What is the economic system of Botswana? The economy of Botswana is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.
In Botswana, the economy comprises a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of specific goods and services. No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of Botswana?
Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Botswana is ranked 61st globally and 3rd in Sub-Saharan Africa indicating that the country has a moderately free economy.
In a similar way, the 2022 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Botswana gets a score of 72/100, which qualifies it as free. Botswana is a country where the government does not control what people do for political reasons, and people have the freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)
The Link Between Public Sector Employment and the Economic System of Botswana
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Botswana, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 21.7% (2019). In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State. Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer is the economy to being a command economy.
What does the biggest company in Botswana say about the country’s economic system?
The biggest company in Botswana should also be looked at, as well as whether it is a state-owned or private company. In this case, Lucara Diamond Group is a mixed private-public company from Botswana. It is owned by both private and public shareholders, making it a hybrid of the two sectors.
The historical factors that have influenced the economic system of Botswana
The mixed economy system of Botswana in the last century was caused by the government’s commitment to free market principles, coupled with an emphasis on economic diversification and export-led growth. This approach has enabled Botswana to achieve a high level of economic growth, while also protecting its citizens from the economic and social disruptions caused by free market forces.