Abstract:
This paper analyses impacts of fiscal policy on structural transformation in Botswana
using structural vector autoregression (SVAR) model over the period of 1990 to 2015.
The study uses an inclusive sustainable transformation (IST) index and government
expenditure as proxies for structural transformation and fiscal policy respectively.
Results show that prudent fiscal policy can be used as a major strategic tool for structural
transformation in Botswana. Most evidently, IST index responds positively to government
expenditure shocks over time. In addition, fiscal policy innovations dominantly account
for movements in structural transformation in Botswana. Notwithstanding, Botswana
has a lot of potential and opportunity to use its fiscal policy more effectively and efficiently
to promote an inclusive structural transformation that leads to sustainable economic
growth.
