Mauritius must adapt
| Author | Emilio Sacerdoti/Gamal El-Masry |
| Position | IMF Monetary and Financial Systems/Western Hemisphere Departments |
| Pages | 217-225 |
Page 217
Over the past 25 years, Mauritius has bucked low growth trends in its region, built a vibrant economy, and nearly tripled per capita incomes. In recent years, however, two major sources of export income and jobs- sugar and textiles-have been hit by the loss or reduction of preferential trade arrangements. Now, this resilient economy must step up productivity, develop new niche products, and further diversify to ensure continued economic success.
Page 224
For the past 25 years, Mauritius has enjoyed strong economic growth and, since its independence from the United Kingdom in 1968, seen peaceful political transitions.
But with global competition heating up and several preferential trade arrangements lost or sharply curtailed, this open and resilient economy must step up its competitiveness and adapt its products to continue its economic success.
Mauritius has bucked the trend of stagnation and poverty and succeeded in building a vibrant economy and raising the living standards of its population of 1.2 million. Between 1980 and 2004, economic growth averaged 5!/2 percent a year and annual per capita income rose from $1,610 to $4,340 at constant 2000 prices and exchange rates (see chart, below). To achieve this success, the country over the past quarter century has diversified its economy from a reliance on a single export commodity-sugar-to other activities such as tourism, export processing (mainly textiles), financial services, and, more recently, information and communications technology.
Despite this diversification, however, sugar remains an important part of the economy, generating about 15 percent of merchandise exports. Through its participation in the African-Caribbean-Pacific group, Mauritius has been exporting sugar to the European Union (EU) under the socalled Sugar Protocol that permits about 510,000 tons of its raw cane sugar to enter the EU duty free and at a preferential domestic price that is about three times the international free market price. Indeed, Mauritius is the protocol's main beneficiary, claiming some 40 percent of the total quota.
Following a recent successful challenge of the EU's sugar regime before the World Trade Organization, however, the EU agreed to cut the...
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