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Imported Capital Goods and Manufacturing Productivity: Evidence from B otswana's Manufacturing Sector
Author(s) -
Habiyaremye Alexis
Publication year - 2013
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12015
Subject(s) - diversification (marketing strategy) , productivity , capital good , foreign direct investment , international trade , manufacturing , business , economics , capital (architecture) , industrial organization , monetary economics , international economics , economy , goods and services , macroeconomics , history , archaeology , marketing
Abstract This article examines the effects of imported capital goods on manufacturing productivity growth in B otswana. Despite consistent efforts aimed at diversification, B otswana's economy has remained heavily dependent on diamond exports, and the country's productivity remains a point of concern. The ability to apply foreign technologies to increase productivity and spur diversification is limited by the foreign exchange gap. This study uses an imported input growth model to analyse how the importation of capital goods contributes to enabling productivity growth and export diversification. With a panel of 340 manufacturing firms, the study also analyses the effects of imported capital goods on firm productivity growth and skills development. The results show that imported machines and equipment have increase manufacturing productivity after 1‐2 years following the investment. Additionally, foreign‐owned firms were found to enjoy more productivity growth than their domestic counterparts.