Botswana Did Everything Right
9 hours ago
- Botswana invested its diamond wealth wisely, avoiding the resource curse by following economists' advice: saving rents, building reserves, investing in education, and maintaining low corruption.
- It became an exceptional economic success in Sub-Saharan Africa, with GDP per capita rising significantly above peers.
- However, despite high education spending, cognitive skills did not improve and economic diversification failed; manufacturing did not develop and services are mainly unproductive public sector jobs.
- The economy remains heavily dependent on diamonds, and natural diamond demand is plummeting due to lab-grown diamonds, declining marriage rates, and China switching to gold.
- Botswana's diamond production value fell sharply, leading to consecutive GDP declines and the likely end of its economic miracle.
- Additional factors include high inequality, South African protectionist policies hindering manufacturing, and geological advantage making diamonds unsmuggable.