The resource curse of natural resources Essay

Chapter 1: Introduction

The resource expletive is the theory that states with an copiousness of natural resources, such as oil and minerals, achieve less economic growing than states that are non endowed with natural resources. There are writers that argue this point ( Auty 1990, Gelb 1988, Sachs and Warner 1995, 1997, 1999 ) and there are those that believe the resource expletive is less to make with resources and more to make with political direction ( Brunschweiler 2008a, 2008b, Ross 1999, 2001 ) .

This theory appears to be contrary to the immediate inherent aptitude felt by many that natural resources will supply an chance for states to develop by utilizing increased grosss associated with a find of resources or an addition in universe monetary values of such resources.

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The first subdivision of this paper discusses a few of the most of import mechanisms in which the resource expletive can attest itself. These are through establishments, corruptness, struggle, Dutch disease and human capital. The 2nd subdivision surveies the instance of Botswana by supplying an apprehension of Botswana ‘s economic and development way I will look into how Botswana avoided some of the traps resource abundant states normally fall into and how Botswana managed diamond excavation in order to profit the state. I will besides execute a little comparing between Botswana and Sierra Leone to foreground the different channels in which resource copiousness can impact economic systems.

In my concluding chapter I will analyze whether Botswana has been successful in to the full get awaying the resource expletive symptoms by discoursing any jobs the diamond excavation may hold caused.

This paper, whilst little, highlights the importance of look intoing phenomena such as the resource expletive. Many states have fallen into poorness since the outgrowth of extractible resources in their economic systems, yet Botswana has managed to avoid such jobs. It is of import to analyze how Botswana did this, so that lesson may be learned and used to assist other states avoid such jobs in the hereafter.

Chapter 3: The Resource Curse Literature Review

Explanation of resource expletive

There are illustrations of resource hapless states surpassing resource rich states throughout history. In recent times the Asiatic Lttes have achieved fast industrialisation and economic growing despite holding few natural resources, where as diamond rich states such as Sierra Leone still remain low on universe economic and societal indexs ( World Bank Development Indicators 2009 ) . But do natural resources ever lead to hapless economic development? Or are at that place other variables in the context of which the natural resources are placed that determine economic development?

There has been much treatment on the resource expletive subject. Prominent among them are surveies by Sachs and Warner ( 1995, 1997, 1999 ) . Although in the decision to the paper Sachs et al admit their findings are “ far from unequivocal ” the general findings are that there is “ grounds for a negative relation between natural resource strength and subsequent growing ” ( Sachs and Warner 1995: p27 ) . They analysed informations from 95 developing states by looking at one-year growing rate between 1970-1990 and resource based exports in 1970. Sachs and Warner classified ‘high copiousness ‘ of natural resources as exports of agribusiness, mineral and fuel as a per centum of GDP. From this simple analysis they discovered the being of the alleged resource expletive and they so tested the theory by commanding a figure of other variables that could explicate the relationship between resources and decelerate economic growing.

The undermentioned treatment will supply a sum-up of the cardinal mechanisms identified in the literature.


However it is of import to observe that non all faculty members support the literature on the being of the resource expletive, Brunnschweiler ( 2008a ) is the most outstanding. The chief reviews of work by Sachs and Warner are the variables used to mensurate resource wealth. Brunschweiler for illustration believes per capita mineral wealth is more appropriate. The inquiry is besides raised as to whether Sachs and Warner were right to include agribusiness in their arrested developments. Although agribusiness is so a primary natural merchandise, as it is the result of using the resource of land, it can be said that agribusiness takes a different way in the economic system than minerals or fuel. It may be better to sort agribusiness individually when sing the resource expletive, particularly in the context of the 3rd universe where many economic systems are agricultural based. Further in this paper I will analyze whether agricultural resources cause the same effects on the economic system as mineral resources.

Arguments against the Resource Curse

Large push theory

Whilst there is no denial that the resource expletive has effected states like Venezuela, Nigeria and the Congo ( Wenar 2008 ) there have been instances such as Botswana and Norway that have given strength to the opposing ‘big force ‘ theory. In the large push theoretical account, developing economic systems are stuck in a trap. In order to develop their economic systems they need to industrialise so they are able to make wealth of their ain. However there are big fixed costs associated with industrialisation that developing economic systems can non afford. Therefore, the name large push comes from the thought that developing economic systems require a big injection of capital in order to develop. This injection of capital can be used to put in economic substructure and will let a more rapid accretion of human capital which farther allows societal and economic development. ( Murphy, Shleifer and Vishny 1989, Birdsall et al 2000 )

Ironically, this injection of capital could originate from big resource grosss, which suggests that the resource expletive may be avoided if the capital is handled in a productive mode, for illustration a long-run and sustainable program.

An of import point made by Walker and Jourdan ( 2003 ) is that every bit entree to resources and minerals is going easier due to reduced transit costs, states are able to prolong industry without holding a big natural resource base. This is could intend that states who are non resource abundant might be better away, as they experience less inauspicious side-effects that I will discourse in this paper than resource rich economic systems.

Dutch Disease

The first consequence, cited by Sachs ( 1995 ) and many others ( Norberg 1993, Gelb 1988 ) is the Dutch Disease. Although it is frequently linked to the find of a natural resource, Dutch disease can happen when there is any positive income daze. For illustration a important rise in primary merchandise universe monetary values can make sudden increased grosss for primary merchandise exporters. The earliest Dutch Disease theoretical account I can follow was foremost created by Corden ( 1984 ) and the theoretical account has been invariably remodelled and analysed by other faculty members since.

There are two strands of the Dutch disease theoretical account, the resource motion consequence and the currency grasp consequence.

Currency Appreciation Effect

Dutch disease is frequently known as de-industrialisation because as one sector of the economic system roars, ( in the instance of this paper we are speaking about the tradable natural resource sector ) other tradable sectors of the economic system become less competitory. This is because a sudden addition in exportation of a natural resource of any sort can do currency grasp ( Dutch disease ) . Whilst this is good for the state as it makes imports cheaper, it makes all the exports from the state ( apart from the natural resource ) less competitory in the universe market as it costs other states more money to from that peculiar state. The same way is besides true for investing in this sector. This is why the fabrication sector of resource abundant states frequently psychiatrists.

Resource Movement Effect

The resource motion consequence is the resettlement of production factors off from the fabrication sectors towards to dining ( natural resource ) sector. Davis and Tilton ( 2005:238 ) believe “ the Dutch disease really allows a state to profit from its new found mineral wealth by promoting resources to flux from other sectors of the economic system to the dining sector: ” However, this resource motion is besides a cause of the shrinkage of the fabrication sector noted above.

An of import point argued in Sachs and Warner ( 1997 ) is that the shrinking of a fabrication sector itself is non a job. The job arises when the shrinking causes slow economic growing, such a instance may happen when an economic system becomes more dependent on their natural resources. The advisability of this is non good ( Jefferis 1998 ) as the economic system becomes more vulnerable to universe monetary value alterations in the natural resource. In bend, these frequently volatile monetary value alterations make it difficult for authoritiess to do mid or long term economic programs and policies. This is frequently said to be what happened in the oil rich Middle East in the 1970 ‘s ( Auty 1990 ) authoritiess were over optimistic about the gaining power of their resources and so the oil monetary values fell dramatically.

However the shrinking of the fabrication sector can hold a negative impact on the economic system because productiveness grows faster in the fabrication sector than in the resource sector ( REF ) and a diminution in this sector means the economic system is losing out on this productiveness. A similar statement is made by Gylfason ( 2001 ) about learning-by-doing and technological progresss. The shrinkage of a tradable fabrication sector besides creates occupation losingss ; normally this could be compensated for as the primary merchandise resource sector expands. But most minerals and oil sectors are capital intensive and non labour intensive ( Sarraf 2001 ) , so they are non able to absorb the unemployment.


Another strand of the resource expletive theory is the analysis of the relationship between resource copiousness and establishments. Specifying establishments is a hard occupation as it can affect many different facets of a states history, civilization and authorities. The chief ground why establishment analysis is critical to detecting the relationship between resource copiousness and economic growing is that establishments affect policy construction and policy construction sets the sphere in which an economic system and resources are managed.


First, the history of a state can travel a long manner to explicating the current state of affairs a state faces today. Acemoglu et Al ( 2001 ) notes the importance of colonization is the finding of establishments. In his position there are two types of colonization. There is colony colonization whereby the colonizers decided to settle in the part, possibly due to a low incidence of lifelessly infective diseases, as occurred by the British in North America. The colony settlements are largely made up of the ‘new universe ‘ , such as North America and Australasia.

The 2nd type of settlement are extractive settlements, whereby the colonizers extracted resources that they found valuable, be it people as slaves or minerals. Naturally, these two different waies have caused rather different results in establishments. Intuitive thinking would take us to believe that traits of a colonizers such as belongings rights and regulations of jurisprudence would be embedded in there settlements. Indeed, Murshed ( 2001 ) and Acemoglu et Al ( 2001 ) publish documents along the same lines. This theory leads to the thought that colonies with exploitatory colonizers tended to non set up foreign ‘good establishments ‘ to the same strength as settled countries. It could be argued, as by Murshed, that forms of exploitatory behavior with respect to resources were learned and necessarily repeated by settlements. On the other manus, settled settlements tended to retain establishments of jurisprudence and belongings rights that European colonizers may hold brought over.

Acemoglu has raised the point that different colonizing states have left really different establishments behind. For illustration, he argues that the British settlements “ inherited better establishments with respect to esteem for the regulation of jurisprudence and democracy ” ( Acemoglu et al 2001: p12 ) . In either instance it is apparent that establishments brought in from Europe have remained in some signifier. However, we must non bury that the settlements of Africa, Asia and Latin America existed long before they were discovered by the Europeans. Prior to colonisation these states had their ain functioning political and societal establishments and it could be that European encroachers merely adapted these establishments to suit their demands and left many bing ways integral.

A little but of import point to observe is that colonization could besides hold had an impact on the ethno lingual and ethno fractionalisation of a state because unreal state boundary lines were placed upon countries of land with no respects to sing the existing, and it could be argued natural, boundary lines. These unreal boundary lines were emplaced for the easiness of the colonizers and really small consideration was given to bing societal boundary lines, for illustration between folks or geographical boundaries. This enforced ethno fractionalisation can be the cause of struggle within a state, even if natural resources are non in the equation, a premier illustration of this is in Rwanda.

Leite and Weidmann ( 2002 ) are of the sentiment that resource wealth does non straight affect economic growing, but that it resources affect the likeliness of corruptness, which hence influences economic growing. Bulte, Damania and Deacon ( 2005 ) further this statement by indicating out it may non be the being of establishments that matter but the quality. In Bulte et Al ( 2005 ) analysis they differentiate between two types of resources. Point resources which are geographically based and hence “ an copiousness of these resources are typically associated with inequality in footings of power and the division of the excess, and frequently are accompanied by perpendicular relationships between agents ( stockholders, directors, laborers ) . ” ( Bulte et al 2005: p1031 ) . Whereas diffuse resources, such as agricultural land, are more geographically dispersed and are hence more every bit distributed and less able to be protected by an elite. It is the belief of Bulte et Al ( p1034 ) that point resources attract worse quality establishments than diffuse resources with respect to corruptness and authorities public presentation.


An copiousness of natural resources provides significant gross for an economic system but unluckily in many developing states where there are weak substructures and hapless people, the enticement of this gross can do corruptness particularly in the political domain. When a authorities experiences big flows of finance, particularly if these flows are comparatively sudden, for illustration a find of minerals or oil, or new engineering that helps extract resources, it can be difficult for a authorities to pull off such flows ( Dietz 2005 ) . They may non hold had experience in covering with big amounts of money. These sudden windfalls increase the chance for corruptness as it is difficult to maintain path of the money and therefore it is easier and to steal and waste.

Corruption besides comes in the signifier of indolence. The political elite may take to guarantee they remain in power by purchasing political favor utilizing the resource grosss. This undermines democracy, but as politicians are able to obtain big amounts of money from resources it is easier to purchase political favor than to develop good policies and there is small incentive to construct substructure in other countries of the economic system, as resources are the chief beginning of income.

One would presume that if countries of the economic system were to get down neglecting or non being developed and maintained to a satisfactory criterion of the citizens so the citizens would demand action from the authorities. However, in fortunes where an copiousness of resources are in the state, the authorities frequently tries to purchase favors from the people by non taxing the citizens, alternatively they use the resource grosss to supply basic substructure, such fortunes could be classed as the rentier consequence cited by Mehlum ( 2006 ) and Brunschweiler ( 2008a ) .

On the other manus, the authorities could make up one’s mind to utilize the resource grosss to help them in an attempt to barricade the formation of societal groups. The authorities might seek to make this because they fear groups independent of the authorities may demand more from a authorities that is unwilling to give more. As Ross ( 2001: p335 ) argues “ Scholars analyzing the instances of Algeria, Libya, Tunisia, and Iran have all observed oil-rich provinces barricading the formation of independent societal groups ; all argue that the province is thereby barricading a necessary stipulation of democracy. This is one of the many ways resources appear to impact political relations.

Whilst the rudimentss are still provided and the people have more money in their custodies, the state of affairs can do jobs as the authorities is non longer held accountable as it is non utilizing the people ‘s money. Therefore the relationship between authorities and citizens breaks down. This leads to a less democratic society and one that Karl ( 1997 ) believes would be one more vulnerable to civil war.


As antecedently discussed weak establishments and corruptness can both take to conditions that breed conflict as they diminish the authorities ‘s ability to work decently. Although a batch of surveies are unable to demo a strong nexus between resource extraction and civil struggle ( Ross 2004 ) , in recent history there have been many illustrations of the internal struggle within states that are abundant in diamonds, such illustrations are Sierra Leone and Angola. Collier and Hoeffler ( 2001 ) cite that war emerges as either a merchandise of grudge or greed. In the instance of natural resources it appears that greed is most likely due to the outrageousness of the grosss compared to other signifiers of authorities gross.

The struggle frequently takes the signifier of civil war within a state as fractions of society jockey for control over the resource wealth ( although the struggle can besides take the signifier of concealed struggle within authoritiess ) . Collier ( 2004 ) suggests that high societal and economic inequality, deficiency of political rights and spiritual or cultural divisions in society cause civil wars. The presence of natural resources can move as a accelerator by foregrounding these mistakes and at the same clip making a fiscal inducement for war. If struggle does happen so ( Brunschweiler 2008b ) believes it “ could be the instance the struggle makes states dependent on resource extraction ” which is the default response when other economic sectors are non executing good. This indicates that one time a state enters into struggle due to resources, they may hold entered a barbarous rhythm that will be difficult to halt.

Fractionalisation within resource copiousness societies has been greatly studied ( Easterly and Levine 1997, Brunschweiler and Erwin 2009 ) as it is believed that societies that are fractioned by category battles, ethnicity or faith have weaker establishments ( Hoedler 2006 ) . In bend weaker establishments lead to a lessened ability of the authorities to command state of affairss and hence combat is more likely to break out ( Arezki et al 2007 ) . Whilst the atomization in society is the footing for the combat, the presence of resources can be seen as the trigger or accelerator for struggle. Fighting is bad for economic growing as it decreases productive activities, which lowers productions and lowers incomes ( Hoedler 2006 ) . Therefore in general the consensus is that the more homogenous the society, the less likely the hazard of struggle.

Having high grosss from resources can besides take to rentier province symptoms as discussed antecedently. In this instance it may be that those in control of resource grosss are invariably on the sentinel for opposing groups seeking wrest control from them. Unfortunately as they are the 1s commanding the grosss, they have money to quash citizens by non merely quashing societal groups but by using armed struggle if they require. This is why ( Brunschweiler 2008b ) believes that as authoritiess are able to fund themselves they are more likely to be autocratic. Although Ross ‘s ( 2001 ) paper chiefly discusses the Middle Eastern oil provinces, he admits that his findings can associate to other mineral economic systems outside the Middle East. This repression can besides falsify the economic system by crushing entrepreneurial endowment ( Alayli 2005 )

However there are some bookmans who believe that resource copiousness can really assist avoid struggle, for illustration, Brunnschweiler and Bulte ( 2008b ) say “ resource wealth raises income, and higher incomes, in bend, cut down the hazard of struggle ” . However, they admit it is a little decrease in hazard and it could be that the big ‘prize ‘ ( resource gross ) that people are able to contend over is a stronger inducement than higher incomes.

The nexus between cultural atomization and the resource expletive has been investigated in a paper by Roland Hodler ( 2006 ) . The purpose of his paper is to explicate why resources can be a approval for some states and a expletive for other. For him, there are two effects of natural resources. First, income of a state rises if the state chooses to utilize the resource for its ain industrial benefit or exports them to other states ; this is a direct positive consequence. Second, an indirect negative consequence is natural resource wealth additions conflict, but merely ( harmonizing to Hodler ) if there are multiple groups opposing each other. Hodler focuses on equaling cultural groups, but other groups that could impact the equilibrium are category groups and political groups. In Hodlers model the resource copiousness is a approval to a state if the direct positive consequence is greater than the indirect negative consequence, but a expletive if the negative outweighs the positive and therefore a comparatively homogeneous society is less likely to see a resource expletive as there are less opposing groups disputing the equilibrium.

Linked with this statement is that of Bannon and Collier ( 2003:3 ) that cultural laterality aboard resource profusion strains struggle. Cultural laterality particularly in authorities or establishments has an of import advantage because that race so hold the power “ in moderating and equalizing cultural dealingss, or pretermiting and possibly worsening them ” ( Good 2005: p31 )

The magnitude of the negative consequence in Hodlers paper is determined by the figure of opposing groups. The higher the figure of groups the weaker belongings rights. I take my definition of belongings rights from Acemoglu et Al ( 2001 ) whereby people have secure belongings rights ( rights against expropriation and that those “ with productive chances expect to have returns on their investing ‘ and that a ‘broad cross-section of society have the chance to put. Furthermore Acemoglu et Al ( 2001 ) make the point that comparative political stableness is needed in order to keep these belongings rights.

Human Capital

As we can see that the resource expletive is interlinked with many facets of economic sciences. It is besides linked with human capital: instruction and wellness. Education is of import in economic development as it raises labour efficiency, provides a more participative society and a better quality of life ( Barro 1997 ) , but is educational development being affected by the resource expletive? Evidence by Gylfason ( et Al 2001: p850 ) shows that “ school registration at all degrees tends to be reciprocally related to natural resource copiousness, as measured by the portion of the labour force engaged in primary production, across states ” . Questions could be raised about the cogency behind utilizing such steps and whether other steps are more appropriate but there is plentifulness of grounds from other writers such as ( Birdsall et al 1997 ) which come to the same decision.

There are two outstanding statements about the consequence the resource expletive has on instruction and frailty versa. First, the huge grosss created by an abundant resource can be used by frontward believing authoritiess to fund instruction ( Sachs and Warner 1997 ) . On the other manus, it has been argued by Gylfason that some resource dependent economic systems choose non to put in instruction substructure as they see small immediate demand for it because “ high accomplishment labor and high quality capital are less common in primary production so elsewhere ” ( Gylfason 2001: p10 ) . However concentrating on resources ( and pretermiting instruction ) hinders the learning-by-doing procedure. This procedure is more likely to develop, along with additions in technological progresss, in the fabrication sector ( Sachs and Warner 1995 ) . Thereby depending on resources and pretermiting instruction can decelerate economic growing as a whole as there is no inducement to increase the gaining power ( both at single and national degree ) that can be achieved through instruction. It is besides worthy to observe that instruction is strongly linked with a higher rate of absorbing new engineerings from other states ( Birdsall 1997 ) .

Chapter 4: The Case of Botswana

Although in the old subdivision I discussed ways in which an copiousness of natural resources could take to decelerate economic growing, there have been states that are resource rich and hold had good economic development: for illustration Norway and Botswana. Norway became one of the top marking states on both economic and societal indexs in the universe ( Larson 2003 ) since the extraction of oil in the early 1970 ‘s.

Graphs demoing growing of Botswana compared to other African states here

In this subdivision I aim to discourse the experience of Botswana through the same cardinal mechanisms I used in the old chapter. These mechanisms are Dutch disease, establishments, struggle and human capital. By utilizing the same cardinal mechanisms I hope to demo how Botswana has avoided the jobs that cause the resource expletive.

Botswana has developed comparatively quickly sing that Botswana was the 3rd hapless state in the universe before independency ( Beaulier 2003: p233 ) As Acemoglu et Al ( 2001 ) points out there were merely 22 alumnus Batswana, who studied outside the state and merely 12km of paved route. It seems that Botswana was in the same place as the bulk of Sub-Saharan Africa. But since “ the mean growing in Africa has been negative since 1965 ” ( Acemoglu et al 2001 ) how has Botswana managed to accomplish the “ highest rate of per capita growing of any state in the universe in the last 35 old ages ” ( Acemoglu et al 2001 ) ? Particularly sing that as a resource rich state it could be expected that Botswana would hold slower growing than those without resources.

Dutch Disease

There are beliing positions as to whether Botswana experienced Dutch disease and whether this was due to the presence of diamonds. Mogotsi ( 2002:129 ) thinks that a mild Dutch disease occurred in Botswana as there was no big preexistent fabrication sector, so when excavation occurred, the skilled labor from the little fabrication sector moved to mining. Less skilled agricultural workers filled the topographic point of the old fabrication workers. As they are less skilled there is some loss of productiveness and efficiency in the fabrication sector.

However Pegg ( 2009: p2 ) believes that there is “ small grounds that agribusiness or fabrication in Botswana has suffered from Dutch disease effects ” like the Dutch Disease theoretical account predicts when there is a big tradable excavation sector. This is because there is really small resource motion as the diamond industry in Botswana as diamond excavation is capital intensive and site specific ( Jefferis 1998 ) . This deficiency of motion means that few positive outwardnesss are present in Botswana ‘s excavation industry. This is apparent in the employment rates. Whilst Botswana has many good economic and societal indexs, unluckily a high unemployment rate is non one of them. “ While mining production contributed 40 % to GDP, it absorbed merely 4 % entire employment ” ( Iimi 2006a: p7 ) . This has big deductions for income distribution and inequality in Botswana. As rewards are higher in the diamond industry ( REF ) it distorts wealth in the economic system.

It has been said that merely around half of the population have benefitted from the increased grosss, outside of additions in instruction, health care and substructure. This is reflected in about 50 % of the population still populating below the poorness line despite GDP per capita being around $ 1000 as there is a little work force for diamonds and a high unemployment rate in general. ( hypertext transfer protocol: // )

However, in the resource expletive theorem if Dutch disease were to happen so imports would be cheaper. As Botswana is 80 % Kalahari Desert ( Beaulier 2003 ) agribusiness is non a major industry and as such Botswana imports most of its demands. 75 % of imports come from neighboring South Africa ( Iimi 2006b: p18 ) there are really small seeable effects of the negative sides of Dutch disease.

Currency grasp is the most obvious side-effect of resource related Dutch disease. But big diamond grosss have non caused Botswana ‘s currency, the Pula, to be systematically overvalued. ( Pegg 2009: p4 ) Although Botswana faces a hard state of affairs with respects to interchange rates. Botswana must pull off the exchange rates carefully as it imports 75 % of its goods from South Africa ( REF ) but Botswana ‘s exports are valued in US dollars. Therefore Botswana must seek to maintain the Pula stable against both the South African rand and US dollar at the same clip to avoid increased monetary values of nutrient or decreased net incomes due to falling dollar monetary values. So far Botswana has managed this well.

Botswana has besides been frontward believing by roll uping big foreign exchange militias ( Jefferis 1998 ) which are of import and utile to hold because it gives them the ability to pull strings exchange rates to help the domestic currency should it necessitate it.

The authorities besides created the Public Debt Service Fund ( PDSF ) in 1972. It recognises that the diamond grosss may be beyond the authorities ‘s absorbent capacity and so the PDSF allows the authorities to salvage money instead than overheat the economic system by passing it. ( Pegg 2009: p3 ) .The Revenue Stabilization Fund ( RSF ) is particularly utile in times of economic downswing like the current fiscal crisis, as they authorities are able to finance normal disbursement by utilizing the nest eggs instead than borrowing.

Of class, although good administration has caused what is seen to be a success with respects to gross direction ( Samatar 1999 ; Leith 2005 ) , it has besides been said ( Pegg 2009: p2 ) that “ stableness of rent watercourses ” besides helped Botswana command the monolithic flows and non fall into resource related Dutch disease. This has besides led Botswana to travel ‘upper in-between income position ‘ in the World Bank categorization. This is impressive as before independency Botswana was classified as a ‘low income ‘ state. ( World Bank Income Classification ) .


Several writers have put frontward the statement that inclusive pre-colonial establishments are responsible for Botswana ‘s economic development as establishments are a ground why nutrient policies are chosen and besides enable good policy picks to lodge. Beaulier 2003 )

Before colonization it seems that Botswana society was by and large inclusive. An of import establishment of traditional Botswana society is the function of kgotlas which are an “ assembly of grownup males in which issues of public involvement were discussed ” ( Acemoglu et al 2001 ) Botswana society allowed unfastened dissent of the King and heads in kgotlas which provided a just and accountable society.

A farther point argued by Acemoglu et Al ( 2001 ) and besides by Englebert ( 2000 ) and Iimi ( 2006a ) is that the comparatively not intrusive nature of British colonialism left a batch of traditional and functional establishments integral. During the scramble for Africa in the 1800 ‘s Britain agreed to granted Botswana associated state position requested by Batswana heads in 1885 ( Beaulier 2003 ) . The heads wanted protection from the South African Afrikaners who were traveling towards Botswana. However, Britain “ apart from protecting from invasion the British had no existent involvement in actively pull offing Bechuanaland ‘ ( modern twenty-four hours Botswana ) ( Beaulier 2003 ) as they believed there was non much worthy of extraction and Britain besides did n’t desire to take on another outgo when it already had to finance India, South Africa and Zimbabwe ( Beaulier 2003 ) For Britain the chief ground behind allowing Protectorate position was to halt the Germans come oning farther into cardinal Africa once they had captured Namibia. ( Beaulier 2003 ) As such, the light colonization did non go forth much in the manner of societal and physical substructure ” ( Beaulier 2003: p228 ) . When we relate this to the resource expletive theory that holding good establishments enables resource wealth to be managed suitably, we can see that although Botswana was colonised they did non go forth behind much substructure. As it was neither extensively settled by the British nor extensively exploited it appears that Botswana escaped the extremes of colonialism. The two establishments adopted from Britain by Botswana that appear to hold had good effects on society are the acceptance of the Westminster parliamentary system and common jurisprudence legal codification ( Beaulier 2003: p234 )

Independence came in 1966, when the British Bechuanaland Protectorate became an independent member of the British Commonwealth. Although Botswana became a democracy after independency it “ maintained Tswana cattle-owner hierarchy and royal household posterities got presidential term ” ( Englebert 2000: p14 ) . The first President of Botswana was Seretse Khama who was Chief of the Bamangwato folk. He has been praised by many faculty members ( Iimi 2006a and Englebert 2000 ) It appears that he has put Botswana on the right way since independency. Unlike a batch of African leaders, Khama decided to follow developmental policies above a Marxist stance ( Beaulier 2003 ) . His grounds for making so may be because his leading was legitimate. As Englebert ( 2000: p14 ) says “ in historically legitimate provinces such as Botswana, on the other manus, elites are freer to follow developmental and industrial policies as their hegemony is good established ” .

Khama is besides praised for doing wise determinations with respect to leting foreign investors into the diamond excavation industry, which established good international ties which is good for economic growing ( Beaulier 2003: p234 ) . He besides made courageous economic determinations of liberalizing trade and lower income revenue enhancements. The low income revenue enhancements made political sense for Khama ‘s authorities and it besides meant that people are less likely to hedge paying revenue enhancements and less corruptness as there is non a big sum of money to contend over ( Beaulier 2003? ? ? ? ? ) . Equally good as modernizing Botswana economically, Khama kept a batch of the pre-colonial establishments. On the whole I believe this to be a wise pick as determinations to continue such establishments as the Kgotlas kept portion of Botswana ‘s civilization and allowed the determinations of the new authorities to be openly assessed and criticized by the populace and as Iimi points out it is of import that citizens can “ train those in authorization for resource extraction ” ( Iimi 2006a: p10 )

State capacity is besides an of import factor in turning away of the resource expletive. Englebert ( 2000: p8 ) defines province capacity as the capacity “ to plan and implement policies, make believable committednesss, run an efficient bureaucratism and supply restraints to timeserving behavior ” If province capacity is non big so the hazard of over development of the resource is likely ( Iimi 2006a ) . It appears that Botswana has been extremely effectual in this regard as compared to other African states it has a better mark on the corruptness indexes…

However, it is apparent that establishment are non the exclusive factor in the ability of Botswana to avoid the resource expletive and prosper as before independency there was good pre-colonial establishments yet Botswana was the 3rd hapless state in the universe before independency ( Beaulier 2003: p236 ) . The position is besides instead pessimistic because if bad growing is due to history of states and their colonization so Africa is doomed as they are unable to alter their yesteryear.


As discussed in the old chapter resource copiousness can do corruptness among authorities functionaries. However Botswana has taken stairss to avoid corruptness. Such steps include the creative activity of the Directorate of Corruption and Economic Crime which is a section that investigates studies of possible corruptness. It is particular because it can describe instances straight to the president of Botswana.

The deficiency of corruptness comes as a surprise sing that at the beginning of the flow of diamond grosss Botswana was still an extremely hapless African state and even now “ inequality has remained singular high ” ( Acemoglu et al 2001 ) . One could presume, besides, that the sudden nature of the flows would hold made it easier for people to rent-seek as the flow might non hold been good managed due to its enormousness. On the other manus, although there is no uncertainty that diamond gross is a big flow the authorities seem to hold been able to pull off it reasonably good ( Samatar 1999, Leith 2005 ) . As the grosss of diamonds have a clip slowdown from the oncoming of excavation until the authorities receives the finance ( REF ) it could be argued that Botswana ‘s diamond gross was non so sudden, which gave the authorities clip to be after direction schemes.

Botswana used the IMF and World Bank in an consultative capacity ( Beaulier 2003: p235 ) to assist pull off the flows and it appears that the good leading and the creative activity of a believable authorities, which forges trust between the citizens and authorities, are to thank for that fact that “ corruptness in the populace sector is non a large job ” ( Iimi 2006a: p11 )

In the Transparency International ‘s 2009 perceptual experiences report Botswana scored 5.6 out of a possible 10 ranking is 37th in the universe. The 2nd most crystalline state in the African continent is South Africa with a mark of 4.7. ( Transparency International Corruption Index 2009 ) Therefore, the resource expletive theory foretelling that high resource copiousness tends to take to more corruptness appears to non be a strong statement for the instance of Botswana. However that is non to state that all is good in Botswana. There are still concerns over elect corruptness and non-accountability issues, particularly during the 1990 ‘s ( Good 2005: p33 ) . Transparency is a good index of the degree of corruptness, as is answerability. If people are held accountable for actions and determinations taken by a authorities ( or any individual or establishment in power ) so there is likely to less corruptness. The authorities has made appropriate stairss to being an accountable authorities. For illustration, “ The fundamental law besides makes the lawyer general independent of the authorities and politicians ” ( Iimi 2006a: p11 ) and as antecedently said the Kgotla establishment allows even local countries of authorities to be criticised and accountable.


“ Of all sub-Saharan African states, Botswana has been the lone one free from international and political convulsion since independency ” ( Beaulier 2003: p234 ) . This is rather surprising sing that most other diamond pull outing African states have entered into long and bloody civil struggle, e.g. Angola and Sierra Leone. So how did Botswana avoid struggle?

  • First, “ autochthonal conditions in Bechuanaland ( contemporary Botswana ) exhibited a just sum of cultural and cultural homogeneousness ” ( Acemoglu et al 2003: p228 ) , and as discussed in the old chapter ethnically disconnected societies are more likely to fall into civil war.
  • Although Botswana is reasonably homogenous in comparing to other states, there are a assortment of different folks populating in the boundary lines of Botswana. The chief cultural groups are “ Tswana ( or Setswana ) 79 % , Kalanga 11 % , Basarwa 3 % , other, including Kgalagadi and white 7 % ” ( CIA Factbook: Botswana ) As we can see, Botswana is defined as comparatively homogeneous due to the fact that about 80 % of the population are of Tswana beginning, yet there are a batch of different cultural folk. So we must non presume that as Botswana is comparatively homogeneous there are non struggles of involvement among different ethnicities.

    On the other manus, the fact that there is clear cultural laterality by the Tswana in Botswana as they “ became an institutionalized component in the fundamental law and in the political system through a Tribal Land Act, Tribal Territories Act, Chieftainship Act, and a House of Chiefs composed wholly of Tswana ex-officio members ” ( Good 2005: p32 )

    But despite the cultural laterality, there have non been big civil wars or struggle within Botswana. Although there have been incidences whereby members of other folks are protesting and contending for a more equal society and stronger rights for the smaller folk. ( Good 2005 )

    Possibly the biggest, or at least most widely known, struggle within Botswana has been centred around the battle of the San ( besides known as Basarwa ) minority against the authorities of Botswana. This shall be discussed in CHAPTER XXX

    As antecedently discussed, faith can besides be a factor in spliting a state in struggle. In the 2001 Census merely over 70 % of citizens identified themselves as Christian, around 20 % were Atheist, 6 % were Badimo ( native/anscestory based ) , and 2 % identified themselves with other faiths ( CIA World fact book: Botswana ) . Like, ethnicity Botswana appears to be comparatively sacredly homogeneous. In recent history there has been no major struggle between spiritual divisions ( International Religious Freedom Report 2007 )

    Another ground that resource abundant economic systems frequently have conflict is that “ avaricious Rebels could seek profitable robbery chances ” ( Brunschweiler et al 2008b ) . However, before the find of diamonds there were no obvious Rebel groups ( REF ) . Besides, the grosss have been so big ( accounting for 40 % of GDP Iimi 2006a ) that cipher wanted to upset the balance at the hazard of going the also-ran in the conflict, and hence coming out worse than they were earlier.

    Botswana ‘s turning development and non-interventionist stance into foreign personal businesss have gained blessing from Western states who therefore offered protection to Botswana should conflict arise between the state and other neighbouring states. This has besides attracted some FDI into the state which can profit the economic system. ( Beaulier 2003: p235 )

  • An interesting determination taken by Khama after independency was to do all sub-soil mineral rights that of the authorities. This is fascinating as a batch of the diamonds in the dirt belonging to his ain folk. ( Acemoglu et al 2001 ) XXXXX
  • Some interesting grounds to demo that Botswana has been a comparatively peaceable state since independency is the function of the armed forces in Botswana. Until 1977 the state did non hold an ground forces ( hypertext transfer protocol: // ) . We can merely assume that the direction of diamond grosss and the nature of establishments and determinations of post-independence leaders discussed antecedently in this paper prevented the battle for power over the diamonds.

    Human Capital

    In the old subdivision it was discussed that school registration is frequently little when resource copiousness is high. This appears to non be the instance in Botswana as we can see from the graph below… XXXX ( REF )

    Botswana chose to put in instruction because the authorities of Botswana was really cognizant of the importance of increasing human capital. The Sustainable Budget Index ( SBI ) and the Development Fund were created in 1972 ( Iimi 2006a: p10 ) which allows diamond grosss merely to be spent on development outgo and recurrent disbursement on instruction and wellness. Iimi ( 2006a: p10 ) points out that although this regulation is largely followed, when it has n’t been at that place have been big financial shortages. The authorities ‘s committedness to finance indispensable services and specially healthcare and instruction has benefitted the bulk of people in Botswana, nevertheless now Botswana has started funding these public services to a great extent they have made a committedness that will be hard to change by reversal should the diamond grosss deplete.

    However, non all is good on the instruction forepart in Botswana. As antecedently observed, diamond excavation is capital intensive, and hence non much high skilled labors is required. It is non surprising therefore that Botswana suffers from a high unemployment rate, The UN estimation was 17.6 % of the labour force were unemployed in 2006. ( hypertext transfer protocol: // crName=Botswana ) However, it should be noted that it is likely Botswana has a big informal labor force which absorbs and therefore lowers this high unemployment rate ( Perrings 1996 ) . From this it appears that the educated population of Botswana is non making their full potency due to miss of high skilled occupations.

    However, the increased disbursement on instruction can non be seen as a negative issue in any sense, as with a skilled labor force Botswana and hopefully accomplish its purpose of diversifying the economic system more easy than it could hold done without such accomplishments. Having an educated population besides encourages investing from abroad into Botswana. ( REF )

    BOX- Brief comparing between Botswana and Sierra Leone

    Graph demoing one-year gross domestic product growing

    Sum of diamonds mined in each state. % of GDP and existent sum

    Sierra Leone has clearly taken a different way from Botswana as in past decennaries it has been unsuccessful in utilizing diamond excavation to transform the economic system for the better.

    Sierra Leone is likely most celebrated for it ‘s long civil war that has plagued the state throughout the 1990 ‘s. It is frequently argued that the most likely cause of the war was control of the diamond mines. The war began in 1991 when the Revolution United Front ( RUF ) attacked Eastern parts of Sierra Leone and gained control of diamond mines in an country called Kono. The war was marked with maiming ( in an effort to deter people from voting ) and violent deaths. Over XXX were killed, XXX were maimed and XXX were displaced and became refugees. The civil war officially ended in 2002

    As we can see from the tabular array above, even though the war officially ended in 2002, in 2007 Sierra Leone is still marked as 3rd worst state on the HDI. Whilst Botswana has used the diamonds to make a GDP per capita of $ 13,604 Sierra Leone is a twentieth of that figure.

    Botswana besides has a high grownup literacy rate in comparing to the remainder of Africa ( REF ) due to the finding of the Botswana authorities on disbursement in instruction. Sierra Leone, on the other manus, has an grownup literacy rate below 40 % .

    With respects to excavation that occurs in both states, both are at least partly operated at the top terminal by DeBeers.

    The difference in public presentation between Botswana and Sierra Leone could be due to high cultural atomization in Sierra Leone. Two of the chief ethnicities are Mende and Temne, each doing up 30 % ( CIA WORLD FACT BOOK: Sierra Leone ) . As discussed in Chapter XX cultural fractionalisation is linked with the resource expletive due to greater hazard of struggle and corruptness. Although in Sierra Leone ‘s instance cultural tenseness was non the chief accelerator during the civil war nor a major factor in the actions of the RUF ( REF ) .

    Another cause of Sierra Leone ‘s inability to utilize diamond grosss to profit the state could be the determinations of leaders post-independence. As old discussed Botswana benefitted from the forward-thinking post-independence leaders such as Khama and Masire. But Sierra Leone did non profit from the leading of Siaka Stevens who was known for his autocratic opinion manner and executing of his resistance ( REF ) .

    Possibly due to the two complecting factors of bad leading and civil war, Sierra Leone has non had the chance to construct substructure like Botswana has. ( REF ) . This has besides meant that good economic policies were non adopted in Sierra Leone but were adopted in Botswana.

    However, the hereafter of both states is under the magnifying glass by faculty members late. In Botswana ‘s instance we are looking at how the economic system can go on to turn by going less diamond dependant. In the instance of Sierra Leone, it concerns whether, after old ages of adversity and desolation caused by the diamond industry, whether the same diamond industry can be used to reconstruct Sierra Leone. It is hoped that Sierra Leone can larn from the Botswana experience on how to pull off resources expeditiously, and hopefully avoid some of the traps that Botswana has failed to avoid such as diamond dependence.


    Chapter 5: Problems the Diamonds have Caused Botswana


    However, although Botswana has avoided a batch of the side-effects of the resource expletive, all is non perfect. Botswana appears to be to a great extent dependent on the diamond industry with around 40 % of GDP coming from excavation ( Iimi 2006a: p3 ) . Resource dependence is a job as resources can be exhausted or universe monetary values for the trade good can drop and therefore ensuing in a dramatic bead in authorities gross.

    This occurred in the 1980 ‘s and as a consequence Debswana had to carry diamonds ( Hill and Knight 1999 p 307-310 ) . More late, during the economic down bend, “ Debswana decided to close all of its diamond mines in December 2008 ” ( Pegg 2009: p2 ) which so reopened in April 2009.

    When this occurs the authorities may happen it hard to finance its budget and recurrent disbursement. This is why resource grosss should be a safety cyberspace ( Brunschweiler and Bulte 2008b ) as opposed to the chief beginning of support for a authorities. However, this advice is difficult to follow in developing states like Botswana because the force per unit area to pass money when it is available to high due to high poorness degrees. ( Jefferis 1998: p311 )

    The causes of resource dependence look to be hapless foresight by the authoritiess concerned as Brunnschweiler ( et al 2008b ) cites “ hapless economic development policies- taking an economic system to go dependent on its primary exports- dampens growing ” . Based on this statement it could be interpreted that it is resource dependence and non resource copiousness that causes the ‘curse ‘ .

    Diversifying the economic system off from diamond dependence appears to be, in theory, a instead effectual remedy for diamond dependence. It is indispensable in the instance of Botswana as its diamond mines are expected to be exhausted in around “ 50-100 old ages of supplies at current production ” ( Jefferis 1998: p315 ) . However, there is a batch of academic consensus that appears to state Botswana has been unsuccessful in diversifying its economic system ( Pegg 2009 and Confederation of Commerce, Industry and Manpower, Mmegi, 29 August 2003 ) .

    This is non to state Botswana has n’t tried. It has made at least a little attempt when it attracted investing in the signifier of a auto assembly works which was built in the state ‘s capital metropolis Gaborone in 1993 ( Good 2005 ) . Some grounds it has been hard for a big fabrication sector to develop in Botswana has been because there is a little domestic market and the South Africa, who Botswana to a great extent relies upon for imports, has a really protectionist attitude towards industry ( Good 2003b: p6 )

    The auto fabrication industry in Gaborone has had many jobs which Mmegi ( 2003 ) indicates are caused by the deficiency of FDI in Botswana, rough competition from South Africa and a deficiency of attempt in advancing industrialisation by the authorities of Botswana. This could be true of all efforts at diversifying the economic system into greater industrialisation.

    90 % of foreign direct investing in Botswana has been directed towards the excavation industry ( Clover 2003 ) and although Botswana has one of the best recognition evaluations in Africa ( US Department of State 2009 ) it has non attracted much FDI for other industries ( Pegg 2009: p3 ) . In fact FDI for Botswana has been falling over recent old ages “ FDI was $ 100 million in 1997 but merely $ 57 million by 2001 ” ( African Development Bank: p.78. )

    As Botswana has a little domestic market, it is natural that Botswana would export any merchandises of fabrication. Botswana has enjoyed a really close relationship with South Africa as it is portion of the South African Customs Union ( SACU ) . Although this has been good to Botswana, South Africa is really protective of its industry and has had grudges with Botswana seeking to export its merchandises to the South African market in the yesteryear ( Good 2003b: p6 )

    So how can Botswana go less diamond dependant? One suggestion is to put more in the agricultural sector. As the diamond industry has caused some shrinking in the agricultural sector, puting in it could increase its end product one time once more. It is particularly of import in the instance of Botswana as a big part of the population is employed in agribusiness, despite it merely lending a little sum to GDP ( Pegg 2009 ) . This would besides take to better income distribution as it is by and large the rural who are least advantaged in many economic systems, including Botswana.

    Human Rights Issues: San Bushmen

    The San Bushmen are an autochthonal group of peoples who inhabit Southern Africa, including Namibia, South Africa and Botswana. The figure of San ( besides known as the Basarwa and Khoi ) populating Botswana are estimated to be about 50,000 ( BBC 2002 ) .

    The San who occupy an country of Botswana known as the Central Kalahari Game Reserve ( CKGR ) have attracted broad media attending to due their resettlement by the authorities outside of the KGCR where they ascendants have lived for over 30,000 old ages ( BBC 2002 )

    The country was created to protect the wildlife that exists in that country and the San were allowed to remain by the British as their hunter-gatherer being worked in harmoniousness with the intent of the KGCR.

    Diamond sedimentations were discovered in assorted countries within the KGCR in the 1980 ‘s and in 1996 a formal rating of the mine was completed ( Survival International 2003 ) .

    Not long after that in 1997, forced remotion of the San from the game modesty started. Although the San have no legal ownership of the land ( due to the Botswana authorities declining to admit the San ‘s rights ) the forced remotion of San people is illegal and has attracted much attending from NGO ‘s such as Survivor International.

    Maltreatments of human rights, such as the right to H2O hold been violated by the authorities who destroyed all the San ‘s boreholes and removed all H2O armored combat vehicles. ( REF ) . It has besides been reported that menaces were made against the San and huts were destroyed in an effort to take the San. ( REF )

    The authorities ‘s official grounds for relocating the San are that the San are now turning towards agricultural patterns to last as their mobile ways of hunting and assemblage are going obsolete in modern times ( ref ) and such activities are non in harmoniousness with the purpose of wildlife saving. It has besides been said that the resettlement of the San is for their ain good as they are able to absorb into modern civilization and have the benefits of health care, schooling and occupations if relocated ( Good 2003a ) . The attempted forced assimilation of the Bushmen into modern Batswana life depletes their civilization.

    Of class, many have suspected the grounds for the resettlement plans are so that the authorities and Debswana can work the diamonds that are beneath the dirt. This surely appears to be a factor in the remotion as diamond geographic expeditions increased after the evictions had occurred. ( REF )

    Although no diamond excavation has occurred in the CKGR, the nature of the diamond trade encourages stock pile of diamonds in order to maintain the universe monetary value high ( REF ) . It makes sense therefore that even if Debswana is non looking to work the mine at present, possibly due to the economic crisis, it is likely to make so in the hereafter.

    To contend the unfairness the San experienced they decided to take the Botswana authorities to tribunal to let them to travel back onto the CKGR ( Sesana and Others v Attorney General ( 52/2002 ) [ 2006 ] BWHC 1 ( 13 December 2006 ) ) . The San were successful and many of the San returned place. However, some of the San are still being refused entry to the CKGR and even those that have returned do non hold entree to H2O and the authorities are still non leting them entree to the H2O holes. ( REF ) .

    Obviously, the battle of the San has cast uncertainty on Botswana ‘s democracy and if it is true that the ground the San were evicted was due to diamond excavation so it could be said that portion of the resource expletive has affected Botswana ‘s human rights profile.

    The repute of Botswana has suffered due to this blazing racialist attitude which some have called a “ slow race murder ” ( REF ) or “ cultural cleaning ” as the San are unable to last outside the CKGR without animate beings to run or without H2O. The greed of the authorities and Debswana to do more money by working diamonds appears to hold no bounds as they have proven when they have crossed international Torahs and have no respect to the ancient civilization of the San. ( REF )

    But as a BBC ( 2003 ) reports states “ A successful land claim by the San might do it more hard for the authorities to work any mineral discoveries, although the province owns all mineral sedimentations in Botswana ”


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