16 RESEARCH
A positive note on natural resources and development in Sub-Saharan Africa : exploring Botswana ’ s case
The 2017 edition of Debating Development - an annual series of debates organized by IOB and USOS - addressed the question The global resource grab ?, with a focus on the problems related to the exploitation of natural resources , whether natural resources actually benefit the well-being of people and how the exploitation of these resources can be made more sustainable . In this short piece and as a sign of hope , we present a success story of natural resources being used to foster economic growth and reduce poverty .
Botswana is often cited as a success story of escaping the resource curse . Thanks to natural resources ( diamonds , copper / nickel , coal , wildlife , soils , forests , veld products , and ecosystems ), the country has one of the most successful economies in Africa and its revenue from mineral exports , especially diamonds , has enabled the implementation of different poverty-reduction policies .
A reminder of the natural resource curse
The natural resource curse refers to Sachs and Warner ’ s ( 1995 ) influential empirical observation that being a natural resource or mineral exporter reduces a country ’ s development prospects . However , once endogeneity is accounted for , this negative relationship no longer holds . Put differently , resources are not necessarily a curse and countries with mineral endowments , that fail to develop are often the ones that remain resource dependent ( Brunnschweiler and Bulte , 2008 ). The main reasons for natural resources to become a burden on development are Dutch disease , volatility curse and governance curse .
Dutch disease ( Corden and Neary , 1982 ): productive resources move from non-mineral traded goods ( the output of which declines ), to the booming mineral sector and the non-traded goods ( the output of which increases ), thereby causing a progressive “ deindustrialization ” contributing to poor long-run performance .
For example , since the start of its oil exports , Nigeria has seen its agricultural sector collapse and has become dependent on imported food ( Otaha , 2012 ).
The Volatility Curse ( Hausmann and Rigobon , 2003 ): volatility in the price of mineral prices translates into exchange rate fluctuations and inefficient “ stop-go ” provision of government services and infrastructure projects because of low predictability of public revenue . The higher dependence on mineral
“... we intend to conserve our resources wisely and not destroy them . Those of us who happen to live in Botswana in the 20th century are no more important than our descendants in centuries to come .” Hon . Sir QKI Masire , former President of Botswana
Exchange to change January 2018
16
RESEARCH
A positive note on natural
resources and development
in Sub-Saharan Africa:
exploring Botswana’s case
The 2017 edition of Debating
Development - an annual series of
debates organized by IOB and USOS
- addressed the question The global
resource grab?, with a focus on the
problems related to the exploitation
of natural resources, whether
natural resources actually benefit
the well-being of people and how the
exploitation of these resources can be
made more sustainable. In this short
piece and as a sign of hope, we present
a success story of natural resources
being used to foster economic growth
and reduce poverty.
Botswana is often cited as a success
story of escaping the resource
curse. Thanks to natural resources
(diamonds, copper / nickel, coal,
wildlife, soils, forests, veld products,
and ecosystems), the country has one
of the most successful economies in
Africa and its revenue from mineral
exports, especially diamonds, has
enabled the implementation of
different poverty-reduction policies.
E xchange to change J anuary 2018
A reminder of the natural
resource curse
The natural resource curse refers
to Sachs and Warner’s (1995)
influential empirical observation
that being a natural resource or
mineral exporter reduces a country’s
development prospects. However,
once endogeneity is accounted for,
this negative relationship no longer
holds. Put differently, resources are
not necessarily a curse and countries
with mineral endowments, that fail
to develop are often the ones that
remain resource dependent
(Brunnschweiler and Bulte, 2008).
The main reasons for natural
resources to become a burden on
development are Dutch disease,
volatility curse and governance curse.
Dutch disease (Corden and Neary,
1982): productive resources move
from non-mineral traded goods
(the output of which declines),
to the booming mineral sector
and the non-traded goods (the
output of which increases),
thereby causing a progressive
“deindustrialization” contributing
to poor long-run performance.
For example, since the start of its
oil exports, Nigeria has seen its
agricultural sector collapse and has
become dependent on imported food
(Otaha, 2012).
The Volatility Curse (Hausmann and
Rigobon, 2003): volatility in the
price of mineral prices translates
into exchange rate fluctuations
and inefficient “stop-go” provision
of government services and
infrastructure projects because of
low predictability of public revenue.
The higher dependence on mineral
“...we intend to conserve
our resources wisely and not
destroy them. Those of us who
happen to live in Botswana
in the 20th century are no
more important than our
descendants in centuries to
come.” Hon. �\�R�HX\�\�K��ܛY\��\�Y[�و����[�