 Africa average. Real GDP per capita grew even faster,
 averaging more than 10 percent a year -- the most rapid
 economic growth of any country in the world. The crucial
 question is: Why has Botswana grown the way it has done, and
 what lessons does it offer? This evidence-based story is an
 account of policy and institutional dynamics of sustained
 growth and development in Botswana -- illuminating the role of
 leadership. It shows how a secure political elite has
 pursued growth-promoting policies and developed, modified,
 and maintained viable inherited traditional and modern
 institutions of political, economic, and legal restraint.
 These institutions have remained robust in the face of
 initial large aid inflows and spectacular mineral rents,
 producing a growth pattern that has been both rapid and
 cautious. The nature of the Botswana developmental state is
 illustrated by the way in which the state mobilized
 development resources-especially savings, investment, and
 human resources, widely known as the primary drivers of
 economic growth, and prudently managed the economy without
 becoming excessively involved in the nuts. It demonstrates
 that through intentional policy choices and countercyclical
 instruments, countries can shift from aid-dependent to
 trade-led natural resource development (though probably with
 narrow-based growth), to a broader development strategy as
 long as the state is capable and operates within effective
 institutional design. Botswana's story is sterling
 example of how the critical issue in development is not so
 much access to resources but how resources are managed.