Botswana’s diamonds boom: Was there a Dutch disease?

In Botswana, because of the fact that the manufacturing sector did not decline in absolute terms, and also because of the evidence of accumulation of foreign reserves, it has been argued that a Dutch disease has been avoided. Botswana has not incurred huge foreign debts, and this is used as evidence that the spending was not unsustainable. However, it can be argued that incurring heavy debt may be an outcome of a Dutch disease, but that it is not a necessary outcome. In other words, a country may experience a Dutch disease without necessarily going through the problems that other countries went through if what it experiences is a mild form of the “disease”. This paper shows a situation of a country which does not experience de-industrialisation in the conventional sense, but in which a relative decline of the manufacturing sector is sufficient to constitute a relative de-industrialisation. In addition, most of the other characteristics of the “disease” are found to be existing. A case is made, therefore, that Botswana did suffer from a Dutch disease as a result of its diamond boom of 1982-90.
https://www.researchgate.net/publication/4786812_Botswana’s_diamonds_boom_Was_there_a_Dutch_disease

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