DETERMINANTS OF ECONOMIC GROWTH IN BOTSWANA THROUGH THIRLWALL’S MODEL
Date
2020-05-06
Authors
BAITSILE, PEO NNANG NAIMA
Journal Title
Journal ISSN
Volume Title
Publisher
University Of Bostwana
Abstract
The purpose of this paper is to estimate economic growth of Botswana. The study relies on the
Thirlwall’s model and its extension to estimate the price and income elasticities of export and
import demand using the productivity data for the period of 1980-2016. The estimation for this
work is based on the Auto-Regressive Distributed Lag, (ARDL), modeling to estimate the price
and income elasticities, which is based on the conventional equations of exports and imports
demand. The practical application of the estimated elasticities provides insights about the
determinants of the economic growth of the Republic of Botswana, thus, the Thirlwall’s hypothesis
of balance of payments constrained growth is used.
The results from the imports and exports equations showed the following. The estimated price
elasticities of demand for imports and exports were unexpected and statistically insignificant. The
estimated income elasticities of demand for imports and exports were as expected and statistically
significant. From the extended imports and exports equations, the price elasticities of imports were
unexpected and statistically significant. The income elasticity of imports and exports were as
expected and statistically significant.
Practical applications of the estimated price and income elasticities of demand for imports and
exports gave the economic growth rates of 5.63 percent and 4.97 percent respectively for the
Thirlwall and extended Thirlwall’s model with the export growth rate of 4.87 percent. The overall
results indicated that Thirlwall hypothesis holds in determining Botswana’s economic growth rate.
This correlated with the study done by Matsheka in 1998, where when calculating Botswana’s
economic growth rate, the results showed that Botswana’s economic growth rate could be
predicted using the Thirlwall’s model.