Thursday, October 10, 2013

Why Hasn’t Botswana Diversified out of Diamonds?

Why Nations Fail: Everyone agrees that Botswana has much better institutions than pretty much anywhere else in sub-Saharan Africa. A decade ago we argued in a joint paper with Simon Johnson that these institutions are the reason why Botswana has succeeded economically while most around it have failed.
Yet despite this and the fact that diamonds are running it out, it has struggled to diversify out of diamonds, and it also has very high levels of inequality. There has not been a resource curse in terms of economic growth, but the economy has not diversified out of diamonds and into more modern sectors either.
Why not if its institutions are good?

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