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

42 Pages Posted: 6 Apr 2015

See all articles by Brian McCaig

Brian McCaig

Wilfrid Laurier University - School of Business & Economics

Margaret McMillan

Tufts University - Department of Economics; International Food Policy Research Institute (IFPRI); National Bureau of Economic Research (NBER)

Iñigo Verduzco-Gallo

International Food Policy Research Institute (IFPRI)

Keith Jefferis

Econsult

Date Written: March 2015

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

McCaig, Brian and McMillan, Margaret and Verduzco-Gallo, Inigo and Jefferis, Keith, Stuck in the Middle? Structural Change and Productivity Growth in Botswana (March 2015). NBER Working Paper No. w21029. Available at SSRN: https://ssrn.com/abstract=2590219

Brian McCaig (Contact Author)

Wilfrid Laurier University - School of Business & Economics

Waterloo, Ontario N2L 3C5
Canada

Margaret McMillan

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Inigo Verduzco-Gallo

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Keith Jefferis

Econsult ( email )

Plot 129
Millenium Office Park
Gaborone
Botswana

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