Proceedings of the 24th International Academic Conference, Barcelona

MACROECONOMIC DETERMINANTS OF ECONOMIC GROWTH IN BOTSWANA: THE KEYNESIAN APPROACH

TEBOHO JEREMIAH MOSIKARI, DITEBOHO LAWRANCE XABA, JOHANNES TSHEPISO TSOKU

Abstract:

The interest of this study is to examine the macroeconomic determinants of economic growth in Botswana. The paper is motivated by poverty and unemployment figures rampaging the economy of Botswana, therefore, it is necessary to investigate its growth empirics. The study adopted the Keynesian expenditure approach to identify the factors influencing Botswana’s economic growth. The study used the time series data spanning from 1966 to 2014. The paper applied a robust Engle-Granger approach to examine the long run equilibrium between Keynesian macroeconomic factors and economic growth. In an attempt to examine the long run equilibrium, the results of the study reviled that all the variables performed according to Keynesian theory expectation. Furthermore, although imports impact negatively to economic growth according to Keynes theory and it is empirically proven. The study recommends that economic policy makers in Botswana should reconsider the import structure of the economy in such a way that they promote import of capital goods that will impact positively to economic growth in the long run that will translate to eradicate poverty and reduce unemployment.

Keywords: economic growth, Keynesian theory, cointegration

DOI: 10.20472/IAC.2016.024.065

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