ECONOMIC DEVELOPMENT.pdf

ECONOMIC DEVELOPMENT IN BOTSWANA DEFINITION OF TERMS AND CONCEPTS -Economy: A system by which a country’s resources are organized -Development: It is a positive change in the society -Gross National product (GNP): The total value of all goods and services produced in a country in...

ECONOMIC DEVELOPMENT IN BOTSWANA DEFINITION OF TERMS AND CONCEPTS -Economy: A system by which a country’s resources are organized -Development: It is a positive change in the society -Gross National product (GNP): The total value of all goods and services produced in a country in a year plus those coming from outside the country -Gross Domestic Product (GDP): The total value of all goods and services produced in a country in a year (home-produced wealth excluding income from abroad) -Corruption: Illegal behavior by officials or people in positions of power -Dual society: A nation which is divided into rich and poor classes -Domestic market: The market within the country -Sustainable Development: It refers to the exploitation of resources wisely which must be continued for future generations to come -Foreign Aid: Are resources given from one country to another one in the form of money, materials or human resources -Tied Aid: Assistance that comes with certain conditions or strings attached -Donor country: A country which gives aid -Recipient country: A country which receives aid -Humanitarian: Kindness to people eg. Food for famine relief -Protectionism/Trade restrictions: Is done to protect local industries from stiff competitions from MNC`s -Quota: A limit on the quantity of something -Foreign Exchange: Is foreign currency or money from other countries -Devaluation of Currency: It means the making of the local currency weaker in comparison to other currencies -Privatization: The selling of government owned corporations to private buyers -Debt: The money owed to a financial institution -Structural Adjustment Programme (SAP): It is the reduction of government spending and increasing government income by increasing exports -Economic Development: It is more about improving the quality of life of citizens by producing and distributing resources of the country -Economic Growth: It deals with increasing the economic base or GDP of a country -Economic Sector: A business controlled by the government or private sector -Economic Diversification: The development of a wide variety of industries such as mining, tourism, manufacturing, agriculture, trade etc 1 DIFFERENT EXAMPLES OF ECONOMIC SECTORS IN BOTSWANA -Tourism, Manufacturing, Fishing, Mining, Trade, Agriculture, Communication, Forestry and Quarrying ECONOMIC SECTORS OR STAGES OF PRODUCTION IN BOTSWANA a) Primary sector/industry These are economic activities which extract raw materials from land or sea eg. Mining, agriculture, forestry, quarrying and fishing Challenges -Raw products-Since raw materials do not have value added to them they provide low financial returns or money -Price fluctuations-Prices of raw materials are always changing (up and down) -Perishables-Some raw materials from agriculture and forestry are seasonal and get rotten easily e.g. Crops, fruits, phane etc b) Secondary sector/industry Is the processing and manufacturing of raw materials into finished products e.g. Canning of beef, making of vehicles, making of shoes etc Challenges -Lack of markets-The market for finished products in Botswana is too small while the outside markets has a lot of competition from Multi National Corporations (MNC`s) -Costly Utilities- Water, accommodation and power/electricity are too expensive -Inferior quality goods-Some manufactured goods from Botswana are of low quality c) Tertiary sector/industry It provides services to the consumers e.g. teaching, nursing, policing, tourism, banking, insurance etc. Challenges -Lack of qualified professionals-There is shortage of skilled personnel in the country to provide services in different fields -Poor Service delivery-Sometimes service delivery is affected by industrial actions and other factors like strikes, go-slow, sick leaves etc -De-motivation-Low morale can affect productivity at work places e.g. promotions -Corruption-It undermines economic development of the country e.g. bribery -Lack of resources-Most government departments are faced with shortage of resources especially e.g. transport, medication etc 2 FACTORS THAT CONTRIBUTE TO ECONOMIC DEVELOPMENT -Infrastructure: Good roads, telecommunications, power, factory shells makes production to be easy and effective -Capital/Financial assistance: Money and machinery are needed to for goods and services and payment of workers -Education: Skilled labour is needed in the production of quality goods and services -Utilities: Provision of cheap serviced land, water, electricity and accommodation -Natural resources/Raw materials: There are needed in order to start any economic activity e.g. water, minerals, plants, animals etc. -Technology: Appropriate technology is needed to produce more goods and services within a certain period of time e.g. Computers -Markets: Availability of ready markets for goods and services can bring more money -Political stability: Democracy and good governance enhance effective production of goods and services without fear or favour -Reduction of import duties and taxes: to attract foreign investors to produce more goods and services -Entrepreneurship: Good management of businesses to produce more goods and services to satisfy the country THE IMPORTANCE OF THE ECONOMIC SECTORS -Create employment: Job opportunities are found in the mines - Trade: Brings foreign exchange through exportation of goods -Promote country’ image: Helps in putting the country into the international arena so as to attract foreign investors -Generate Revenue: Income goes to the government for development e.g. Taxation -Social responsibility: That is helping the local communities with some donations and developments to improve their lives -Improve lifestyles: They improve the living standards of people eg. Health and education - Develop infrastructure: Good roads and sports facilities in the country improve the welfare of Batswana -Technology: They provide advanced technology that meet global standards in the form communication and entertainment services e.g. Telecoms and recreation -Education: They offer scholarships to locals in order to develop human resources and improve productivity -Sphere of influence: Promotes the development of other industries e.g. Mmamabula Thermal electricity industry developed due to the mining of coal from Morupule 3 1. MINING: Involves the extraction of raw materials from underground -Job creation-Creates employment for a lot of people -Projects-Leads to development of infrastructure like roads and buildings -Improves Trade-Brings foreign exchange from exportation e.g. dollars -Creates Revenue-It’s a source of income through royalties and taxes -Education & Training-Develops human resources by training more people for various fields -Out-reach projects-Promotes social responsibility through donations and Building of some infrastructure Challenges: -Shortage of skilled personnel-It results in the recruitment of expensive foreigners -Lack of capital- To buy expensive machinery for the industry -Lack of Ownership-Many mining companies are owned by foreigners who repatriate their profits to their home countries -No control of world prices-Fluctuation of world market prices results in low profits from sales -Environmental degradation-Mines are prone to environmental problems like pollution and floods -Economic Meltdown-Global economic recession results in decline in global demand for products Solutions: -Education-Train more Batswana in specialized -Economic Diversification-Invest profits from mining to develop other industries -Bargaining-Renegotiate terms of loans with foreign banks -Protect ecosystem-Investment by companies in rehabilitating damaged environment -Environmental Policy-Legislation for protection of the environment -Stockpiling-reserving minerals and selling them when world prices go up 2. AGRICULTURE: The practice of growing of crops and rearing of livestock for subsistence and commercial purposes -Food Security-Provides people with food such as beef, milk, cereals, beans etc. -Create Revenue-A source of income as farmers can sell some of their products -Create Jobs-Creates employment for people such as farm managers, herd boys etc. -Provide Natural Resources-It provides raw materials for other industries like skins use leather products such as bags and jackets and cotton for clothes -Source of Revenue-Source of income for government through taxation of farmers foreign exchange -Education-Trains more people for different economic sectors 4  Challenges: -Self Reliance-Batswana are not self-sufficient in food production and therefore import more food from other countries -Unfavourable climate conditions-Unreliable, seasonal and unevenly distributed rainfall, extreme temperatures which kill crops and livestock -Unfair Trade-Competition for markets results in collapse of some industries -Shortage of Markets-Lack of markets or distance to markets and low market prices affect the businesses - Attitude towards agriculture-lack of youth involvement in agriculture sector -Infertile Soils-Poor soils which are mostly sandy and saline -Lack of Scientific Methods of farming-Poor methods of farming result in low production -Natural Disasters-Pests and diseases result in losses or damage to farm products -Lack of capital-Lack of money to buy farm inputs such as fertilizers and pesticides -Scarce Resources-Conflict in land uses result in limited land for agricultural purposes Solutions: -Training-Provide extension services like teaching farmers modern methods of farming by agricultural demonstrators -Credit Schemes-Give loans to farmers to buy machinery, fertilizers and pesticides -Commercialization of Agriculture-Encourage more people to go into Farming for business -Marketing-Improve farmers’ access to markets such as BMC and BAMB -Poverty Eradication Policy-Establishment of schemes to assist farmers e.g. ISPAAD (Integrated Support for Arable Agricultural Development) 3. TOURISM: the business of providing holiday makers with services such as accommodation and recreational activities -Create Jobs-Creates employment for people such as tour guides, hotel workers etc. -Provides market- Local people who traditional crafts like Baskets and sculptures to tourists -Promote trade-Brings foreign exchange from tourists -Projects implementation-Leads to the development of infrastructure like roads and hotels -Enhances Environmental Management-Encourages conservation of natural and cultural resources 5  Challenges: -High maintenance costs-Needs expensive and well maintained facilities such as hotels and transport e.g. vehicles -Poaching illegal killing of endangered species which may lead to their extinction -Environmental damage-Too many tourists can cause soil erosion ,veld fires and littering -Unreliability-It’s seasonal as most tourists come around Christmas Time and in winter -Very competitive-There is a lot of competition from neighbouring countries with more developed tourist attractions Solutions: -Develops projects-Improve infrastructure like accommodation and roads -Improve holiday destinations-Promote tourist attractions in urban centers -Empowerment-Encourage more Batswana to be involved in the tourism industry -Diversify tourism-Promote culture based tourism e.g. cultural village and music -Environmental protection-Employ more personnel to guard against poaching e.g.Special game wardens -Marketing-More advertisement of Botswana’ tourism abroad 4. MANUFACTURING: The process of turning raw materials into finished Products -Create jobs-Creates employment for people working in various industries -Improves Trade-Brings foreign exchange since some industries are export-oriented -Import Substitution-Reduces the costs of importing some goods since they are manufactured goods -Creates Revenue-Generates income which can be used to improve infrastructure -Education-Increases skills development through in-service training Challenges: -Poor infrastructure- Our roads are bad which makes it difficult to transport goods and services to and from the markets -Small Domestic market- Our small population cannot consume all manufactured goods -Costly utilities- Expensive water and electricity prices increases production costs and then prices for finished goods -Lack of skilled labour-Few Batswana have managerial skills as such more companies are owned by foreigners -Unfair competition- Well-established foreign companies brings quality goods at low prices due their low production costs 6  -Lack of capital- Shortage of money to establish industries and buy equipment and merchandise (stock) -Global economic crisis-Recession has diminished the global appetite for manufactured goods. Solutions: Negotiations--Expanding the market by entering into some trade agreements with other countries -Good Infrastructure-Improvement of infrastructure by the government e.g. roads -Trade Restrictions—Our infant domestic companies should be protected from giant multi-national corporations -Credit schemes-Provision of loans and grants to encourage establishment of local industries e.g. CEDA -Subsidies-Reduction of utility costs by the state to reduce production costs 5. TRADE & COMMUNICATIONS: This involves businesses that sell Manufactured goods -Create jobs-It creates employment for different people -Improves transportation-It helps to ferry goods and services to and from the markets -Improves technology-Encourages quick exchange of information -Education-Trains more people for different professions like technicians -Develops Projects-Leads to development of infrastructure and gadgets Challenges: -Small domestic market-Small population with a low buying power for the goods produced locally -Poor transport network -In remote areas there are bad roads which affects the transportation of goods to and from the markets -Poor business skills-Lack of managerial skills to run businesses Effectively and efficiently -Stiff competition-High from goods produced by rich foreign companies -Lack of capital-Lack of money to establish domestic companies Solutions: -Training-Equip more Batswana with business skills -Create Jobs-Create employment opportunities to increase the purchasing power -Create credit facilities-Provision of loans and grants by the state for Batswana -Develop projects-Improvement of infrastructure like roads and telecommunications -Trade restrictions-Protect infant local companies from trans- nationals 7  THE CHALLENGES FACED BY EACH ECONOMIC SECTOR -Economic Diversification: The sectors have a problem of diversifying the economy because we rely much on the mining sector - Output: Sectors are still producing goods and services in small quantities which could not meet the demands -World recession: In most cases industries and trade are not successful because of price fluctuations/changes -Brain Drain: Skilled personnel migrate to developed countries for greener pastures ie. Better employment opportunities and higher salaries -Globalization: There is unfair competition between Multi National Corporations and small domestic industries for markets. Usually MNC`s produce cheap and quality products and this forces small industries to close -Technological changes: Sectors have to advance their technology every time in order to produce more goods and services eg. Intermediate technology to complex technology -Political integration: accommodating political views that allows investment growth -Corruption: It enables nepotism, bribe and factionalism, these compromises quality production of goods and services -Diseases: Outbreak of livestock diseases affects the beef industry while HIV/AIDS kills a lot of employees in different sectors -Natural disasters: Frequent droughts leads to decreased water supply to all sectors -Privatization: They government is selling many industries to the private companies or individuals hence employees are being retrenched EVALUATE THE CONTRIBUTION OF EACH SECTOR TO THE ECONOMY - Jobs: Even though economic sectors create employment there is a serous shortage of jobs in developing countries -Revenue: Sectors bring money for the government to develop the country but some parts of the country are still underdeveloped -Improve lifestyles: Sectors improve the standard of living of people but some people are very poor or destitutes in the country -Education: Sectors train people into different fields but a lot people are not yet self-employed -Diversification: Some sectors like mining and tourism contribute more money while others like manufacturing and agriculture are not doing well -Infrastructure: Sectors provide education, health and entertainment services but at times the services are expensive and the poor cannot afford them e.g. private hospitals, schools, gym rooms etc 8  POSSIBLE SOLUTIONS TO THE PROBLEMS FACED BY THE ECONOMIC SECTORS -Protectionism/Trade restrictions-The government to protect local infant industries from stiff competition from Multi National Corporations (MNC`s) -Competition: Industries should try their best to meet the Global standards so as to produce quality goods and services -Technology: Sectors should equip both employers and employees with the latest technological developments eg. Information technology skills -Trade agreements- Countries should negotiate in order to reduce brain-drain and high exports and imports duties (tariffs). -Provision of Serviced Land: The government should create a conducive investment climate by providing electricity, water, accommodation, good roads, security etc in order to attract foreign investors -Consultation: Sectors must facilitate negotiations/dialogue between employers and the employees in order to avoid civil strifes or industrial actions -Political stability: For the sectors to perform well there must be a stable or peaceful political environment in a country HOW CORRUPTION UNDERMINES ECONOMIC DEVELOPMENT -Diverts investments: Investors are scared away by corrupt practices and as a result jobs would not be created -Economic disparity: Corruption widens the gap between the rich and the poor ie. The corrupt get richer -Re-location and shut down: Corruption makes some industries to collapse/shut down or relocate to corruption-free zones, because normally profits are used by corrupt people for self enrichment or to buy out some authorities for favouritism -De-motivates workforce: Corruption demoralizes the employees because in some instances they are not given the benefits due for them -Retards progress: It delays progress because corrupt officers inflate/increase the actual time to spend on the project -Un-procedural tendering system: Some foreign companies are given preferential treatment in the awarding of tenders because they are always ready to give backhanders to public officers. Some jobs are given to Ghost companies, i.e. some foreign companies have engaged in the practice of “fronting” for jobs by some citizens on behalf of foreign companies to win juicy tenders -Poor workmanship: Some corrupt companies do flimsy jobs which later require the government to renovate them within a short period of time after their completion with supplementary funds -Nepotism: Some incompetent people are given posts which they do not deserve or are not trained for simply because they are friends or relatives of the employers and thus inhibiting production and performance -Political instability: Corrupt can breed some tribal, gender and other social unrests and hostilities which are deterrents for economic development 9 WAYS OF SUSTAINING ECONOMIC DIVERSIFICATION -Protectionism: The government should protect our infant industries by imposing quotas so that they do not get swallowed by giant ones like the Trans National Corporations -Privatization: The state should sell out some of the corporations to improve work ethics so as to increase production -Corrupt free practices: There should be zero tolerance for nepotism, favouritism and bribe in order to perform better -Technology: Employers and employees need to be equipped with the latest technological developments or skills in order to run the business properly and efficiently -Agglomeration of economies: Businesses operating in the same geographical area should network/syndicate with others so as to save more -Sports and recreation: Development of more entertainment facilities to promote self-employment and hence self-reliance -Foreign Direct Investment: The government should attract foreign companies in order to create more jobs and increase government revenue -Infrastructural Development: improvement of roads and buildings so as to enhance production and transportation of goods and services -Tourism: Establishment of more tourist destinations or holiday resorts to attract more visitors in order to earn more foreign exchange -Commercialization of agriculture: Farmers should engage in the production of goods for commercial purposes to improve food security -Import Substitution: Development of manufacturing industries locally to reduce buying from other countries -Education and Training: people must be equipped with business management skills so as produce effectively -Provision of loans and grants: The government should provide credits scheme in order to encourage more Batswana to go into businesses to promote self- employment *Red tape/bureaucracy-delays progress e.g. processing of work permits, trading licensing, and tender processes *Poor supervision-Lack of monitoring of projects funded through loans such as Young Farmers Fund *Fly-by-night companies-Allows for repatriation of profits by international companies to their countries *High crime rates-Although the government has set up DCEC corruption cases are kept on being reported at a high rate *Poor infrastructure-Failure to provide adequate infrastructural development *Lack of trade restrictions-Failure to protect Batswana’s businesses e.g. selling of fat cakes by foreign Hawkers *Poor business skills-Inadequate business education given to Batswana as their businesses are more susceptible to collapse than those of foreigners *Lack of markets-Market for local products still limited despite establishment of BEDIA & BIIC 10 THE ROLE OF STAKEHOLDERS IN PROMOTING ECONOMIC DIVESIFICATION a) Government -Self-Employment: She introduced financial assistance in the form of loans and grants for Batswana to start their own businesses eg. CEDA, -Education: She provides education so as to train more Batswana inside and outside Botswana in different academic fields i.e. human resource development -Foreign Direct Investment: She is giving some incentives so as to attract foreign companies to establish in the country eg. Tax rebates -Mixed economy: Resources are channeled to improve other economic sectors like tourism, manufacturing, agriculture and fishing -Marketing: Advertises its country outside for foreign investors e.g. internet -Privatization: She is engaged in selling some industries in order to increase her revenue -Provision of serviced land: Utilities should be provided at reduced costs for infrastructural development -Political stability: a peaceful environment because of good governance promote economic production -Intervention-Provision of technical assistance e.g. hiring of consultancy -Provision of entrepreneurship: Management skills in businesses are needed in order to run them properly -Protectionism policy: The state should protect infant industries locally from rich foreign companies -Good customer care attitude: The state has introduced performance reform programmes so as to improvement of our work ethics so as to maintain our clients MULTI-NATIONAL CORPORATIONS (internationally owned companies) Advantages -Promote competitive trade: help local owned companies to meet global standards -Create Jobs-Create employment opportunities for the locals -Speed up economic development- Improves citizens life styles -Infrastructure development-Taxes gained from the MNC’s are used to develop the country -Provide financial assistance-Help local companies with finance to carry out their projects e.g. commercial banks -Provide sponsorships-They offer scholarships and in-service training to the locals to improve them -Enhances negotiations-Provide a platform to solve world economic crisis like recession e.g. IMF 11  Disadvantages -Retards citizen empowerment-Inhibit growth of citizen-owned companies as small local businesses are swallowed by the unfair competition from MNC’s -Exploitation of citizens-Top posts are occupied by expatriates while locals fill low paying jobs (exploitation of locals as MNC’s are profit-oriented) -Control world prices-MNC’s tend to monopolize world and domestic markets to their advantage -Profit repatriations-Act as ‘fly by night’ companies who may skip or leave the country after making huge profits to their mother countries -Loss of jobs-They are associated with large scale retrenchments or loss of employment by the locals -Corrupt practices-They slow down the country’s citizen economic empowerment programmes as they shield their commercial interests b) The Youth -Create jobs-They form their own companies and businesses with the help of the Department of Culture and Youth -Self reliance-They form clubs which encourages self-employment such as Boot camps, Junior Achievement Botswana (JAB) -Enhances cross pollination of ideas-They are involved in entertainment groups which help them exchange ideas -Form syndicates-Some form joint ventures to start businesses -Training-Some educate their peers on business related matters e.g. JAB -Voluntarism-some join some public works like special constables & ipelegeng c) The Private sector -High competition-Helps them to produce more and quality goods for exports -Value for money-Desire for profit makes them to charge reasonable prices eg. Shops -Improves country’ image-Markets the country outside e.g. BEDIA with its Global Expo Botswana -Financial assistance-Provide money to the government for development through taxes -Provides business skills- Enhances entrepreneurial or management skills for Batswana for human development -Infrastructure development-Sets up industries to bring foreign exchange e.g. manufacturing and tourism -Promote good governance-Serves as government`s watch dog or pressure groups on illegal activities e.g. newspapers -Education-Provides scholarships and sponsorships for some people 12  d) Non-Governmental Organizations (NGO`s)/Parastatals -Employment-Organizations hire people to carry out different activities -Training-Women organizations equip women with political and entrepreneurial skills for them to enter politics and business e.g. WAR, Emang Basadi -Promote good governance-Serve as government watchdog to protect peoples rights e.g. Ditshwanelo, Media -Provide pool of skilled labour-Enhances manpower development through sponsorships and scholarships -Improves life styles-improve the standard of living for destitute and disabled e.g. Red Cross -Promote eco-tourism-Some organizations help the communities to develop themselves through the programme of Community Based Natural Resource Management (CBNRM) e.g. Sankoyo Development Trust e) AID Agencies (e.g. USAID and CIDA) -Financial assistance-Provide monetary aid in the form of grants and loans for counties to improve their infrastructure -Training-They provide technical aid in the form of expertise to deserving people -Voluntarism-Assist to improve the lifestyles of the poor and disabled people e.g. rehabilitation centers like Thuso -Import substitution initiatives-Helps the developing countries to engage in structural adjustment programmes so as to enhance a positive balance of trade ASSESS THE IMPORTANCE OF GLOBAL ECONOMIC FORCES FOR ECONOMIIC DEVELOPMENT IN BOTSWANA (GLOBALIZATION) BENEFITS -Foreign Direct Investment: Foreign companies would increase government revenue through taxes but some companies repatriate their profits to their mother countries -Employment Creation: International companies invest in Botswana and create jobs which help to improve the living standards of Batswana but some do pay them little wages and make them work under bad conditions -Infrastructure Development: Some taxes and dividends from multi national companies are used to build schools, health centres, and roads but some companies evade paying taxes through corruption -Tourism and Trade: These sectors of the economy get enhanced by free trade and movement of people but some visitors can be a national security threat -Skilled Labour: Importing some people with the technical know how or experts would help the country to train its people and increase production of goods and services but some foreigner exploit Batswana -International Markets: Locally produced goods and services can be sold at the international markets but fluctuation of world prices results in low profits for our exports 13  -World Trade Patterns: Botswana enjoys free trade with other countries therefore she can gain foreign exchange and new technology from such dealings but rich countries monopolize these trade agreements -International Financial Institutions: Botswana gets financial assistance from global institutions for her development but she pays back the loans at high interest rates -HIV/Aids: Botswana gets donations or aid from international organizations in order to help her fight the HIV/Aids scourge but some donors have since stopped their contributions which is now affecting the war against the disease -Gender Equality-The empowerment of women has changed the roles of Women as more females occupy professional jobs CHALLENGES -Tied Aid: In most cases developed countries give donations or aid with some strings attached -International Financial Institutions: When they lend money to a country, the loan has to be repaid with high interests and the country will be pushed into debt crisis due to negative balance of payment -Trade imbalances: These are giant profit making companies which usually make local industries to close down because of unfair competition and therefore a lot of people would become unemployed -Fly-by-night companies: Some companies come and invest in the country with the help of the host country`s credit schemes and after accumulating a lot of money they close down without notice leaving behind the workers stranded -Labour Exploitation: Some companies employ Batswana and give them low wages while the foreigners occupy top management posts with handsome financial and fringe benefits -Profits repatriation: These foreign direct investments take the profits back to invest in their mother countries with strong currencies -Global Financial Trends: They usually affect the Pula currency and the government is therefore forced to devaluate its currency and make the goods and services to be more expensive for Batswana this widens the gap between the rich and the poor -Fluctuation of Global Prices: Prices of minerals, agricultural products and fuel keep on going up and down since Botswana does not have control over them -Monopoly of World Markets: Goods from Botswana are out-competed by goods which are produced by developed countries, because they are cheap and of good quality while the market within the country is flooded with imported goods -Botswana becomes a dumping site: The country experiences a proliferation of cheap inferior quality goods from Asia e.g. “Difonkong” clothing and vehicles 14 i) Fluctuation of market prices/world economic recessions Effects are: -Price Fluctuations-Affects Botswana’ mineral prices and there by leading to fewer profits -Erodes our economic base- Reduces Botswana’ foreign reserves at global financial institutions -Subsidies-Leads to constant adjustments on prices of essential products e.g.Petroleum products -Prioritization-Leads to constant adjustments to the national budget/budget deficit -Loss of Jobs-Leads to retrenchments by the private sectors ii) World financial institutions (IMF and World Bank) Advantages/Benefits to Botswana -Financial assistance-Provide funds (loans /grants) that speed the process of development -Projects implementation-Promote infrastructure development e.g. building of roads -Poverty eradication-Promote poverty alleviation programmes -Education-Promote human resource training as the loans may be used to establish schools -Provide foreign aid-Promote temporary relief to Botswana’ economic problems Disadvantages/Negatives -Debt crisis-Their loans are repaid at high interest rates which to leads to huge debts -Rigidity-The terms of repayments are in most cases not flexible especially the time frame and interest rates -Decreases wage bill-It may lead to budget deficit and probably loss of jobs in the private sector ii) World Trade Patterns: e.g. free trade or movement of goods Advantages/Benefits to Botswana -Promote trade-It enables easy access to foreign goods and services by Batswana -Technological advancement-It enables Batswana to get access to the latest technology that promotes economic development -Creates revenue-Creates more investment opportunities and employment as a way of diversifying the economy by the MNCs 15 Disadvantages/Weaknesses -Unfair trade system-There would be high influx of substandard goods e.g. ‘Difonkong’ clothing and electronics -Economic collapse-Shut down by locally owned companies because they are out-competed by rich foreign businesses -Labour exploitation-Creation of low wages for locals in the Multinational corporations -Enhances cross boarder crime-Creates room for cross boarder criminal activities like terrorism, drug/human trafficking e.tc. -Enhances money laundering-Provide room for cross boarder money laundering and a lot of foreign currency in Botswana has been lost in the process. 16