Botswana's role in the global economy : opportunities and challenges

Mosarwa, Magdeline Tsholo (2007-03)

Thesis (MBA)--Stellenbosch University, 2007.

Thesis

ENGLISH ABSTRACT: As the world globalises there is need for economic integration. These integration processes can be both regional and global Africa as one of the world's continents is not immune to these integrations; regions within the continent have formed trade blocs which enhance economic development for individual member states of such blocs. Even though these countries are not equal in terms of economic development the ultimate goal is to have sustainable economic development and be able to compete in the global world. Botswana is one country with such aspirations and dreams. This paper addresses the role of Botswana in the global economy; highlighting its opportunities and challenges. Botswana has been a success story in Africa, with its GOP per capita increasing from less than US$2 000 in 1975 to around USSIO 000 in 2005, recording economic growth rates of over seven per cent. The country's economy has been heavily reliant on mining. tourism. manufacturing and agriculture. Diamonds are by far the most important source of income for Botswana, accounting for more than 70 per cent of total export earnings. The satisfactory performance of the financial sector impacts on overall development and the diversification of the economy. In its efforts to integrate and strengthen bilateral relations with bigger market economies, Botswana is a signatory to a number of trade agreements such as World Trade Organisation (WTO), Cotonou, Southern Africa Development Community (SADC), Africa Growth Opportunity Act (AGOA) and Southern African Customs Union (SA CU). As a member of the WTO, the inclusion of China into the organisation implies that Chinese products are now highly competitive when compared to Botswana products due to lower production costs enjoyed by Chinese finns. Chinese finns also enjoy competitive advantage in US markets where Botswana exports some of its textile products under AGOA. However, the country has enjoyed productive relationships with the European countries since its colonial period and through the Cotonou agreement, which was signed between the European Community and the Africa, Caribbean and Pacific countries. Botswana is also a signatory to regional blocs such as the SADC through which it has agreed on a number of economic issues such as trade, gender, water resources, peace and security, democracy and good governance. Through the SADe, member states such as Botswana are able to lobby for support or form partnerships with developed nations such as Sweden. By being a member of SACU, Botswana can export to a large market and complement its smaller domestic market. As players in the global economy, countries are exposed to many challenges and opportunities. There are opportunities for attracting more investment into the country due to its excellent economic performance. Investment can be attracted in financial and manufacturing sectors through encouraging private-public partnerships. This paper discusses some of the growth sectors in the economy and how they can be enhanced to contribute to sustainable development. It is also worth mentioning that Botswana faces challenges such as HIV/AIDS and unemployment. By being landlocked, the country is relatively expensive for investors to manufacture locally and export to foreign countries, which dampens the attraction of foreign direct investment. Some of these challenges and opportunities experienced by Botswana can serve as lessons for other African countries.

AFRIKAANSE OPSOMMING: Soos die globaliseringsproses wereIdwyd vorder is daar ook 'n proses van toenemende ekonomiese integrasie, wereldwyd en op 'n streeksbasis. Afrika neem ook deel aan die proses. In die verskillende streke van die kontinent is handelsblokke besig om te ontplooi. AI is hierdie lande nog ver agter in die internasionale mededingingsproses strewe hulle daarna om op 'n volhoubare manier internasionaal mee te ding. Botswana het beslis die mikpunt. Hierdie studie spreek Botswana se rol in die wyer streeks- en internasionale ekonomie aan. Die land word algemeen beskou as 'n ontwikkelingsukses, met 'n BBP per capita toename van US$2 000 in 1975 tot US$I0 000 in 2005, en 'n gemiddelde jaarlikse groeikoers van meer as sewe persent. Die landsekonomie is sterk afhanklik van die mynbousektor, landbou, toerisme en fabriekswese, met diamante tot 70 persent van uitvoere. As deel van die proses om nouer in te skakel by die groter markte het Botswana by 'n reeks ooreenkomste aangesluit, naamlik die Wereld Handelsorganisasie, die Cotonou-ooreenkoms, die SADC, AGOA en SACU. Terwyl die aansluiting by hierdie ooreenkomste Botswana se uitvoermarkte uitgebrei het, het Sjina se aansluiting by die WTO vir Botswana se nywerhede groter mededinging veroorsaak. Aan die ander kant het die lidmaatskap van Botswana by die SADC en Sacu vir die land baie geleenthede geopen om meer effektief te pleit en te onderhandel vir ekonomiese, sosiale en ander ontwikkelingsvoordele, veral waar Botswana se eie bevolking en markte so klein is. Om 'n beeld te kry van die uitwerking van die stappe van Botswana word in die studie ook gekyk na ontwikkelingstendense in spesifieke sektore asook na pogings om buitelandse kapitaal na die land te trek. Terselfdertyd moet besef word dat Botswana vanwee sy hoe HIV/Vigs koers tans en in die toekoms te kampe het met 'n reeks heel spesiale struikelblokke wat die ontwikkelingsproses beinvloed.

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