Inter-Sectoral Economic Linkages in the Mining Industries of Botswana and Tanzania: Analysis Using Partial Hypothetical Extraction Method

Abstract

Fiscal and local content policies aimed at promoting linkages between mining and other economic sectors have been informed by theories built on historical observations dating back to the 1950s. This paper contends that there is a need to rethink theories about mining-based economic linkages and the prospects for structural change based on an improved understanding of existing and potential inter-sectoral linkages. Using the input–output tables for Tanzania and Botswana, we apply the Partial Hypothetical Extraction Method within the Leontief and Gosh input–output frameworks to examine the linkages between the mining and quarrying sector and other economic sectors within these two economies. We find that, for Botswana, possible linkage pathways lie in scaling-up coal, soda ash and salt mining and investing in glass, polymer, and chemicals manufacturing. For Tanzania, opportunities for linkage pathways lie with the mining and manufacturing of non-metallic and construction materials as well as metallic minerals and natural gas. For both countries, the prospects for transforming their economies away from a heavy reliance on mineral extraction hinges on leveraging extractives for infrastructure, innovative technology, and technical skills, as well as capturing business opportunities, knowledge, and financial returns to invest in more diversified economic activities.

Innovation and Drivers of Productivity: A Global Analysis of Selected Critical Minerals

“…These fluctuations in commodities sectors' efficiency and productivity have presented challenges to global demand and supply balances. Mining exporting countries, in particular, are vulnerable to delayed growth due to low productivity [4][5][6]. The significant growth in resource demand caused by global industrialisation and urbanisation has put great pressure on mining companies to boost productivity.…”

Integration of digital manufacturing skills in industrial design education and its impact on small and medium enterprises

“…For example, Botswana is the world's leading diamond-producing country, with its economy predominately being centred around mining, especially diamonds. Botswana has depended mainly on diamond mining; however, there is a growing need to diversify the economy because diamonds are not forever (Modungwa, 2018;Weldegiorgis et al, 2023). The mining sector contributes approximately 35% to the gross domestic product (GDP), with diamonds contributing approximately 94% of the total mining share in the GDP (Statistics Botswana, 2022).…”