Botswana: A Diamond in the Rough

1) The Harvard suit of clothes, ?Botswana: A Diamond in the Rough?, describes the exceptional lesson of Botswana?s sustained economic rise from near strong poverty to a country with a 10% average annual GDP growth for more than four decades. This case shows that healthy economic gains can be achieved by a mixture of formal institutions and ad hoc substitutes for missing institutions.

When Botswana gained its independence in 1966, the country lacked many of the institutions deemed essential for economic growth by roughly prosperous developed nations. These absent institutions included a central bank, a national currency, basic administrative structures, foodstuff institutions, and the ability to connect to the global markets and apply external tariffs. Yet, Botswana was rum among its neighbors in that it held institutions such as a st satisfactory, democratic governing supported by a charismatic leader and a constitution which upheld the liberties of a free press, legal transparency, and property rights. Botswana?s institute of government also lacked the discriminatory practices and internal combat present in many of the neighboring countries.

Botswana was able to adjunct its lack of many formal institutions with substitute ad hoc solutions which change many gaps.



The country?s initial lack of its proclaim central bank and national currency was supplemented with the country?s use of the South African Monetary Union until Botswana was able to establish its own currency and central bank in 1976. Similarly, Botswana relied on the South African Customs Union (SACU) for masking of import tariffs used to raise tax revenue and nourish infant domestic industries.

Gaps left in the country?s infrastructure by weak public funding and an underdeveloped private sector were patched with help from financing and disposition given by multinational firms, development institutions, as comfortably as the creation of some of its own formal institutions. The most prominent of these...

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