Most economists agree that private property, the rule of law, and free markets are crucial for economic development, but there is still disagreement over what other factors determine why some nations are rich while others are poor. Jeffrey Sachs (2001) and Sachs and Warner (1995, 1997) argue that climate, geography, proximity to the coast, and distance from the equator are significant determinants of economic growth (see also Diamond 1997). By contrast, North (1981), North and Thomas (1973), and Rosenberg and Birdzell (1986) insist that a particular set of institutions--namely, polycentric governance, the rule of law, and a rich respect for private property--have led to the West growing rich.
More recently, Acemoglu, Johnson, and Robinson (2001), hereafter AJR, argue that geography and demography matter because they affect the quality of institutions: During colonialism, low-quality institutions were established in regions with high-population densities and low life expectancies. By contrast, regions with low-population densitites and high life expectancies established better institutions. Thus, sub-Saharan Africa was left with bad institutions because colonists in Africa faced low life expectancies and tried to colonize areas with large populations. The incentive for colonists was to expropriate rents as quickly as possible rather than think of the long run.
Each theory has some explanatory power, yet each has its problems. As Gregory Mankiw (1995: 303-7) points out, our traditional econometric tools cannot sort out the causes of economic growth because our models are constrained by multicollinearity, simultaneity, and other problems. The limitations of econometrics leads Mankiw to conclude: "It is not that we have to stop asking so many questions about economic growth. We just have to stop expecting the international data to give us all the answers."
Rodrik (1998, 2003) also recognizes the limitations of econometric evidence. He argues that if we concentrate too much on aggregate macroeconomic data, we will fail to appreciate the outliers (see also Boettke 2001). This study is inspired by Rodrik's (2003) call for more case studies and "analytic narratives." By limiting ourselves to the study of growth in a particular country, in this case Botswana, we can learn much about the process of development.
Botswana is a landlocked nation roughly the size of Texas (220,000 square miles) with a population of nearly 1.6 million people. Botswana borders Zimbabwe to the northeast, South Africa to the east and south, Namibia to the north and west, and touches Zambia at one spot on the Zambezi River in the north. Most of Botswana is uninhabitable with the Kalahari Desert accounting for 84 percent of Botswana's land mass. Consequently, 80 percent of the population lives 'along the fertile eastern border of the state (Parson 1984: 4).
According to AJR (2003: 94), indigenous conditions in Bechuanaland (modern-day Botswana) exhibited a fair amount of cultural and ethnic homogeneity. Tribal chiefs were highly respected. They determined whether land should be allocated to hunting, farming, or residences, and resolved conflicts within the tribe and with other tribes. Despite their immense political power, chiefs were not regarded as above the people, but rather as their equals.
One crucial institution in guaranteeing equality between the chief and his constituents was the custom of tribal gatherings called the kgotla (Ayittey 1992: 325). Kgotlas helped the chief stay closely connected to his people. Like the New England town meeting, kgotlas were the main forum for political discussion. A kgotla gave all adult males the opportunity to criticize and advise the chief.
Relative to other African tribes, Botswana's pre-colonial tribalism was quite tolerant of dissent. While kgotlas created a political connection between the chief and his people, the people also had an important economic connection with their chief. …