An African Success Story: Botswana (Acemoglu, Johnson & Robinson)

Summary

Acemoglu, Johnson & Robinson's study of Botswana (MIT working paper 2001; published 2003 in Rodrik, ed., In Search of Prosperity, Princeton) is the canonical account of the one sub-Saharan economy that escaped the resource curse. It is the best non-Nordic companion to Norway for the claim that capturing resource rent works where institutions are strong: a diamond-dependent, landlocked, initially destitute country that became the world's fastest grower by managing its rents well.

What the Study Found

The headline is stark:

"Botswana has had the highest rate of per-capita growth of any country in the world in the last 35 years. This occurred despite adverse initial conditions, including minimal investment during the colonial period and high inequality."[1]

Concretely, "Botswana had a PPP-adjusted income per capita of $5,796 in 1998, almost four times the African average, and between 1965 and 1998, it grew at an annual rate of 7.7 percent"[1] — achieved from a base so low that at independence in 1966 the country had "12 kilometers of paved road, 22 Batswana who had graduated from University and 100 from secondary school."[1]

Why it worked — institutions, not geology. The authors' thesis is that "good policies were chosen in Botswana because good institutions, which we refer to as institutions of private property, were in place."[1] Diamonds supplied the rent; institutions determined the outcome:

• Rents captured and managed publicly, not privately looted. Diamond wealth (mined by Debswana, a 50/50 partnership with De Beers) accrued to the state; "the government invested heavily in infrastructure, education and health," and "the bureaucracy has been on the whole meritocratic and non-corrupt."[1]
• Dutch disease avoided by fiscal discipline. "Despite the mineral wealth, the exchange rate has not become overvalued, while monetary and fiscal policy has been prudent" — indeed "fiscal policy has been prudent in the extreme."[1] Botswana later formalised this with the Sustainable Budget Index and the Pula Fund (established 1993), a sovereign-wealth vehicle in the same family as Norway's.

This is precisely the resource-rent-capture mechanism working outside Scandinavia: high rents + strong institutions + prudent macro policy = durable public wealth rather than a curse.

Relation to the Georgist Case

Botswana confirms the load-bearing qualifier of the capture claim: the instrument is necessary, the institutions are what make it sufficient. The same diamond geology that might have fuelled a kleptocracy instead financed schools, clinics, and roads because rents were captured transparently and spending was disciplined. It generalises Norway's lesson to a poor, tropical, ethnically diverse country — a much harder test than a rich Nordic democracy — and so materially strengthens the claim that capture-plus-good-institutions, not Nordic exceptionalism, is what escapes the curse.

Nuances and Limits

• Growth is not welfare across the board. The authors flag that "Botswana has one of the highest adult incidences of AIDS in the world with perhaps 25%–30% of adults being HIV positive," which they call "a serious public policy failure."[1] High growth coexisted with a major health catastrophe and persistently high inequality.
• Diamonds, not land. This is mineral-rent evidence; extending it to a pure land value tax is an analogy about rent capture and institutions, not a test of the land case (rent-gradient caveat).
• Endogenous institutions. The paper's own puzzle is why Botswana had good institutions; the answer (inclusive pre-colonial institutions, light colonial footprint, farsighted post- independence leadership) is partly historically contingent and not a recipe others can simply copy.

Bears On

• Outcome: Capturing resource rent works — where institutions are strong — the strongest non-Nordic confirmation of the institutions-are-decisive thesis.
• Concept: Sovereign Wealth Fund — Botswana's Pula Fund as a second real-world case.
• Concept: Resource Rents.

See Also

• Learning by Failing: The Origins of the Norwegian Oil Fund (Lie)
• Natural Resource Rents, Local Taxes, and Government Performance: Colombia (Martinez)
• Sovereign Wealth Fund · Resource Rents

Sources

1. Daron Acemoglu, Simon Johnson & James A. Robinson (2001/2003), "An African Success Story: Botswana," MIT Dept. of Economics Working Paper No. 01-37 (July 2001); published as ch. 4 in Dani Rodrik (ed.), In Search of Prosperity: Analytic Narratives on Economic Growth, Princeton University Press, 2003. MIT full-text PDF (fetched and read this session) · CEPR DP3219 — used for the highest-per-capita-growth claim, the 7.7% annual growth and $5,796 income figures, the initial-conditions detail, the institutions-of-private-property thesis, the prudent-fiscal-policy / no-overvaluation (anti- Dutch-disease) finding, the public investment in infrastructure/education/health, and the HIV/AIDS caveat.