Over the past decades, a negative view of mining has emerged questioning the positive relationship between mineral extraction and economic development with particular attention to developing countries. The debate remains unresolved as mining continues to be an enclave sector in many resource-rich developing countries. In this paper, we examine the linkage between mining and non-mining sectors in the economy of Botswana using time series data from 1976 to 2014. The study adopted statistical tests including the Granger causality test and vector autoregressive (VAR) technique based upon the impulse response function (IRF) and variance decomposition (VD) to observe linkages among variables. The empirical results show a significant causal linkage from mining to manufacturing and services. Our findings are consistent with respect to the statistical tests used. Overall, the results indicate that there is a forward linkage between mining and manufacturing and mining and service sector. The policy implication of the study is that the government of Botswana should consider the development of backward linkage from mining sector such as provision of mining inputs and services by local companies.
Mineral Economics – Springer Journals
Published: Dec 5, 2016
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