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While Botswana since independence has experienced impressive economic growth and development this progress has not been accompanied by economic diversification and endogenous growth. In this article we focus on the colonial period and investigate to what extent the formal sector of Bechuanaland Protectorate (colonial Botswana) had the potential to constitute the basis for a diversification of the dominating cattle economy away from its dependency on exporting a single natural resource good – beef. We base our study on colonial archive sources and anthropological evidence which we use to: examine labour market structures; estimate welfare ratios and surplus; and discuss government spending. We find that the demand for skilled labour and human capital development was low throughout the colonial period and that the private sector generally lacked the economic strength and dynamics to develop alternative and/or complementary sectors. Further, we find no evidence of demand driven diversification, neither stemming from private sector consumption and investments, nor from government spending on economic activities outside the cattle sector, infrastructure and human capital development. [ABSTRACT FROM PUBLISHER]

Long-term growth in developing countries has been explained in four frameworks: 'extractive colonial institutions' (Acemoglu et al., 2001), 'colonial legal origin' (La Porta et al., 2004), 'geography' (Gallup et al., 1998) and 'colonial human capital' (Glaeser et al., 2004). In this paper we test the 'colonial human capital' explanation for sub-Saharan Africa, controlling for legal origin and geography. Utilising data on colonial era education, we find that instrumented human capital explains long-term growth better, and shows greater stability over time, than instrumented measures for extractive institutions. We suggest that the impact of the disease environment on African long-term growth runs through a human capital channel rather than an extractive-institutions channel. The effect of education is robust to including variables capturing legal origin and geography, which have additional explanatory power. [ABSTRACT FROM AUTHOR]