Successful Development in Botswana

As most people know, Africa is extremely poor and many of its countries are below the average low-income level. With most of the continent under the poverty line, people still remained puzzled as to why this particular area of the world has still yet to develop. Although Africa has not obtained success as a whole, a few countries have been able to develop and grow to some extent. Botswana, a land-locked country located in Sub-Sahara Africa, has not only outgrown its neighboring countries, but it has also been the fastest growing economy in the world for the last forty years. Why has Botswana been able to sustain tremendous rates of economic growth while other sub-Saharan countries with similar climates and locations have not?

Botswana has a population of approximately 1.8 million people, is located north of South Africa, and is roughly the size of Texas (Encyclopedia of the Nations: Botswana, 2007). The Kalahari Desert makes up nearly 70% of Botswana while the remaining portion of the country in the East is more habitable. This insufficient amount of habitable land in combination with the country's inadequate water supply have caused problems for the growing population in Botswana. In addition to these problems is the curse of the AIDS epidemic, as roughly 35% of the all adults in the country are HIV positive (Encyclopedia of the Nations: Botswana, 2007). So why again has Botswana, which is fairly similar to the other countries in the area, been able to obtain and sustain tremendous rates of economic growth for so many years? The answer ultimately requires a much more extensive analysis than simply climate or location. In An African Success Story: Botswana, Daron Acemoglu, Simon Johnson, and James A. Robinson have narrowed down the reasons for success in Botswana. These experts from the Department of Economics at MIT argue that the adoption of good policies, the institutions of private property, and key characteristics that allowed these institutions to stay in place have all contributed to the success of Botswana over the past 40 years.

The adoption of good policies is a crucial factor that ultimately contributed to development and growth in Botswana. Over the past 40 years, the government in Botswana has had steady and reliable economic policies. In general, it can be concluded that good policies lead to investment, increased jobs, and better economic fundamentals. However, these beneficial policies would not have been nearly as effective without the underlying institutions that encourage economic growth, development, and investment.

In An African Success Story: Botswana, Acemoglu, Johnson, and Robinson conclude that the reason for good policy selection, both economically and politically, was a result of the "good" underlying institutions (An African Success Story: Botswana, Acemoglu, p 5). These institutions played an extremely important role in Botswana's successful development. Acemoglu, Johnson, and Robinson go even further in describing these institutions as "good" such that they correspond "to a social organization which ensures that a broad cross-section of the society have effective property rights" (Acemoglu, p 5). One can refer to this group as "institutions of private property". Under these institutions the property rights of investors and potential investors are rightfully protected. They also provide political stability, put a constraint on political elites, and encourage broad-based participation. Acemoglu, Johnson, and Robinson display the importance of these institutions when they estimate that "changes in institutions can close as much as ¾ of the income gap between the nations with the best and worst institutions" (Acemoglu, p 6). They then go even further in stating, "Once we control for the effect of institutions, countries in Africa do not have lower incomes" (Acemoglu, p 6). Thus, this statement supports the significance of institutions in the successful development in Botswana relative to the rest of the world.

Knowing that good institutions are important to economic development is simply not enough and will not automatically lead to success. Why did these institutions remain in place in Botswana but not in neighboring countries? The answer to that question can help explain Botswana's success since the 1960s and can possibly help other countries get on the right path to successful growth and development. According to Acemoglu, Johnson, and Robinson, pre-colonial institutions, minimal British involvement, appropriate interests of the elites, the discovery of diamonds, and good decision making by leaders all played an important role in establishing institutions and keeping them intact.

Botswana possessed pre-colonial institutions which ultimately put constraints on political elites and allowed the country to traverse a successful development path. Consistent with An African Success Story: Botswana, in 1885 Great Britain created the British Bechuanaland and the British Protectorate, current day Botswana, because of the land's strategic importance in dividing Germany's colony in the west and the Boer states in the east. The British wanted to limit any territorial expansion from these two sides. In the 19^th century, southern Africa was comprised mainly of tribes with the chief as the highest figure in society. The chief's authority was represented and carried out by friends, relatives, and officials. These adult males gathered together to discuss local issues in meetings known as the kgotla (Acemoglu, p 9). Acemoglu, Johnson, and Robinson explain the importance of these assemblies in stating, "Even though they were supposed to be advisory they seem to have been an effective way for commoners to criticize the king" (Acemoglu, p 10). The kgotla ensured appeasement among tribes and thus created more political stability, which was very important in creating an environment that was conducive for economic development. Thus, the institutions in Botswana put constraints on political elites by expanding the broad participation in politics.

In Botswana these institutions remained whole partly because of minimal British colonization. Acemoglu, Johnson, and Robinson say that "colonialism was very light" mainly because Great Britain created the colony to limit territorial gains by the Germans and the Boer states (Acemoglu, p 12). They expand on this idea and conclude that the land was not "particularly valuable or attractive in itself" (Acemoglu, p 12). Thus, the institutions that were already established in Botswana were not destroyed by British involvement. The British did not stay out of Botswana completely as colonialism did have "important effects on the structure of the economy" (Acemoglu, p 13). The hut tax of 1899 and the native tax of 1919 required people to pay some money to the British. These taxes ultimately encouraged people to join the labor market so that they could earn money and pay this annual tax. According to Acemoglu, Johnson, and Robinson, there was some British colonialism; however, overall involvement was fairly minimal, which allowed the institutions to remain intact and unchanged.

Similar to minimal British involvement preserving the institutions in Botswana, the elites were also interested in maintaining and strengthening these institutions after independence. On September 30, 1966, Botswana gained independence from Great Britain and was on the way to controlling its own future. As indicated by Acemoglu, Johnson, and Robinson, Seretse Khama formed the Botswana Democratic Party (BDP), which incorporated the emerging elites in addition to the traditional chiefs. In An African Success Story: Botswana, the strength of the BDP is described when it states, "They could integrate within the party the traditional rural structures of loyalty between commoners and chiefs" (Acemoglu, p 15). As a result of this popularity, in 1965, the BDP won the first election, and Seretse Khama was nominated president. As stated by Acemoglu, Johnson, and Robinson, "strengthening institutions of private property were in the economic interests of the elite" (Acemoglu, p 11). Many of the elites in Botswana owned cattle and were involved in the main export sector in the country at that time period. Thus, with the elites heavily invested in the economy, it seems reasonable to say that it was in the interests of the political elites to favor good institutions. Furthermore, Botswana's political elites at that time did not feel threatened by growth and development. Therefore, it would be practical for the elites to support the current institutions with the idea of strengthening them as much as possible.

Not only did the interests of the elites support the institutions, but people did not want to change the status quo after the discovery of diamonds, allowing these institutions to grow and develop even further. The leaders of Botswana made strategically important mining agreements with DeBeers, a company that specializes in the exploration, mining, and manufacturing of diamonds. With the agreement in place, the government of Botswana would receive half of all diamond profits in the country. The government was running a budget surplus by the mid 1970s with the diamond industry thriving and expanding tremendously. Acemoglu, Johnson, and Robinson argue that the revenue generated from the mining industry was managed appropriately as the money was effectively and efficiently put to use. The rents were put towards the government budget as additional investment, allowing the economy to expand and the country to strengthen as a whole. One prime example that shows the government's ability to manage the diamond industry occurred in the 1980s when Botswana was unable to sell its diamonds for nearly half a year. Even through these difficult times, the government still managed to keep diamond prices relatively high without allowing government expenditure to fall. This ability to successfully control diamond prices ultimately led to more positive effects in years to come.

Furthermore, the diamonds in Botswana were positioned in such a way that the sector was mostly capital intensive rather than labor extensive. Botswana has mostly kimberlite pipes, which are channels that extend from the mantle to the surface and are highly concentrated with diamonds. However, in countries that have not been so fortunate such as Sierra Leone, diamonds are mostly spread out amongst thousands of miles of streams and rivers. Mining in these areas are more labor intensive and do not have the same positive effects of countries that have diamonds in highly concentrated areas.

Not only did the diamond industry have positive effects on institutions, but good decision making by leaders did so as well. Seretse Khama, the first president of Botswana, was a very legitimate leader. According to An African Success Story: Botswana, his prior experiences as the chief of Bangwato, present day Botswana, and his involvement with the Botswana Democratic Party contributed to increased political stability and ultimately more developed institutions. In the book it states, "Key decision made by Botswana leaders, particularly Seretse Khama and Quett Masire, appear to have been crucial", showing the impact leaders can have on institutions in addition to country development (Acemoglu, p 24). One of his crucial decisions as president involved the transfer of diamond rich lands from his own tribe to the government. If he did not complete this task, there could have been greater conflict between tribes simply because of the potential to generate tremendous revenue.

Some people would say that factors other than good institutions played a significant role for successful development to occur in Botswana. Scott Beaulier, assistant professor of Economics at George Mason University, puts more emphasis on leaders and their ability to direct a country in the right direction rather than simply being guided by "good" institutions. In Explaining Botswana's Success: The Critical Role of Post-Colonial Policy, Beaulier states, "Good leadership, in fact, could be the key factor in Botswana's development" (Beaulier, Explaining Botswana's Success: The Critical Role of Post-Colonial Policy, p 18). He argues that the future of the country after independence rested in the hands of Khama and his administration. It is ultimately the people with authority who have control of the country's future path, not Botswana's prior experiences. Khama's administration established pro-market policies, which included low taxes for mining companies and thus more investment. According to Beaulier, he also kept income taxes low to encourage people to pay their taxes and avoid corruption. Khama made critical decisions after independence that supported strong markets with the vision of having a better tomorrow.

If every nation in Africa had the chance to choose the most appropriate role for government, why did so many African countries turn out differently than Botswana? Beaulier argues that many of the elected leaders of other African nations chose paths that did not support long-term economic development and growth. Khama, on the other hand, maintained good policy and made wise decisions after independence, giving Botswana the opportunity to develop into the country it is today. The difficulty then arises of why Botswana had strong leaders while other countries did not.

There are two distinct factors that separate Khama from other African leaders. His experience in Great Britain in addition to his personality allowed for better leadership and in the end greater success for Botswana relative to other African nations. Khama received an education at Fort Hare University, which Beaulier describes as an institution with an "explicitly 'Euro-centric' vision for Africa" (Beaulier, p 21). He obtained an education that revolved around Western tradition and values and would inevitably spread European culture into Botswana. As said by Beaulier, Khama then went on to study at Oxford's Balliol College where he received a degree in law. He was exposed to British law as well as their culture and way of life. Khama's education revolved much around markets, Western values, and British common law, which eventually impacted his policy selection for Botswana. Beaulier argues that "Policy choice at a critical point in time was the key factor determining the wealth and poverty of African nations" (Beaulier, p 21). It is hard to say which factor impacted Botswana's success the most, but leadership and key decision making definitely paved the country's future to some extent.

Beaulier and Acemoglu, Johnson, and Robinson offer substantial evidence about the origins of Botswana's success and its tremendous rate of growth. It is important to note that these pieces of literature do not necessarily disagree with each other, but that different factors are emphasized more in each of them. Beaulier argues with Acemoglu, Johnson, and Robinson by saying that good leadership was the primary factor for Botswana's success while favorable institutions were a secondary factor. If Botswana's success is mainly attributed to its colonial institutions, then it seems that a country's success might be based on their past. If this concept is true, then it would be acceptable to conclude there is little hope for some countries whose history will inherently limit its success. At the same time, it would not be reasonable to conclude that one leader could change a country's direction simply with good policy and excellent decision making. Thus, it would be acceptable to say that both strong institutions and good leadership played a very important role in Botswana's growth, but it is hard to conclude which factor should be emphasized more.

One might be able to determine the significance of certain factors if there is some sort of analysis done between successful countries and ones that have failed. After gaining independence, Botswana has been successful and has achieved tremendous rates of growth. On the other hand, Zimbabwe has become a miserable failure. What are the underlying reasons for these very different outcomes even though they were both former British colonies? The factors contributing to growth in Zimbabwe, or the lack there of, are similar to the ones offered earlier by Acemoglu, Johnson, Robinson, and Beaulier. Robert Mugabe, prime minister of Zimbabwe after gaining its independence in 1980, played a major role in determining the failure of the country. The magazine The American says that in 1982 Mugabe turned on former ally Joshua Nkomo and the Zimbabwe Africa Peoples Union (ZAPN), killing nearly 20,000 of its supporters. This attack allowed Mugabe and the Zimbabwe African National Union (ZANU) to win the following election very easily. In The American it states, "Nkomo was forced to agree to a merger of ZAPU with Mugabe's ZANU. In return, Nkomo received the largely ceremonial title of Zimbabwe's vice president", which shows the presence of corruption and political insecurity in Zimbabwe shortly after independence (Tupy, The American). This political unrest was not a component of Botswana's experience as it was named the least corrupt country in Africa by Transparency International, a global civil society organization that fights corruption. A recent sign at the Gaborone airport reads, "Botswana has a ZERO tolerance for corruption. It is illegal to offer or ask for a bride", which displays Botswana's political security and its ability to preserve beneficial, long-term goals (Biles, p 2). Political instability and corruption ultimately had some effect on Zimbabwe's outcome. However, it is difficult to determine the exact significance this factor played in its failure. The figure below from The American shows divergence in the per capita income of Botswana and Zimbabwe. It is hard to determine the exact reasons for Zimbabwe's failure, but one can easily make the argument that political insecurity was an important factor that separated these two countries into what they are today.

Overall Botswana's success can be attributed to good policy, underlying institutions, and good leadership. Acemoglu, Johnson, and Robinson put a tremendous amount of emphasis on the adoption of good policy in addition to the maintenance of good institutions. These institutions of private property encouraged investment and gave Botswana the opportunity to grow at incredible rates of growth for over 35 years. Beaulier, on the other hand, seems to believe that good leadership was the most important factor in Botswana's development. Key decision making right after independence was essential for Botswana's development. None of these factors alone could explain Botswana's success, but it was the combination of these factors occurring at the right time that allowed the country to experience high rates of economic growth for so many years.

Although Botswana has been the fastest growing country over the last 35 years, will the country be able to sustain this rate of growth? Although per capita income has grown at nearly 7 % since the 1960s, Botswana still has a long way to go. Paul Rantao of the Botswana National Front believes the government has not done enough to actually help the country as he states, "The government is more concerned about per capita income, and that doesn't reflect the real quality of life of the majority. Most people here are unemployed" (Biles, p 3). According to the World Bank, only thirteen people out of a hundred have access to the internet and growth of industries other than mining have been minimal. However, the country has sought to diversify its economy by developing the financial services and tourism industry. Furthermore, part of Botswana's success can be credited to the pursuit of prudent and sound monetary and fiscal policies, which helped lay the base for the country's future. Botswana's success can also be attributed to the National Development Plans that the country has consistently instituted.

It is important to compare across countries in order to determine the true success of a country. With this being said, Botswana is considered one of Africa's success stories because it has experienced high rates of growth and has developed greatly relative to its neighboring countries in Sub-Saharan Africa. Although Botswana has not experienced perfection, the country has done extremely well over the past 40 years. In his farewell address, former President Festus Mogae left the people of Botswana with an influential statement that supported the country's future success. He had an optimistic outlook and said, "Whatever our challenges, ours is a land of hope and promise" (Pham, p 6).

Bibliography

1) "Botswana." Encyclopedia of the Nations. 2007. Advameg Inc. . 9 Dec 2008 .

2) Acemoglu, Daron, and Simon Johnson, James Robinson. An African Success Story: Botswana. 2001.

3) Beaulier, Scott. "Explaining Botswana's Success: The Critical Role of Post Colonial Policy." Mercatus Center at George Mason University. 19 Aug 2004. George Mason University. 10 Dec 2008 .

4) Tupy, Marian. "Botswana and Zimbabwe: A Tale of Two Countries." The American 14 May 2008 10 Dec 2008 .

5) Biles , Peter. "Botswana: Africa's success story? ." BBC News, Gaborone 07 Mar 2005 10 Dec 2008 .

6) Pham, J. Peter. "Botswana's Success Sparkles amid African Gloom." World Defense Review. 17 Apr 2008. 10 Dec 2008 .