Abstract:
The tourism sector has gained much attention to be a strategic sector for Botswana’s
economic diversification in the past few years, given the country’s lack of economic
diversification. Therefore, this study aims to estimate the impact of tourism on economic
growth and assess its potential to promote economic diversification. The study employs
an Autoregressive Distributed Lag (ARDL) model with annual time series data for the
period 1974-2023. The estimated results show that tourism arrivals have a positive impact
on real Gross Domestic Product (GDP) per capita both in the short-run (SR) and logrun
(LR). The findings indicate that a percentage increase in the number of tourism
arrivals would increase real GDP per capita by 0.06 and 0.56 percent in the SR and LR,
respectively. This indicates that tourism has the potential to promote economic and export
diversification. However, Botswana’s tourism sector is not competitive compared to other
regional countries (e.g. Seychelles and Mauritius), despite the country’s comparative
advantage, abundance of wildlife and being peaceful in nature. To achieve the national
objectives of export and economic diversification, policies intended to promote tourism
development need to be strengthened. Upgrading tourism infrastructure, promoting
hospitality skills, product diversification and clear market strategy will ensure the sector
is competitive in the global market. Further, since tourism is labour intensive, it will
provide immediate employment opportunities, particularly for young people and those
living in rural areas, which as a result will address unemployment challenges the country
is experiencing.
Description:
The series comprises of papers which reflect work in progress or limited research efforts,
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.