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Tuesday, 11 August 2009

Why is Mauritius so successful?

According to a new paper, we don't really know for sure, but what we do know is that although there's no single reason the strength of its "institutions" has been critical and certainly more important than what is usually mentioned (trade openness). This accords with my previous position and certainly not what National Indaba delegates were told :

The Mauritian development ‘strategy’ was one of heterodox policy interventions, especially on exports, but one that was implemented in the context of a favourable trading environment externally and very strong economic and political institutions domestically. One clear message is that attempting to replicate the Mauritian experiment might be hazardous for other countries, in part because the trading environment is now less favourable. Preferential margins for African countries will slowly but inevitably decline as global liberalization proceeds apace and as China proves to be a major competitor for African manufacturing exports. Perhaps, more importantly, it may be difficult for other countries to replicate the key elements of the Mauritian globalization strategy—heavy intervention, extensive subsidization, and targeting, including through the creation of EPZs—because the preconditions for ensuring that an interventionist strategy succeeds, notably, the quality of domestic institutions and political processes, may not be in place.

But the impact of strong institutions has been much broader and deeper. If Mauritius has demonstrated one thing, it is the invaluable benefit conferred by a domestic political system that is inclusive and provides a basis for keeping social conflict manageable — which indeed was Meade’s biggest worry.

In Africa, social stability is still elusive because of persistent internal conflicts, despite the progress made on democratization in recent years. In the ten years between 1995 and 2005, nearly half the countries in Sub-Saharan Africa have seen some form of internal conflict. Against this background, Mauritius stands out as a beacon of possibilities. But creating an inclusive political system that has kept internal conflict at bay (despite the latent possibilities that were not very different in Mauritius than in the rest of Africa) is hard work, and was done, in Mauritius, in the early days and by the early political leadership. It is no coincidence that the only two African countries that have posted consistently high rates of economic growth are Botswana and Mauritius, which are also the only two uninterrupted democracies since independence.


  1. Mauritius is successful because many reasons. The following is not an exhaustive list! The first one is that there is a resident white population that has kept most Mauritians employed one way or the other, until industrialization came. I have spent the last 5 years in the West African sub region and I have witnessed first hand the management capabilities of these few Mauritian whites that have used the limited resources that Mauritius has to keep the nation afloat. I remember the talk of forcing these whites to leave Mauritius, then Ramgoolam, like Mandela later after the apartheid regime was dismantled, thought better of it. The only country that comes close that phenomenon is Ivory Coast, but Gbagbo is making sure that this disappears with his narrow-minded nationalism. We are not talking about South Africa with its three million whites! I am talking of Lebanese (African so-called whites!) who think more about rebuilding Lebanon rather than reinvesting in the countries they are in! The second point is that the trouble maker that Berenger was, won in 1980, from the mismanagement of Ramgoolam and as he was left holding the stick, he was forced to tame his fake Marxist zeal and face the realities. He reined in the unions that had paralysed the country during the first Ramgoolam regime. Once the unions were in check, it was easy for Jugnauth, two years later, to institute market oriented strategies, preparing the ground for the third reason: GAETAN DUVAL, who spearheaded the arrival of the Chinese industrialists from Honk Kong, who were wary of the Communist take-over and were informed that Mauritius was the perfect place to set up shop, as it had duty and quota free entry into the EU....and with a lot of eager unemployed people. With the policies of MEDIA(Export Development and Investment something institution!) and EPZs, the rest was history. The fourth reason was again GAETAN DUVAL who really spearheaded the move to turn Mauritius into a high-end tourist destination. It should also be remembered that the majority Mauritian population is Hindu and as such, smart and docile and not given to unduly antagonize the other minorities. This majority population also has good work ethics, something that I see lacking in continental Africa. This majority population also believes in self improvement and has produced the cadres that are needed to run an increasingly sophisticated economy. The other minorities had no option than to follow suit! Last of all, as most of the initiatives and institutions have been funded by the government, they did not have anything to lose. Witness their drive to make the island into a place for cyber business. Good governance and democratization may have a part with it. Even though Mauritius is not the beacon of good governance, it is still manageable when compared to Africa. In Ivory Coast, the former Head of the World bank informed me that more than half of the oil produced in Ivory Coast, is not accounted for. Nigeria is in a class of its own when it comes to corruption!
    But now the challenge is to see if Mauritius can keep the momentum going!

  2. Ravi,

    I am struggling with your "cultural explanations"
    with what I know about Mauritius.
    It strikes me that Mauritius is multi ethnic and multi religious.

    With regards to post indepedence accommodation of whites. I think we cannot deny the fact that many countries that accommodate whites after independence faired economically better (e.g Zimbabwe) but they also had huge inequalities.

  3. Ravi.

    I agree mostly with what you said but Hindus do not represent such a majority as you are so generously stating.

    Hindus count for 50% of the population, Christians 30% and Muslims 17% ( and others like chinese 3%).

    Its a fallacy to hear Hindus always self - proclaiming that they have such a huge majority in Mauritius.

  4. Mauritiian Man,

    I stand corrected. You are right. HIndus are just about 50% of the population. And I will agree that each ethnic group has played its part in the success of Mauritius.

    Since you brought the matter back to mind, I have taken the liberty to present some more thoughts on why Mauritius has been so successful. Come to think of it, the seeds of this success was planted a long time ago, in the sixties.
    My take on the matter is that Mauritius has been lucky, very lucky in fact, in the ethnic mix of its population, in the leaders who juggled threats of economic collapse with geostrategic considerations while maintaining some semblance of social cohesion.

    Even the decision to offer universal education by Ramgoolam senior as a ploy to win the 1980 election did end up having an extremely beneficial effect...we ended up with a fairly well educated population…at the expense of the state.
    The welfare state advocated by the Labour Party, which has benefitted all ethnic groups, barely supported by a monoculture sugar economy in the old days, has paid its dividend, in that it has led to opportunities for a more or less even income distribution for most classes in the Mauritian society. This may be disputed by certain apologists, but hey, everybody is allowed to have his say!
    As a Mauritian , you will appreciate the advent of “Longtill Housing” subsidized housing scheme in the sixties and the construction of “cités”, after “cyclone Carol” has led to a culture of property ownership which has precluded the marginalization of certain segments of the society.
    So the foundation of the success was laid a long time ago, and with forward thinking politicians like Duval, who took advantage of prevailing circumstances and Jugnauth Senior’s business development at all costs, built on these foundations, leading to our present success. This despite the actions of perpetual spoilers like Berenger, who in the seventies, destroyed a very efficient public transport system, through strike actions, forever playing one ethnic group against the other!
    As a footnote, let me add that I just spent ten years in sub-Saharan West Africa (Sierra Leone, Liberia and Côte d’Ivoire) and I marvel at what my tiny Mauritius has been able to achieve, with a thousandth of the resources available to these countries.

  5. Archaic Laws Scare Foreign Investors, Says World Bank:

  6. Chasing Away Investors:


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