Potential Welfare Benefits of Agricultural Transformation in Botswana: A Computable General Equilibrium Model Analysis

Abstract

This paper analyses the agriculture sector’s performance, and quantitatively evaluates the development impact on the Botswana economy of the agricultural transformation strategy. The evidence shows that the agriculture sector witnessed an upward trend during the period 2006-2011. The main contributing factor to this upward trend appears to be good rainfall. The thrust of the quantitative insights emanating from simulations of advancement in farming technologies supports the policy stance that transforming agriculture by raising its productivity levels would lead to improvement in aggregate welfare. A 5% increase in Hicks-neutral technological progress in agriculture translates into 0.6% improvement in overall economic well-being that is proportionally distributed across rural and urban households. These findings clearly suggest that the improve agricultural-productivity policy needs to include a component that will allow farm-workers’ incomes to increase and prevent inequalities in the distribution of income from increasing as agricultural output expands.