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Sustainable development in mineral economies: the example of Botswana

Published online by Cambridge University Press:  02 August 2004

GLENN-MARIE LANGE  and
MATTHEW WRIGHT
GLENN-MARIE LANGE
Affiliation:
Center for Economy, Environment and Society, The Earth Institute at Colombia University, New York, NY 10027, USA. E-mail: [email protected]
MATTHEW WRIGHT
Affiliation:
Bank of Botswana.
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Abstract

The Hartwick–Solow rule for sustainability requires that depletion of natural capital be offset by a compensating increase in other forms of capital capable of generating as much income as the natural capital they replace. Many countries have not been successful in transforming natural capital into other forms of wealth. This paper investigates the process of wealth transformation for Botswana, one of the most successful resource-rich countries. Using an expanded measure of wealth that includes manufactured capital, natural capital and net foreign financial assets, Botswana's per capita wealth has increased over the past 20 years. Government has recovered and reinvested rent. However, examination of the public sector capital budget reveals considerable unproductive investment. While correction for unproductive investments still indicates sustainable development, results suggest that aggregate indicators such as national wealth or genuine savings may be misleading without further attention to the process by which natural capital is transformed into other forms of wealth.

Type
Research Article
Information
Environment and Development Economics , Volume 9 , Issue 4 , August 2004 , pp. 485 - 505
Copyright
© 2004 Cambridge University Press

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Footnotes

The views expressed here are those of the authors and do not necessarily reflect the views of the Bank of Botswana. The authors would like to thank Richard Auty, Jay Salkin, and several anonymous reviewers for their helpful comments.