An Econometric Approach to Exchange Control Liberalization and Economic Growth: The Case of Botswana
DOI:
https://doi.org/10.61538/ajer.v3i1.482Abstract
This study assesses the impact of exchange control liberalisation on economic growth in Botswana. In literature it has been very unclear of how the liberalisation of exchange controls impacts economic growth as there has been mixed results. Botswana liberalised its exchange controls in 1999 and to date there has been no empirical study that assesses how their liberalisation has impacted Botswana’s growth. This study attempts to fill in the gap. It uses quarterly data from 1981 until 2006. Cointegration and VECM methods are used for estimation. The results show that exchange control liberalisation had no impact on economic growth in Botswana for the period studied. Botswana’s government needs to try and develop policies that will promote sectors that spur economic growth. Policies imposed should be in the form which enhance growth such as increasing capital stock and human capital in order to spur economic growth.References
African Economic Outlook Botswana (2012): www.africaneconomicoutlook.org.
Al-Turki, S.M (1995), “On the Construction of Quarterly Time Series Data for the Gulf Cooperation Council Economies,†Journal of King Saudi University, Vol.7, pp 107118.
Bank of Botswana (2000), “Annual Report 2000,†Gaborone: Bank of Botswana.
Bank of Botswana (2012), “Annual Report 2012,†Gaborone: Bank of Botswana.
Chatterji. M, Mohan. S and Dastidar. S.G (2013), “Relationship between Trade Openness and economic Growth of India: a time Series Analysis,†Working Paper No 274, University of Dundee.
Gabaraane, M. (2003), “Botswana Financial Services,†SATRN Working Paper No.2, Gaborone: Botswana Institute for Development Policy analysis.
Greenaway, D., Morgan,W. and Wright, P. (2002), “Trade liberalisation and Growth in Developing Countries,†Journal of Development Economics, Vol.67 , pp 229-244.
Gujarati, D.N. and Porter, D.C. (2009),â€Basic Econometrics,†Mc Graw Hill International Edition, Fifth Edition.
Jefferis, K. (1997), “Exchange Control Liberalisation, In: Salkin, J.S., Mpabanga, D., Cowan, J., Selwe, J. and Wright, M. (eds.) Aspects of the Botswana Economy: Selected Papers, Gaborone: Printing and Publishing Botswana.
Jefferis, K. (2008), “The Rationalisation of Foreign Exchange Controls in Angola,†Southern African Global Competitiveness Hub, Gaborone, Botswana.
Johansen, S. (1988), “Statistical Analysis of Cointegration Vectors,†Journal of Economic Dynamics and Control, Vol. 52, pp231-254.
Johansen, S. and Juselius, K. (1990), “Maximum Likelihood Estimation and Inference on Cointegration-with Application to the Demand for Money,†Oxford Bulletin for Economics and Statistics.
Leith, J. C. (2000), “Why Botswana Prospered,†Canadian Economics Association, University of British Columbia. Phaleng (1994), “Report on Exchange Control Liberalisation,†Gaborone: BOCCIM/BDC. Phillips, P.C.B and Perron, P. (1988), “Testing for Unit Root in Time Series Regression,†Biometrica, Vol.75, pp335-346.
Samarasiri, P. (2008) “Exchange Control Liberalisation, Measures and their Other Economic Impact on the Economy,†Central Bank of Sri Lanka.
Siphambe, H.K (2007), “Growth and Employment Dynamics in Botswana: A Case Study of Policy Coherence,†Mimeo, University of Botswana.
Yongzhong, W. (2009), “Liberalisation of Foreign Exchange Controls: Japans Experiences and its Implications for China,†Nikkei Asia Scholarship Research Report.
