The Effects Of Export Diversification On Botswana’s Economic Growth

Botswana as a developing country made some efforts to diversify its economy.Botswana employed development polices and strategies like Economic Diversification Drive(EDD),Vision 2016,Vision 2036;NDP 10 and NDP 11 were employed to diversify the economy from its reliance on primary commodities.Botswana has signed several free trade agreements regionally,bilaterally as well as multilaterally for preferential market access of its goods and services.Several trade agreements have been signed whose emphasis is to eliminate trade barriers for easier movement of goods between borders of Botswana and her trading countries.In light of this,the aim of this research is to examine effects of export diversification on country?s growth.The following variables used as independent variables includes export diversification,FDI,Population,Manufacturing,and General Government Net Consumption were selected and a time series data from 1995-2016 was sampled for analysis.Real GDP per Capita(GDP)was used as a dependent variable to determine the relationship between the two concepts.To obtain accurate and efficient estimates of the effects of export diversification on economic growth the study used Ordinary least square(OLS)technique.The empirical results are consistent with this model.In Solow model of growth,shows a positive relationship between real GDP per capita growth and export diversification is significantand lead to economic growth in Botswana.The empirical model shows that other variables also play a role in enhancing economic growth in Botswana.FDI is insignificant but has a positive relation with economic growth in Botswana and through investment the country can enhance economic growth.The study further shows that other variables such as Manufacturing and Government Net Consumption is significant and shows a negative relation with economic growth in Botswana.It is recommended that Botswana government to promote export diversification by pursuing policies that will attract foreign direct investment,investing in manufacturing industries and supporting domestic sectors.Moreover population is significant and has a positive relationship with economic growth;therefore government of Botswana must try by all means to grow its population by introducing social welfare programmes such as offering maternity and housing benefits,and general child allowances.Theories and literature list many sources of success concerning economic growth and agree that export diversification is a channel to economic growth and it has been recommended by different researchers due to its effectiveness.In conclusion this research paper shows that export diversification is significant to economic growth in Botswana.