Economy of Mauritius Information
The economy of Mauritius refers to the economic activity of the island nation of Mauritius.
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Overview
Since independence in 1968, Mauritius has developed from a low-income, agriculturally based economy to a middle-income diversified economy with growing industrial, financial, and tourist sectors. For most of the period, annual growth has been in the order of 5% to 6%. This compares very favourably with other sub-Saharan African countries and is largely due to sustained progress in economic conditions; between 1977 and 2008, growth averaged 4.6% compared with a 2.9% average in sub-Saharan Africa.[2] Also important is that it has achieved what few fast growing economies achieve, a more equitable income distribution and inequality (as measured by the Gini coefficient) fell from 45.7 to 38.9 between 1980 and 2006.[2] This remarkable achievement has been reflected in increased life expectancy, lowered infant mortality, and a much-improved infrastructure. Sugarcane is grown on about 90% of the cultivated land area and accounts for 25% of export earnings. The government's development strategy centers on expanding local financial institutions and building a domestic information telecommunications industry. Mauritius has attracted more than 9,000 offshore entities, many aimed at commerce in India and South Africa, and investment in the banking sector alone has reached over $1 billion. Mauritius, with its strong textile sector, has been well poised to take advantage of the Africa Growth and Opportunity Act (AGOA).
Mauritius has attracted US$10.98 billion in Foreign direct investment inflows. Top sectors attracting FDI inflows from Mauritius (from January 2000 to December, 2005) are electrical equipment, telecommunications, fuels, cement & gypsum products and services sector (financial & non-financial).
With a well-developed legal and commercial infrastructure and a tradition of entrepreneurship and representative government, Mauritius is one of the developing world’s most successful democracies. The economy has shown a considerable degree of resilience, and an environment already conducive to dynamic entrepreneurial activity has moved further toward economic freedom. The island’s institutional advantages are noticeable. A transparent and well-defined investment code and legal system have made the foreign investment climate in Mauritius one of the best in the region. Taxation is competitive and efficient. The economy is increasingly diversified, with significant private-sector activity in sugar, tourism, economic processing zones, and financial services, particularly in offshore enterprises. The government is trying to modernize the sugar and textile industries, which in the past were overly dependent on trade preferences, while promoting diversification into such areas as information and communications technology, financial and business services, seafood processing and exports, and free trade zones. Agriculture and industry have become less important to the economy, and services, especially tourism, accounted for over 72 percent of GDP. The government still owns utilities and controls imports of rice, flour, petroleum products, and cement.
Policies for Success
Recent reports on progress on the Millennium Development Goals by the Overseas Development Institute indicated four key reasons for economic success.[2]
- Heterodox Liberalisation and Diversification
- Concerted strategy of nation building
- Strong and inclusive institutions
- High levels of equitable public investment
Heterodox Liberalisation and Diversification
Mauritius has followed a pragmatic development strategy in which liberalisation process was sequenced and tailored to its competitive advantages and weaknesses.[2] The export-orientated approach has encouraged liberalisation supported by strong state involvement as a facilitator (of the enabling environment for the private sector); as operator (to encourage competition); and as regulator (to protect the economy as well as vulnerable groups and sectors from shocks).[2] Strategies were evidence-based and adapted according to results[2]. There has been consistency and stability, regardless of which political party is in power.[2]
Liberalisation occurred in phases that were initiated to build on advantages the economy enjoyed on the international market.[2]
- 1970s: Mauritius profited from sugar rents, established an export processing zone EPZ and successfully attracted capital and foreign investment in manufacturing.
- 1980s-1990s: EPZ expanded and led to a significant increase in foreign direct investment (FDI) and tourism. Preferential access to sugar and clothing markets amounted to 7% of GDP in the 1980s and 4.5% in the 1990s, capital and current accounts were liberalised, contributing to an investment and employment boom and the high inflow of FDI brought with it managerial skills.
- 1990s-2010: Further diversification, liberalisation and investment.
Concerted strategy of nation building
A concerted strategy of nation building since Independence created the foundations for sustained growth.[2] Partnerships across ethnic groups allowed economic redistribution to be negotiated and the resulting better balance of economic and political power allowed strong and independent institutions.[2] The emerging political system encouraged a consultative approach to policy formation that allowed strategies for growth to be continued regardless of changes in the parties in power.[2]
Strong and inclusive institutions
Strong institutions are critical in ensuring country’s competitiveness, economic resilience and stability.[2] They have supported development strategies and ensured that export earnings are reinvested in strategic and productive sectors. In the financial sector they have built a regulated and well-capitalised banking and financial system that protected it from toxic assets prior to the 2008 global financial crisis.[2]
Corruption Law
Mauritius ranks 41st out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008, an improvement over 2007. Mauritius is one of Africa’s least corrupt countries. In 2002, the government adopted the Prevention of Corruption Act, which led to the setting up of an Independent Commission Against Corruption (ICAC) a few months later. The ICAC has the power to detect and investigate corruption and money-laundering offenses and can also confiscate the proceeds of corruption and money laundering. Corruption is not seen as an obstacle to foreign direct investment.
High levels of equitable public investment
Mauritius has a strong human capital foundation developed through consistent and equitable investment in human development.[2] This enabled Mauritius to exploit advantages, learn from expertise brought in through FDI and maintain competitiveness in a fast evolving international market.[2] Education and health services are free and have been expanded in recent years, in order to create further employment opportunities and ensuring inclusive growth. The educated and adaptable workforce were essential elements of 1980s export-orientated growth.[2] Around 90% of entrepreneurs in the export processing zone (EPZ) and in the manufacturing sector were Mauritian nationals, businesspeople had the human capital, education and knowledge needed to exploit market opportunities.[2]
Financial services
Mauritius provides an environment for banks, insurance and reinsurance companies, captive insurance managers, trading companies, ship owners or managers, fund managers and professionals to conduct their international business. The economic success achieved in the 1980s engendered the rapid growth of the financial services sector in Mauritius. The following types of offshore activities can be conducted in Mauritius:
- Offshore Banking
- Offshore Insurance
- Offshore Funds Management
- International Financial Services
- Operational Headquarters
- International Consultancy Services
- Shipping and Ship Management
- Aircraft Financing and Leasing
- International Licensing and Franchising
- International Data Processing and Information Technology Services
- Offshore Pension Funds
- International Trading
- International Assets Management
- International Assets Management
- International Employment Services
Board of Investment
The Mauritius Board of Investment is an agency of the Government of Mauritius whose aim is to promote and facilitate investment in Mauritius.
The Board of Investment targets the international business community and is responsible for attracting international investment and talents in the country.
Macroeconomic statistics
Household income or consumption by percentage share:
lowest 10%: NA
highest 10%: NA
Distribution of family income - Gini index: 37 (1987 estimate)
Agriculture - products: sugarcane, tea, corn, potatoes, bananas, pulses; cattle, goats; fish
Industrial production growth rate: 8% (2000 estimate)
Electricity - production: 1,836 GWh (2002)
Electricity - consumption: 1,707 GWh (2002)
Oil - consumption: 21,000 bbl/d (3,300 m3/d) (2003 estimate) 21,000 bbl/d (3,300 m3/d) (2001 estimate)
Current account balance: $2.041 million (2010 estimate) $284.1 million (2004 estimate)
Reserves of foreign exchange and gold: $1.676 billion (2004 estimate) $2.360 billion (2010 estimate)
Exchange rates: Mauritian rupees per US dollar - 30.99 (1 February 2010), 32.86 (2006), 29.14 (2005), 27.499 (2004), 27.902 (2003), 29.962 (2002), 29.129 (2001)
See also
- Mauritius
- Bank of Mauritius (central bank)
- Mineral industry of Mauritius
Notes and references
- ^ "Doing Business in Mauritius 2010". World Bank. http://www.doingbusiness.org/ExploreEconomies/?economyid=125. Retrieved 2010-08-18.
- ^ a b c d e f g h i j k l m n o p q Milo Vandemoortele and Kate Bird 2010. Progress in economic conditions in Mauritius: Success against the odds. London: Overseas Development Institute
This article incorporates public domain material from websites or documents of the CIA World Factbook.
External links
- Economy of Mauritius at the Open Directory Project
- Ministry Of Finance and Economic Development
- Central Statistics Office - Official gatherer and provider of statistics for Mauritius
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Categories: Economy of Mauritius | African Union member economies | World Trade Organization member economies
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