Developing Sustainable Special Economic Zones In Botswana: A Conceptual Discussion

Abstract

This conceptual paper explores the concept of Special Economic Zones (SEZs) and suggests a sustainable development strategy for Botswana through a five-stage analysis of the literature. It describes SEZs as specially demarcated areas that offer unique incentives to attract foreign and local direct investment, and presents Botswana's SEZ policy, which offers investors developed infrastructure, technology and incentives and aims to diversify the economic and export base beyond mining through specialized sector hubs. The paper argues that an outward-looking, export-oriented development strategy is vital for Botswana because it is an open economy highly dependent on foreign trade, because its exports are dominated by diamonds and need to be diversified, and because its small population limits the local market. It discusses policy options for diversification and describes two theoretical frameworks, Rostow's modernization theory and the international product life cycle. It then draws lessons: Botswana could promote foreign direct investment by differentiating itself as a peaceful, stable democracy; SEZs should be treated as transitory policy instruments within a broader package of policies to improve international competitiveness, with periodic revision of SEZ laws and domestic reforms that eventually extend the same incentives to all firms; and success requires strong state involvement and commitment at the highest level of government, with private partners where public funds are lacking.

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