The development stories of equatorial Guinea and Botswana : a game theory model of how public-private partnerships can turn resources from a curse into a blessing

Abstract

The growth acceleration episodes characterizing Botswana and Equatorial Guinea were based on the respective discoveries of diamonds and oil. However, while Botswana, already characterized by inclusive and democratic institutions, succeeded in transferring much of the benefits deriving from the natural resource to society, Equatorial Guinea's corrupt government retained all the oil-generated wealth and prevented the population's standard of living from improving at a pace proportional to the country's growth. The two countries also differ in terms of their vulnerability to the "resource curse" phenomenon, due to their unequal level of economic diversification both within the major natural resource sector and across several industries. This Thesis firstly adopts a deep analytical approach to compare the two countries' development records and to understand the discrepancy in the quality of the two growth acceleration episodes. The second main contribution of this study consists in the analysis of the potential benefits resulting from the implementation of Public-Private Partnerships in the developing world. The methodology applied in the last section derives from Game Theory, a branch of Economics increasingly adopted in applications to real-world circumstances. In this specific case, the results of this coordination exercise between public and private parties will present very different implications for a democratic country as Botswana and for a corrupt one as Equatorial Guinea.