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Mauritius ECONOMY
The Mauritian economy has undergone remarkable
transformations since independence. From a poor country
with high
unemployment exporting mainly sugar and buffeted by the
vagaries
of world demand, Mauritius has become relatively
prosperous and
diverse, although not without problems.
The 1970s were marked by a strong government commitment
to
diversify the economy and to provide more high-paying jobs
to the
population. The promotion of tourism and the creation of
the EPZs
did much to attain these goals. Between 1971 and 1977,
about
64,000 jobs were created. However, in the rush to make
work, the
government allowed EPZ firms to deny their workers fair
wages,
the right to organize and strike, and the health and
social
benefits afforded other Mauritian workers. The boom in the
mid1970s was also fueled by increased foreign aid and
exceptional
sugar crops, coupled with high world prices.
The economic situation deteriorated in the late 1970s.
Petroleum prices rose, the sugar boom ended, and the
balance of
payments deficit steadily rose as imports outpaced
exports; by
1979 the deficit amounted to a staggering US$111 million.
Mauritius approached the IMF and the World Bank for
assistance.
In exchange for loans and credits to help pay for imports,
the
government agreed to institute certain measures, including
cutting food subsidies, devaluing the currency, and
limiting
government wage increases.
By the 1980s, thanks to a widespread political
consensus on
broad policy measures, the economy experienced steady
growth,
declining inflation, high employment, and increased
domestic
savings. The EPZ came into its own, surpassing sugar as
the
principal export-earning sector and employing more workers
than
the sugar industry and the government combined, previously
the
two largest employers. In 1986 Mauritius had its first
trade
surplus in twelve years. Tourism also boomed, with a
concomitant
expansion in the number of hotel beds and air flights. An
aura of
optimism accompanied the country's economic success and
prompted
comparisons with other Asian countries that had dynamic
economies, including Hong Kong, Singapore, Taiwan, and the
Republic of Korea (South Korea).
The economy had slowed down by the late 1980s and early
1990s, but the government was optimistic that it could
ensure the
long-term prosperity of the country by drawing up and
implementing prudent development plans. According to Larry
W.
Bowman, an expert on Mauritius, four development aims of
the
country into the 1990s will be "modernizing the sugar
sector,
expanding and diversifying manufacturing infrastructure,
diversifying agriculture, and developing tourism." In
addition,
because of the threats to agriculture resulting from
Europe's
common agricultural policy and the potential effects on
textiles
of the General Agreement on Tariffs and Trade (GATT),
Mauritius
hopes to transform itself into a center for offshore
banking and
financial services. A stock exchange opened in Port Louis
in
1989. Another sector needing attention is that of housing
because
increased family incomes have raised the demand for
housing.
Overall, Mauritius had a 1993 gross domestic product
(GDP--see Glossary)
estimated at US$8.6 billion, with a growth rate
of 5.5
percent, and a 1993 inflation rate of 10.5 percent.
Data as of August 1994
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