Little, land-locked Botswana has had one of the best growth records in the world (What happened in Botswana?, Ben Muse, Jan 9, 2004).
Finding diamond mines didn't hurt. But many countries have been unable to leverage rich natural resource endowments into growth. Many think that under some conditions resource riches can lead to lower growth rates. This is the resource curse. Why was Botswana different?
Her President, Festus Gontebanye Mogae, laid out his thoughts recently at the Center for Global Development. Michael Clemens reports:
The president noted that his predecessor, Seretse Khama, transferred rights to subsoil diamonds away from Khama’s own tribe -- the Bangwato -- to the state. Crucially, Khama did this before the diamond revenues began to flood in; it is much easier to redistribute hypothetical income than actual income. President Mogae also mentioned the skill of the team that negotiated with De Beers, plus their prescient decision to reinvest some of their royalty revenue back into De Beers -- thus turning Botswana's diamonds into a triple payday of royalties (50%), corporate taxes, and dividends. Economists have noted the importance of centuries-old political institutions in shaping the transparent governance that ensures those revenues really do end up in the Treasury. Both this and the president's above point about timing, unfortunately, call into question the simple replicability of a "Botswana model" elsewhere. The president said little to allay such doubts.
Clemens also reports on President Mogae's thoughts about the AIDs situation in Botswana, and on her efforts to get foreign investment: Can other countries replicate Botswana's past? (Can Botswana?) (Global Development: Views from the Center, October 13)
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