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Corresponding Author:
Strike Mbulawa, Graduate Studies, Faculty of Business & Accounting, Botho University, Gaborone, Botswana

Coauthors:
Samuel Chingoiro, Graduate Studies, Faculty of Business & Accounting, Botho University, Gaborone, Botswana

Export Diversification in Botswana: Key Drivers and Policy Implications

July 4, 2023
JEL classification: F21; F43; O11
Keywords: Botswana; Export Diversification; Growth; Remittances; Investment

Abstract

Export diversification appears to be a well sought trade goal for developing countries, with a lot of studies now focusing on the drivers. However, there are no universal diversification determinants that fit for all countries and this study specifically investigated the key drivers in Botswana. The study applies a vector autoregressive estimation, using annual data that spans from 1960 to 2020. The study shows that economic growth, remittances, and exchange rate volatility matter for a successful diversification policy on exports. Enhanced GDP growth and inflow of remittances promote diversification, while exchange rate depreciation dampens it. Both domestic investment and foreign direct investment were also found to be essential drivers. Therefore, policies targeted at attracting investment in public infrastructure projects and private business initiatives should be encouraged. Whilst Botswana is on growth trajectory, policies that attract of foreign oriented financial flows and stabilize the exchange rate management system are ideal for reducing the current concentration of exports in merchandise and commercial services sectors.

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Export Diversification in Botswana: Key Drivers and Policy Implications

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