Laura Zeiger

MAURITIUS Success Offers a Model for Other Developing Countries

Mauritius has experienced an economic boom over the past six years, characterized by strong growth, low inflation, and an unprecedented level of employment creation. Real gross domestic product grew by an average rate of 7 percent annually for the period 1984-88, and was estimated at 6 percent for 1989. Economic growth has been accompanied by considerable investment in both the private and public sectors. Gross fixed investment grew in real terms by an annual average rate of 15 percent between 1984 and 1988.

Mauritius has made remarkable progress in implementing a development program combining adjustment, growth, and modernization. The economy is based on export-oriented manufacturing (mainly textiles), sugar, and tourism. The country's Export Processing Zone (EPZ) has made manufacturing the key sector in the Mauritian economy. With growth rates averaging 30 percent annually during 1984-87, the EPZ sector emerged as the engine of growth of the Mauritian economy.

The economic success of Mauritius has won recognition at the international level, and the International Monetary. Fund (IMF) and the World Bank have encouraged other developing countries to follow the Mauritian model. However, underlying structural weaknesses still hamper the Mauritian economy. A lack of natural resources and remoteness from major international markets tend to dampen the country's economic development prospects. A major problem is the continued dependence on sugar and garment exports, making Mauritius vulnerable to adverse climatic conditions and fluctuations in world markets and prices. Mauritius is now diversifying its range of exports away from textiles.

The current economic and financial climate is favorable to the further expansion of all sectors. The U.S. Agency for International Development is sponsoring a trade and investment mission to Mauritius next month. The country is an attractive site for foreign investors, combining generous investment incentives, a stable government favoring a free market economy, and a relatively inexpensive and productive labor force. Considerable opportunity exists to expand U.S. exports to Mauritius. Principal export items from the United States include aircraft parts, diamonds, jewelry, fertilizers, machinery and transport equipment, and tobacco leaf. In coming years, there is considerable market potential for U.S. exports of machinery and raw materials for the EPZ, telephone cables, switching equipment and engineering, computers and other automated office equipment, agricultural and agro-industry machinery and equipment, construction equipment, pollution control equipment and services, and wheat.

The Mauritian Government eliminated all import quotas in 1984-85, and since has implemented significant tariff reform measures, including the reduction of duties on 260 items and the elimination of all import duties on printing, agricultural, and agro-industrial machinery and equipment, and on raw materials and accessories used in the production of garments, leather goods, and jewelry. In 1988, Mauritius adopted the Harmonized System of customs tariffs and liberalized exchange controls on current transactions. All payments for imports can be settled by commercial banks without prior approval of the Central Bank.

For additional information about opportunities to do business in Mauritius, call the Commerce Department Desk Officer on (202) 377-0357.

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