Factor substitution possibilities and the extent of returns to scale in Botswana

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Periodical article

Title:	Factor substitution possibilities and the extent of returns to scale in Botswana
Authors:	Odada, J.E. Mogotsi, I.P.
Year:	2000
Periodical:	South African Journal of Economics
Volume:	68
Issue:	4
Pages:	726-758
Language:	English
Geographic term:	Botswana
Subjects:	investments private sector
External link:	https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2000.tb01275.x/pdf
Abstract:	Since 1970, a number of policies and programmes have been put in place in Botswana to encourage investment in the nonmining sector. In spite of these incentives, which have been aimed primarily at creating employment opportunities in the private sector, the pace of employment creation has been slow and the public sector still accounts for a significant proportion of total employment in the country. The present author argues that failure of macropolicies and programmes to address the technical realities at the sectoral level has been responsible, to some extent, for their low rates of success in addressing the unemployment problem. These policies and programmes have not been based on a clear understanding of the extent of returns to scale in the various sectors of the economy, nor have they been based on a clear understanding of factor substitution possibilities in these sectors. In this paper the author estimates the extent of returns to scale and the elasticities of factor substitution between labour and capital in five major private sectors of the economy of Botswana. Bibliogr.