The study investigates the causal relation between gross domestic saving andforeign direct investment with economic growth using time series data from 1980 to 2015. The study employs a granger causality analysis framework which applies an error correction mechanism. First, Augmented Dickey-Fuller and Phillips Perron unit root tests were used to test for a unit root in variables. The findings show that for all variables the order of integration was(0). Thereafter, the Bounds Test for co-integration was conducted and this indicated 2 co-integrated equations. The vector error correction method (VECM) was applied to capture short and long-run causalities. The results reveal that domestic savings cause economic growth both in the short run and long run and vice versa. However, no causal relations are found between a foreign direct investment with gross domestic savings and economic growth in Botswana. From a policy perspective, there needs to be a two-pronged approach to achieving economic growth in Botswana. Incorporating measures to accelerate domestic saving to ûnance domestic investment and promote higher growth on the one hand, and adopting growth-enhancing measures that strengthen the capacity to save, in turn reinforcing accelerated growth on the other. The study concludes that the absence of a well-functioning investment climate has meant that foreign direct investment in Botswana has not generated the positive spillover effects necessary to drive economic growth.

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