Nonprice Competitiveness in Mauritius

Two pieces of information right away (just in case you didn’t know)—Mauritius is an island nation, east of Madagascar and south of the Seychelles archipelago, in the Indian Ocean. Also, WAEMU stands for the West African Economic and Monetary Union; comprised of 8 nations in, you guessed it, West Africa. Chapter 3 of the IMF’s Regional Economic Outlook for Sub-Saharan Africa looks specifically at the WAEMU and its growth prospects. Several areas that may help explain growth differences—between WAEMU and the rest of SSA, and between SSA and the world—are examined on page 48 and following. A case study of Mauritius (Box 3.3 on page 53) takes a closer look at one of those areas, competitiveness.

Trade policies and a country’s competitiveness stance relating to exports, imports, tariffs, etc., usually have a ‘price’; that is, they can normally be quantified in dollar amounts. Nonprice competitiveness concerns those factors and policies that may be more difficult to quantify. Specifically, in this case study, Mauritius is held forth as an example of being a country in which it is easy to do business. This topic has been discussed in class as one of the factors that may encourage investment in general; and foreign direct investment, particularly. The World Bank has a “Doing Business Indicator” and from 2008 to 2010, Mauritius has been listed as the “best place to do business in sub-Saharan Africa. In 2010, it ranked among the top 20 countries in the world.”

The reforms that Mauritius implemented (see especially the paragraph on structural reforms and the next paragraph on property rights) in response to the external trade shocks has led to strong economic responses and increased foreign direct investment. The last sentence of the case study highlights the topic of structural transformation that the class covered earlier in the semester. You can almost see the graphs coming alive…”sugar into textiles, then tourism, and recently information and communication services and financial services.” Incidentally, if you want a closer look at how this ease of doing business might be affecting growth in Mauritius, look here.

This post was originally published on a course blog for Theory of Economic Development at MSU.

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