Selected Issues Papers

While Botswana achieved strong post-independence growth supported by prudent macroeconomic management and diamond revenues, economic performance has weakened over the past two decades, with slower growth, persistently high unemployment, and erosion of fiscal and external buffers. Declining global demand for diamonds has heightened the urgency of economic diversification. This note analyzes Botswana’s growth constraints using a dual approach. Firm-level evidence from the 2023 World Bank Enterprise Survey highlights obstacles including limited access to finance, governance challenges, land tenure issues, and infrastructure gaps. A complementary cross-country macro-structural analysis applies a cross-country empirical model that estimates growth gains from reforms in institutions, credit markets, and labor regulations. The findings show strong alignment between firm-level concerns and macro-level reform priorities, supporting targeted structural reforms to boost medium-term growth and diversification.