The effect of economic globalisation on income inequality in Botswana

Résumé

This paper analyses the impact of economic globalisation on income inequality in Botswana, emphasising both direct and indirect transmission mechanisms. The study utilises annual time-series data from 1990 to 2023, employing the Autoregressive Distributed Lag (ARDL) model and the Toda–Yamamoto Distributed Lag (TYDL) Granger causality method to examine the interrelations among economic globalisation, trade openness, inflation, economic growth, and income inequality. The results indicate a consistent long-term link among the variables, wherein economic globalisation diminishes income disparity, whilst broader globalisation and trade openness likely to intensify it. The causation findings indicate that both economic globalisation and globalisation directly impact income disparity, while globalisation also indirectly influences inequality via inflation. Real GDP per capita indirectly affects inequality via globalisation, while exports directly contribute to inequality. The study indicates that while economic globalisation fosters economic growth and integration, its advantages are inequitably allocated. It advocates for inclusive economic globalisation policies, targeted fiscal redistribution, financial inclusion, and export diversification to guarantee equitable and sustainable growth in Botswana.

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