Look Botswana: No Hands!

This working paper is a study of how the institutional levers of government affect economic activity. The underlying logic is that changes in the "rules of the game" can affect economic outcomes. Unfortunately, most revisions of property rights laws in the developing world have involved inward shifts of the production possibilities curve (PPC). In sub-Saharan Africa, poor government decision-making has left many countries no better off today than they were at the end of colonialism. This paper explores one of these exceptions, Botswana. Since independence, most African countries have endured an "African growth tragedy." Unlike most other African countries, Botswana managed to escape Africa's poverty trap. Without much foreign aid, and in the absence of a large state, Botswana went from being the third poorest nation in the world in 1965 to an upper-middle income nation today.