Explaining Botswana's Success: The Critical Role of Post-Colonial Policy
Author(s)
Beaulier, Scott
Abstract
Most economists agree that private property, the rule of law, and free markets are crucial for economic development, but there is still disagreement over what other factors determine why some nations are rich while others are poor. Jeffrey Sachs (2001) and Sachs and Warner (1995, 1997) argue that climate, geography, proximity to the coast, and distance from the equator are significant determinants of economic growth (see also Diamond 1997). By contrast, North (1981), North and Thomas (1973), and Rosenberg and Birdzell (1986) insist that a particular set of institutions – namely, polycentric governance, the rule of law, and a rich respect for private property – have led to the West growing rich. As Gregory Mankiw (1995: 303-7) points out, our traditional econometric tools cannot sort out the causes of economic growth because our models are constrained by multicollinearity, simultaneity, and other problems. The limitations of econometrics leads Mankiw to conclude: “It is not that we have to stop asking so many questions about economic growth. We just have to stop expecting the international data to give us all the answers.” Rodrik (1998, 2003) also recognizes the limitations of econometric evidence. He argues that if we concentrate too much on aggregate macroeconomic data, we will fail to appreciate the outliers (see also Boettke 2001). This study is inspired by Rodrik’s (2003) call for more case studies and “analytic narratives.” By limiting ourselves to the study of growth in a particular country, in this case Botswana, we can learn much about the process of development.
