Tag Archives: international

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.

Comments on “The Economics of Poverty in Poor Countries”

This article was written by Partha Dasgupta in 1998 and presented by David Brinton this past Monday. The article highlights poverty/inequality and some of its causes in poor countries; tackling positive feedbacks, poverty traps, fertility, and local and global commons.

Dasgupta explores some of what he calls dichotomies of development economics. In the realm of institutions, markets versus state; public property rights versus private property rights; and the suppression of markets versus distributional failure as a cause of poverty and hunger. Dasgupta aims to dismantle these dichotomies and explain some of the real reasons behind poverty in two of the most prominently poor areas of the world. So, it’s no surprise that Sub-Saharan and the Indian subcontinent are discussed as two of the most well-known seats of poverty. These areas seem to encompass all of the issues that interest Dasgupta.

Rather than simply summarize the remainder of the article, I’d urge a reading of it for anyone with a particular interest in the topics we just covered in class. We often fail to realize that some of the same problems that plague these countries now are not so distant memories for our grandparents and great-grandparents; some of the discussion of poverty traps seems particularly relevant to current American society.

The article covers the issue of positive feedback and poverty traps in a way that makes the reader think. The effects of a positive feedback (a change tends to cause more change in the same direction—think “richer getting richer and poor getting poorer”) for a poor farmer who does not have access to credit or insurance that might save his crop for the year will likely lose the crop and then not have the available resources to grow a better crop the following year; resulting in an even further degraded state of poverty.

Briefly, another noteworthy paragraph in the article concerns the negative effects of a rising middle-class on the poor. As the ranks of the better quality food, protein-demanding middle class rise, farmers that once concentrated wholly on grains and staples are now attracted by the better prices of this new consumer demand. The subsequent decline in supply of staples causes the price to rise and puts adequate amounts of those staples further out of reach of the poor.

Again, take a look at the article. While we struggle with the ‘why does it cost so much to eat healthy?’ question, many struggle with ‘why does it cost so much to eat?’

This article originally appeared on blogger.com under a private blog for the “Theory of Economic Development” course at MSU.

Greg Mortenson Lecture at MSU

So it’s obvious that “Dr. Greg”, as he’s called in Three Cups of Tea, is not completely comfortable speaking in front of crowds; at least he’s certainly not comfortable in front of crowds of non-Pashtu, -Dari, or -Balti speakers. However, regardless of how he might be critiqued on his public speaking skills, the weight of his message is unmistakable: Education brings about peace.

The connection between education and growth in a country is evident throughout our class lecture material and text. Education, particularly primary educational opportunities, is a measure of the Human Development Index and one of the Millennium Development Goals. Greg and his many associates have approached one area of the world, with one goal, and they are making a difference in the lives of thousands of children and parents. Greg is not trying to solve world hunger in every nation, nor did he set out to fix the economies of two entire countries in Central Asia. What he is doing is learning the cultures and languages of one area of the world and helping where he can. Greg cares about kids having opportunities to learn, just like his own kids can in America. He is helping to educate the children of Pakistan and Afghanistan, one village at a time. Those kids and their parents are now more empowered to make better choices. They are improving their human capital and are now able to obtain better jobs when they get to working age, leading to better wages—directly affecting their local economy and eventually the economy of the broader area.

Like those stars in the dark sky (from the Persian proverb), knowledge enlightens a community formerly darkened by its absence. Minds that have been freed by education can no longer be held prisoner by dictatorial, religious extremists; these minds know better now. They don’t have to respond out of fear, but can act in their own best interests and the interests of their community.

This post first appeared on a private group blog for Theory of Economic Development at Mississippi State University.