Sources of declining beef export competitiveness under preferential trade arrangements: the case of Botswana.

Abstract

Despite preferential trade in its export markets, Botswana has experienced declining beef export competitiveness (BEC) since the mid-1970s. We applied an Autoregressive Distributed Lag model to data for 1962–2023 to identify the determinants of BEC, using the Normalized Revealed Comparative Advantage index as a measure of BEC. Results reveal that the decline in BEC was primarily caused by declining cattle population and increasing per capita income in Botswana. A long run relationship was established between BEC and beef export price and cattle population, with elasticities of 0.75 and 0.11, respectively. An inverse relationship was established between BEC and GDP growth rate, with a cumulative short run elasticity of approximately −0.05. Therefore, GDP growth has led to increased domestic demand capacity, further reducing beef exports and BEC. Drought shocks increased BEC by 23.4%, suggesting increased cattle supply to manage the risk of stock loss during drought, which expands exports and BEC. FMD outbreak reduced BEC by 30.3%, while removal of the live cattle export ban reduced BEC by 67.3%. A gradual decline in BEC, at 1.1% per year, due to unidentified factors, was also established. Public policy in Botswana must focus on promoting supply-side livestock productivity enhancing measures to increase BEC.