Question

What does the better economic growth performance of Botswana compared to Nigeria tell us about institutions versus natural resources as causes of economic growth?

Answer 1

-->Not just natural resources but also institutions matter whether political or economical in building a strong national with sustainable growth performance.Examples : Botswana vs Nigeria.

-->Botswana gained independence from Britain in 1966. At the time, Botswana was an extremely poor country.Today, Botswana has the highest income per capita of the region, comparable to countries like Mexico. Economic growth in Botswana has been inclusive: the share of people living in poverty has declined dramatically, moving from 34.8 percent of the population in 1993 to 18.2 percent in 2009.Botswana boasts a GDP (purchasing power parity) per capita of about $18,825 per year as of 2015, which is one of the highest in Africa.

-->Botswana success can be attributed to its strong institutions apart from its natural resources.In the aftermath of independence, the Botswana Democratic Party succeeded in creating robust institutions aimed at achieving political stability and long-term economic growth. Botswana is a consolidated democracy that has been holding free elections since 1966. The Corruption Perceptions Index ranks Botswana as the least corrupt country in Africa (its score is twice as high as the average for Sub-Saharan countries).On the economic side, Botswana is the second freest economy in Africa.

-->On the other hand, while Nigeria has made some progress in socio-economic terms in recent years, its human capital development remains weak.Furthermore country continues to face massive developmental challenges, which include the need to reduce the dependency on oil and diversify the economy, address insufficient infrastructure, and build strong and effective institutions, as well as governance issues and public financial management systems.Inequality in terms of income and opportunities has been growing rapidly and has adversely affected poverty reduction.