Testing the Export-Led Growth Hypothesis for Botswana: A Causality Analysis

Abstract

This paper investigates the causal relationship between export and economic growth for Botswana, using quarterly data for the period 1996 to 2007. The results show that there is bi-directional causality between export and economic growth. The two variables complement each other. This indicates that there is evidence in support of the export-led growth hypothesis as well as reverse causality. The results suggest that in order to achieve high economic growth, policies aimed at export expansion should be promoted. It is also necessary to devote resources on the non-export goods and services production in order to increase exports. The results suggest further, that Botswana can expand its limited domestic market by increasing exports.

Keywords: Africa, Botswana, Exports, Granger Causality, Growth