Fiscal space and the sustainability of investment for development

36 ESS-33 Figure 12. Botswana: Population pyramid, 2010 150,000 100,000 50,000 50,000 100,000 150,000 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95-99 100+ Female Male Source: US Census Bureau, 2010. Practically all the key demographic indicators have shown a downward trend over the last three decades. The total fertility rate declined from 3.8 births per woman in 1995 to an expected 2.5 births per woman in 2010, while the crude birth rate fell from 30 to 23 births per 1,000 habitants during the same period. In economic terms Botswana produces 22 per cent of the worlds diamonds and is the most important producer of this mineral. Since the countrys independence the economy has been driven by diamond exports, and this is perhaps the key element in understanding Botswana’s economic performance since then. Between 1966 and 2005 Botswana was the fastest growing economy in the world, with an average annual economic growth rate of 9 per cent. Between 1966 and 1990 the mean growth rate was even higher 13 per cent, though the 10-year average growth decelerated after 1980, from 11.5 per cent in the 1980s to 5.1 per cent in the 1990s and to 4.7 per cent in the 2000s figure 13. The impressive performance of its economy allowed the country to multiply its per capita GDP by a factor of 50 between 1970 and 2008; despite the reduced growth rate in the 2000s, the per capita GDP doubled. ESS-33 37 Figure 13. Botswana: Long-term GDP and GDP per capita growth rates, 1960-2010 Source: World Bank, 2010. The economy of Botswana is a resource-driven economy, one whose most distinctive features is its strong reliance on diamond exports, its main product since Independence. Not surprisingly, therefore, mining is the countrys main economic activity, accounting for 45 per cent of GDP in 2008. The participation of the public administration sector, the second largest in Botswana, represents roughly one-third of the contribution of the mining sector figure 14. Figure 14. Botswana: Structure of the economy by sector Source: AfDB et all, 2010.