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Exports Diversification in Botswana: Key Drivers and Policy Implications

Author

Listed:
  • Mbulawa, Strike

    (Graduate Studies, Faculty of Business & Accounting, Botho University, Gaborone, Botswana)

  • Chingoiro, Samuel

    (Graduate Studies, Faculty of Business & Accounting, Botho University, Gaborone, Botswana)

Abstract

Export diversification appears to be a well sought trade goal for developing countries, with a lot of studies now focusing on the drivers. However, there are no universal diversification determinants that fit for all countries and this study specifically investigated the key drivers in Botswana. The study applies a vector autoregressive estimation, using annual data that spans from 1960 to 2020. The study shows that economic growth, remittances, and exchange rate volatility matter for a successful diversification policy on exports. Enhanced GDP growth and inflow of remittances promote diversification, while exchange rate depreciation dampens it. Both domestic investment and foreign direct investment were also found to be essential drivers. Therefore, policies targeted at attracting investment in public infrastructure projects and private business initiatives should be encouraged. Whilst Botswana is on growth trajectory, policies that attract of foreign oriented financial flows and stabilize the exchange rate management system are ideal for reducing the current concentration of exports in merchandise and commercial services sectors. La diversificazione dell’export in Botswana: fattori chiave e implicazioni di policy La diversificazione dell’export sembra essere un obiettivo commerciale molto ambito per i paesi in via di sviluppo, tanto che molti studi attualmente sono focalizzati sui fattori chiave del suo raggiungimento. Non essendoci però determinanti universali di diversificazione che si adattano a tutti i paesi, lo scopo di questo articolo è analizzare i fattori chiave per il Botswana. Lo studio applica una stima vettoriale autoregressiva usando dati annuali dal 1960 al 2020. Secondo questo studio la crescita economica, le rimesse e la volatilità del tasso di cambio sono determinanti per una diversificazione efficace dell’export. La crescita del PIL e il flusso delle rimesse aiutano la diversificazione, mentre la diminuzione del tasso di cambio la ostacola. Sia gli investimenti interni che esteri risultano essere dei fattori essenziali per la diversificazione. Pertanto, sono incoraggiate le politiche il cui obiettivo è attrarre investimenti in infrastrutture pubbliche e iniziative imprenditoriali private. Nonostante il Botswana sia in una fase di crescita, le politiche che attraggono flussi finanziari diversamente orientati all’estero e stabilizzano la gestione del tasso di interesse sono ideali per ridurre l’attuale concentrazione di export di beni e servizi commerciali.

Suggested Citation

  • Mbulawa, Strike & Chingoiro, Samuel, 2024. "Exports Diversification in Botswana: Key Drivers and Policy Implications," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 77(4), pages 555-580.
    • Handle: RePEc:ris:ecoint:0983
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    References listed on IDEAS

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    More about this item

    Keywords

    Botswana; Export Diversification; Growth; Remittances; Investment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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