THE POTENTIAL BENEFITS OF LIVESTOCK PRODUCTIVITY INCREASE TO BOTSWANA ECONOMY- The Recursive Dynamic Computable General Equilibrium Modelling Application
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Date
2020-09-06
Authors
GATSOSWE, KOKETSO
Journal Title
Journal ISSN
Volume Title
Publisher
University Of Bostwana
Abstract
To determine the the potential impact of livestock productivity increase on Botswana
economic growth; poverty and income inequality reduction, food security and; employment,
the study utilized the Thurlow (2004) South African recursive dynamic CGE model. The
model is an extension of the static standard CGE model developed by Lofgren et al., (2002)
under the auspices of the International Food Policy Research Institute (IFPRI). The model
was parameterized and initialized to the modified version of the 2011 Botswana economy
EcoMod SAM with behavioural parameters and information set on exogenous variables and
parameters of the dynamic sub-model. It was then solved in GAMS as a mixed complimentary
problem (MCP) with PATH solver. The solution results were then exported from GAMS to
excel spreadsheet for formal presentation of selected variables relevant to the study
objectives. Three of simulations were undertaken, namely; the baseline scenario (referred to
as the reference or business-as-usual (BAU) scenario); the counterfactual scenario and; the
sensitivity tests simulations. Given an average Botswana economy growth rate of 4.3 percent,
the baseline scenario gave an average annual increase of 4.37 percent in total GDP showing
a close similitude of the model real GDP growth rates. This indicates that the model
generates the BAU scenario that realistically approximates the evolution of the Botswana
economy during eight-year time horizon, 2011-2019. The counterfactual results were
analysed by a paired comparison of the values of selected indicators for the reference
scenario. A 5 percent increase in Hick-neutral technological progress in livestock sector
translates to a 0.40 percent rise in in the aggregate welfare of the Botswana economy. The
livestock productivity increase is therefore capable of increasing the level of economic
activity. Private consumption- used synonymously to household final consumption
expenditure, increased by 0.36 percent demonstrating the households’ participation and gain
from livestock GDP growth hence increase in food security and poverty reduction.
Complimentary to 0.76 percent increase in investment, this increase in consumption due to price reductions improved food security (food availability and accessibility to the low income
households with high food consumption shares) and their overall welfare. Moreover, the 5
percent increase in the livestock productivity caused an employment increase in all the labour
skill types. The unskilled labour type skill increased the most and consequently leading
increase in rural households’ income (as is agriculture specific an most of the rural people in
Botswana generally have received no special training and has few specific skills, thus
unskilled). The sensitivity analyses results showed both the quantitative and the qualitative
results to be generally robust.
These findings recommends that improve-livestock policy is a plausible and appealing choice
for policy makers in promoting the country’s economic growth, reducing poverty, income
inequality and rural unemployment. It is therefore suggested that, in implementing the
improve-livestock policy, there is need to capture in the specification of the livestock stockflow linkages and recognize the livestock capital as a factor of production in production
sectors. This is to trace the livestock production system external shocks to the economic flows
and capture livestock capital vital role in other economic sectors particularly other
agriculture and manufacturing.