Mauritius_success.pdf - 5 Mauritius An Economic Success Story Ali Zafar January 2011 There is no miracle It is due simply to hard work discipline and

Mauritius_success.pdf - 5 Mauritius An Economic Success...

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1 5. Mauritius: An Economic Success Story Ali Zafar January 2011 There is no miracle. It is due simply to hard work, discipline, and will. Sir Anerood Jugnauth, President of Mauritius Mauritius is paradise. . .It is beautiful here and we all work together. M. Rambonee, Mauritian taxi driver Ali Zafar is a macroeconmist in the World Bank Group. . This paper is part of the Africa Success Stories project, a World Bank research initiative being carried out by the Office of the Chief Economist, Africa Region.
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2 Contents Abstract Acknowledgments Introduction: Anatomy of the Mauritian Miracle The Growth Story A well-managed economic regime A very successful economic trajectory Favorable international comparisons The role of total factor productivity Structural transformation Improvement in human development indicators Macroeconomic Management Prudent, proactive fiscal policy Monetary policy as an anchor for economic growth Effective response to economic shocks Dynamic Institutions and Adaptability to Change The importance of forging consensus The nexus between the public and private sectors A Tale of Three Sectors: Sugar, EPZs, and Tourism The sugar sector Import substitution industrialization and restrictive trade policies following the colonial period The rise of EPZs in the 1970s and 1980s Post-EPZ economic drivers: tourism, business process outsourcing, and financial services Business Climate and Investment Business climate improvement in recent years The role of foreign direct investment The Economic Future of Mauritius References
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3 Abstract In spite of its small economic size, low endowment of natural resources, and remoteness from world markets, Mauritius has transformed itself from a poor sugar economy into one of the most successful economies in Africa in recent decades, largely through reliance on trade-led development. Real GDP growth averaged more than 5 percent between 1970 and 2009, while GDP per capita has increased more than tenfold over the same period. Though its economic success has been the subject of considerable debate, several key factors were central in bringing about the Mauritian miracle: good macroeconomic policies, particularly fiscal prudence and a competitive exchange rate policy; strong public sector and private sector institutions, with exceptionally productive interaction between the two; a strong, pro-trade orientation and a liberal trade regime; and use of its ethnic diversity to forge a consensus between the different groups. In parallel to its economic growth, Mauritius has achieved significant improvements in key human development indicators. Acknowledgments The author benefited from the guidance and the insights of many Mauritian policy makers, specifically: Raj Makoond (Director, Joint Economic Council), Ali Mansoor (Financial Secretary, Ministry of Finance and Economic Development), Ada Chellapermal (Director, Financial Policy, Ministry of Finance and Economic Development), Mahmood Cheeroo (Secretary General, Mauritius Chamber of Commerce and
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