Development and Sustainable Growth of Mauritius

Vanessa T. Tang, Timothy M. Shaw, Merle G. Holden, Vanessa T. Tang, Timothy M. Shaw, Merle G. Holden

• Publisher: Palgrave Macmillan
• Year: 2018
• Print ISBN:
  9783319961651
• eBook ISBN:
  9783319961668
• Topic: Politics & International Relations
• Subtopic: Sustainable Development
• Index: Politics & International Relations

This edited volume analyzes the Mauritius economy and highlights what conditions and policies have contributed to the development of the country. The project gives a historical and economic analysis of Mauritius and provides comparative approaches looking at other developing states in Africa and Asia. This book is intended for a broad audience, consisting of not only economists with quantitative expertise but also other social scientists, policymakers and scholars interested in the intellectually fascinating exploration of Mauritius's rapid rise and sustained growth performance.

© The Author(s) 2019

Vanessa T. Tang, Timothy M. Shaw and Merle G. Holden (eds.)Development and Sustainable Growth of MauritiusContemporary African Political Economyhttps://doi.org/10.1007/978-3-319-96166-8_1

Begin Abstract

1. Mauritius: The Making of a Developmental African State

Vanessa T. Tang¹ , Merle G. Holden² and Timothy M. Shaw³

(1)

School of Accounting, Economics & Finance, University of KwaZulu-Natal, Durban, South Africa

(2)

University of KwaZulu-Natal, Durban, South Africa

(3)

Department of Conflict Resolution, Human Security & Global Governance, University of Massachusetts, Boston, MA, USA

Vanessa T. Tang

Email: [email protected]

End Abstract

1.1 Introduction

Mauritius, a small volcanic island of 1865 square kilometres situated about 1500 kilometres off the eastern coast of Africa, has long attracted the attention of numerous researchers and was an anomaly for the international community. With ‘barren’ resources and facing a number of economic vulnerabilities, this small remote island in the Indian Ocean can today boast a diversified and burgeoning economy in sharp contrast to a number of other developing countries in Africa. Mauritius is often referred to as an economic miracle or tiger and also held as a textbook example for its rapid successful outward-oriented development and growth based on strong leadership and democratic institutions. Learning its lesson from the extinction of its national symbol, the dodo, Mauritius has managed to adapt and deflect its economic vulnerabilities and become a unique African success story. The Mauritian development experience resonates well with Akamatsu Kaname’s theory of the wild-geese-flying pattern of development—his theory explains how an undeveloped country which first produced for the home market, then soon started to export as local industries grew strong enough. Initially, the goods that are produced are simple and inexpensive. But gradually, the level of quality produced is elevated. This process is continually repeated, leading to a rapid rise in domestic production and economic development.

An underlying strength of Mauritius has been its ability to recognise its limitations and capitalise rapidly on a number of imported strategies. For instance, soon after its independence in 1968, the government under the leadership of the late Sir Seewoosagur Ramgoolam recognised that industrialisation is the gateway to economic development and prosperity for the island. At that time, a number of developing countries particularly in East Asia had started to pursue an export-led growth strategy in order to climb the industrial ladder and boost income and growth. Mauritius also embarked upon an economic diversification strategy spearheaded by the development of Export Processing Zones (EPZs).

This strategy has transformed Mauritius from a labour-surplus monocrop economy to a labour-shortage industrial economy. Much of the country’s EPZ success is due to the rapid development of the EPZ-based textiles and clothing industry.

Mauritius has been relatively unique in Africa, considering the speed with which it has managed to successfully develop and transform its economy. The country has further successfully diversified into services and Mauritius is today a major hub for global trade and investment. Figure 1.1 shows that the economy is undoubtedly well diversified.

Fig. 1.1

Mauritius: A diversified economy. Source: Central Statistics Office Mauritius, 2012 and United Nations National Accounts Database, 2012

The size of the circle represents the changing share of employment plotted against sectoral total productivity. It is worth noting that the services sector experienced the largest positive change in the share of employment as well as high productivity. Furthermore, transformation of the economy is proceeding as manufacturing plays a lesser role in the economy.

There are many lessons and directions that can be drawn from the Mauritian experience. To begin with, this chapter first briefly considers the island’s history. Against this background, we then discuss the change in international regimes towards developing countries, including Mauritius, and the country’s historical development and growth focusing on a trade perspective in light of its key economic significance and developmental impact on the making of this small island African developmental state.

1.2 History of Mauritius

At different periods of its development Mauritius came under the influence of various civilisations. In 1510, the first visitors to land in Mauritius were the Portuguese followed by the first Dutch settlers who arrived in 1598. The Dutch introduced stags and sugarcane, the latter evolving three centuries later into the backbone of the economy of the island. In addition, they also brought African slaves before leaving the island in 1710 (Prosper 1993).

The French landed in 1715 and aided the development of what they called Ile de France into a prosperous colony with a bustling French port in the Indian Ocean. In 1735, Bertrand Francois Mahe de Labourdonnais was appointed Governor of the island. The Governor promoted timber and sugarcane production. The island continued to flourish as a French colony for almost a century until 1810 when during the Napoleonic wars the British conquered the island, mainly because of its strategic importance in the Indian Ocean en route to India.

In 1814, the Treaty of Paris officially bequeathed Mauritius to the British and English became the island’s official language (Prosper 1993: 77). However, the French language and French culture through its music, theatre, literature and philosophy were not abandoned. Mauritius in a way never ceased to be the Ile de France. The British converted the island into a monocrop economy with sugarcane as the mainstay. An important change implemented under British rule was the abolition of slavery in 1835. To compensate for the labour shortage on the island, indentured labourers were imported from India. Soon after, a small minority from China emigrated to the island as merchants. Thus, by the end of the nineteenth century, Mauritius was already a multiracial society and, through its history of colonisation, produced a kaleidoscope of European, African and Asian cultures. In July 1992, the island became a republic and, today, Mauritius remains a sovereign state within the British Commonwealth.

1.3 History in Economic Development and Growth

In the mid-1940s and 1950s, the idea of economic development generated a large number of debates. The catalyst of these debates was the Bretton Woods conference of 1944. At Bretton Woods, 44 countries gathered to debate and negotiate the global economic order against the backdrop of the Second World War. As a result, the formation of various influential multilateral institutions such as the World Bank (WB), the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT)/World Trade Organisation (WTO) were established.

According to Martinussen (2002), following the aftermath of the Second World War, these multilateral institutions were primarily concerned with improving the interests of industrialised countries of the West, and, in particular, the reconstruction and rehabilitation of European economies. Furthermore, Srinivasan (2009) noted that, prior to the creation of the WTO, the GATT organisation was perceived by developing countries to have promoted the interests of developed and industrialised countries. UNCTAD, an agency of the United Nations, was one of the few organisations which attempted to promote the interests of developing and less developed countries.

Having ignored poorer countries for decades, suddenly, in the 1960s and 1970s, the development thrust shifted, focusing on the industrialisation of the poorer developing world (Easterly 2001). Following Prebisch (1950, 1959) and Singer (1950), expanding international trade and diversifying out of primary products, which experienced secular declines in their terms of trade, into manufactures were considered important avenues for developing countries growth and development. Additionally, it is worth noting that, during this period, many developing countries, including Mauritius, were moving towards de-colonisation; and, parallel to the shift towards independence, the poor economic and social conditions of these countries and lack of diversification have attracted international interests.

Enhancing economic growth and improving the living conditions in the developing world became a matter of urgency. This was central to economists and policy-makers, as well as multilateral organisations. In addition, according to Martinussen (2002), such interest mounted as facilitating improvement in the developing world’s living standards and social conditions would also benefit the industrialised nations.

Since the time of Adam Smith, Alfred Marshall and David Ricardo, the quest for economic growth has long been a major preoccupation for economists and policy-makers alike. Economic theory attempts to explain the causes in terms of the production process, markets, trade and technology. As a result, various theories and models have been produced and explored. For instance, in using the production function, the role of technological progress in the Solow (1956, 1960) growth models were endogenised, following the seminal work of Romer (1986) and Lucas (1988). It follows that, in modern endogenous growth theory, both Romer and Lucas emphasised that growth can be achieved through the spillover benefits from human capital innovations and externalities. And recently, others such as Hausmann, Hwang and Rodrik (2007), Jarreau and Poncet (2012) and Tang (2017) have stressed that the sophistication of exports promotes economic growth.

Although there is evidence of various channels and transmission mechanisms of growth, there is not, as yet, a scholarly consensus on the determinants of economic growth (Easterly 2001; Rodrik 2007) and development.

In the developing world, there are few success stories of developmental states that have achieved development and sustained economic growth. Notable achievements are found mostly in Asia, a...

Table of contents

• Cover
• Front Matter
• 1. Mauritius: The Making of a Developmental African State
• 2. Coalitions, Capitalists, and Credibility: Overcoming the Crisis of Confidence at Independence in Mauritius
• 3. Trade Openness and Economic Growth in Mauritius
• 4. Zoning in on Mauritius Special Economic Zones: Structure, Evolution and Economic Impact
• 5. Impact of the Dismantling of the Multi-Fiber Agreement in the Export Processing Zones of Mauritius
• 6. Export Sophistication and Bilateral Trade in Mauritius: An Extended Gravity Model Approach
• 7. The Service Export-Led Growth Hypothesis in Mauritius
• 8. An Input-Output Analysis of Mauritius’ Economy
• 9. Threats to Environmentally Sensitive Areas from Peri-Urban Expansion in Mauritius
• 10. Towards Economic Transformation: The Way Forward for Africa
• Back Matter