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Economics 172 Issues in African Economic Development

Economics 172 Issues in African Economic Development. Lecture 29 May 9, 2006. Outline: Acemoglu, Johnson, Robinson (2003) on Botswana Course summary and question-answer. Botswana: Africa’s success story.

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Economics 172 Issues in African Economic Development

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  1. Economics 172Issues in African Economic Development Lecture 29 May 9, 2006

  2. Outline: • Acemoglu, Johnson, Robinson (2003) on Botswana • Course summary and question-answer Economics 172

  3. Botswana: Africa’s success story • Sub-Saharan Africa has had negative average economic growth. Botswana has averaged 7.7% per capita annual growth since the 1960s - Why? Economics 172

  4. Botswana: Africa’s success story • Sub-Saharan Africa has had negative average economic growth. Botswana has averaged 7.7% per capita annual growth since the 1960s - Why? • In 1965 the country had only two secondary schools and 100 secondary school graduates, and 12 km of paved roads. The country is tropical, landlocked, and arid. It started out with high income inequality, and lots of natural resources (like Sierra Leone). Economics 172

  5. Map of Africa Economics 172

  6. Botswana: History and politics • Nearly identical language, history to Lesotho Economics 172

  7. Map of Africa Economics 172

  8. Botswana: History and politics • Nearly identical language, history to Lesotho • Botswana’s political unity was forged in warfare against the Zulus and the Boers in the early 1800s • In the late 19th / early 20th centuries, Botswana was a protectorate, almost entirely neglected by the British. Traditional political authorities were not co-opted or crushed by the colonizers Economics 172

  9. Botswana: History and politics • Nearly identical language, history to Lesotho • Botswana’s political unity was forged in warfare against the Zulus and the Boers in the early 1800s • In the late 19th / early 20th centuries, Botswana was a protectorate, almost entirely neglected by the British. Traditional political authorities were not co-opted or crushed by the colonizers • The strongest traditional chief Seretse Khama was elected President upon independence in 1962 Economics 172

  10. Seretse Khama’s reforms • Khama actively strengthened the central government, abolishing the traditional rights of Chiefs (including the right to allocate land, and to claim mineral wealth in their lands), and allowed the state to remove chiefs. • He was not personally corrupt, and tolerated opposition groups and an independent media Economics 172

  11. Seretse Khama’s reforms • Khama actively strengthened the central government, abolishing the traditional rights of Chiefs (including the right to allocate land, and to claim mineral wealth in their lands), and allowed the state to remove chiefs. • He was not personally corrupt, and tolerated opposition groups and an independent media • Khama adopted agricultural policies that were pro-rural, and in particular pro-cattle owners, in contrast to most other African countries. He was pro-market, pursued conservative macroeconomic policies, and encouraged foreign investment in mineral extraction Economics 172

  12. Why did Botswana succeed? AJR’s reasons (1) Representative pre-colonial institutions, with lots of institutional checks/balances (e.g., public assemblies) (2) The limited U.K. colonialism left these existing institutions intact, and largely legitimate Economics 172

  13. Why did Botswana succeed? AJR’s reasons (1) Representative pre-colonial institutions, with lots of institutional checks/balances (e.g., public assemblies) (2) The limited U.K. colonialism left these existing institutions intact, and largely legitimate (3) Rural economic interests (especially cattle owners) were politically powerful (4) Huge diamond and other mineral income Economics 172

  14. Why did Botswana succeed? AJR’s reasons (1) Representative pre-colonial institutions, with lots of institutional checks/balances (e.g., public assemblies) (2) The limited U.K. colonialism left these existing institutions intact, and largely legitimate (3) Rural economic interests (especially cattle owners) were politically powerful (4) Huge diamond and other mineral income (5) Visionary nation-building decisions by post-independence leaders (especially Seretse Khama) (6) Heavy involvement of the state in the economy (central government expenditure 40% of GDP), combined with property rights protection, encouragement of FDI Economics 172

  15. Additional questions • Why did Botswana succeed and Lesotho fail? • Is it all about good leadership? (Khama) Economics 172

  16. Additional questions • Why did Botswana succeed and Lesotho fail? • Is it all about good leadership? (Khama) • Was Botswana’s collaboration with the Apartheid regime a key to their success? • Is it Botswana’s ethnic homogeneity? • What is the key factor? Economics 172

  17. Whiteboard #1 Economics 172

  18. Whiteboard #2 Economics 172

  19. Whiteboard #3 Economics 172

  20. Whiteboard #4 Economics 172

  21. Whiteboard #5 Economics 172

  22. Map of Africa Economics 172

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