The rapid expansion in diamond production in Botswana during the 1980s
places the country into that category of economies where the growth o
f other sectors can be examined only with reference to the direct and
indirect impact of the 'booming sector'. Parallels with the impact of
North Sea gas exploitation on non-gas sectors of the Dutch economy in
the 1970s, which came to be known as 'Dutch disease', are evident. It
is shown that, principally through exchange rate movements, the except
ional growth of the mineral sector in Botswana created relative price
disadvantages in the agricultural sector and that these were positivel
y correlated to output. To focus on the irregularity of rainfall patte
rns alone is thus to relegate the importance of economic and political
factors in accounting for low agricultural productivity in Botswana.
In its role as beneficiary of most of the domestic revenues from miner
al exploitation the government has, however, adopted a discriminatory
expenditure pattern, favouring livestock development over arable produ
ction. Though this can seemingly be justified by reference to numerous
scientific reports, it also serves to facilitate the transition by a
traditional dominant group of cattle owners to a contemporary capitali
st class of commercial farmers and industrialists. Where the interests
of this group are not threatened, and where there is advantage to exi
sting wealth holders, then current policy tends to be legitimised by n
eo-classical economic thinking.