Abstract:
manufacturing sector value added as the proxy for industrial growth. It employs the
Autoregressive Distributed Lag (ARDL) cointegration approach using annual time
series data for the period 1983 to 2015. Empirical results show that industrial growth
is driven by financial sector development, human capital development, trade openness
and foreign direct investment. Specifically, domestic credit to the private sector as a
percentage of GDP and secondary school enrolment ratio are found to be significantly
related to manufacturing value added as a percentage of GDP both in the long run and
short run. While the relationship is limited to long run for total trade to GDP, it only
exits in the short run for FDI net inflows. The study therefore recommends that policy
makers should design and ensure proper implementation of financial sector development
strategies that can help ease access to credit for manufacturing enterprises in the country.
There is also a need for a holistic approach in the design and implementation of innovation
and human resource development policies in order to provide a conducive environment
for skills acquisition, innovation and technological advancements in the manufacturing
sector. Trade policies and export promotion strategies should heighten productivity and
value addition in the manufacturing sector, so as to make local firms internationally
competitive. Finally, with regards to FDI, the Government of Botswana should create
an environment that could entice multinationals to invest in the local manufacturing
industry. This, however, should be coupled with protectionist policies to avoid crowding
out local manufacturers and exposing them to foreign competition.
Description:
The series comprises of papers which reflect work in progress, which may be of interest
to researchers and policy makers, or of a public education character. Working papers
may already have been published elsewhere or may appear in other publications.
