The Impact of Tourism on Economic Growth in Botswana

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.