How Non-Diamond Exports Respond to Exchange Rate Volatility in Botswana

Johane Motsatsi ()
Additional contact information
Johane Motsatsi: Botswana Institute for Development Policy Analysis

No 77, Working Papers from Botswana Institute for Development Policy Analysis

Abstract: This paper estimates the impact of exchange rate volatility on non-diamond exports in Botswana using an Autoregressive Distributed Lag (ARDL) model. The model used quarterly data for the period 1995-2018, to estimate both the long and short run dynamics. The estimated results show that real GDP in the non-diamond sector, GDP growth of OECD countries, transport investment and water & electricity investment have a positive impact on non-diamond exports. While the lending interest rate, inflation differentials, exchange rate volatility and misalignment impact non-diamond exports negatively. The findings indicate that the coefficients with respect to the exchange rate volatility in both models are relatively low, suggesting that it has not had harmful impacts on non-diamond exports. This reflects the emphasis given to a stable and competitive exchange rate that will attract increased foreign demand which, as a result, could lead to export diversification. However, Botswana’s export structure is still undiversified, despite efforts made to diversify the sector. To achieve the national objectives of sustainable export and economic diversification, the policy should continue encouraging a stable and competitive exchange rate. Other policies intended to boost export growth should focus on: expanding the production base of the non-diamond sector, committing more investment in the transport sector, and improving water & electricity infrastructure.

Keywords: Non-diamond exports; Exchange rate volatility; Botswana (search for similar items in EconPapers)
Pages: 26
Date: 2020-03
New Economics Papers: this item is included in nep-cwa, nep-int and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://knowledge.bidpa.bw:8080/xmlui/handle/123456789/159 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to knowledge.bidpa.bw:8080 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bid:wpaper:77

Access Statistics for this paper

More papers in Working Papers from Botswana Institute for Development Policy Analysis
Bibliographic data for series maintained by Poloko Ntokwane ().