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The impact of trading with China on Botswana’s economy

Kedibonye Sekakela (Department of International Trade and Finance, Botswana Institute for Development and Policy Analysis, Gaborone, Botswana)

Journal of Chinese Economic and Foreign Trade Studies

ISSN: 1754-4408

Article publication date: 1 February 2016

Abstract

Purpose

The purpose of this paper is to examine the impact of trading with China on Botswana’s domestic and third markets. The paper also assesses the structure and magnitude of Botswana–China bilateral trade.

Design/methodology/approach

The paper used descriptive statistics such as graphic analysis to describe and summarize the basic features of the data. To reach conclusions that extend beyond the immediate data alone, the study applied Chenery Decomposition Approach and also applied the extension of Constant Market Share (CMS) analysis.

Findings

Botswana mainly exports primary products to China and imports intermediate and capital goods, which are mainly used as inputs in the development of infrastructure in the country. Increased imports from China into Botswana’s domestic market has mainly replaced imports from other countries, and China’s textile, clothing and footwear (TCF) exports gained market share from Botswana’s TCF exports in the third markets, i.e. South Africa. Unlike Lesotho, the loss of market share by Botswana’s TCF exports in the South African market increased over the period under study. The Botswana Government needs to consider ways of enhancing Botswana’s TCF export competitiveness and learn lessons from China in relation to enhancing productivity in the TCF and other exporting industries.

Research limitations/implications

Because of lack of data, this paper failed to estimate the impact of import penetration in the manufacturing subsectors and analyze the rapidly growing Botswana–China bilateral trade in services. There has been no estimate of the impact of intermediate and capital goods on production costs of Botswana’s productive sectors. Lastly, because of lack of data, there have been no estimates of Botswana’s consumer surplus generated from consuming relatively low-priced goods from China.

Originality/value

This is the first study to carry out an empirical analysis of the Botswana–China trade relation. The study will be of value to academia and to policymakers who are interested in studying the China–Africa relation.

Keywords

Citation

Sekakela, K. (2016), "The impact of trading with China on Botswana’s economy", Journal of Chinese Economic and Foreign Trade Studies, Vol. 9 No. 1, pp. 2-23. https://doi.org/10.1108/JCEFTS-09-2014-0022

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited