Africa-Press – Mauritius. Mauritius is struggling to re-invent itself in a fast changing global and regional environment, which challenges some of the foundations of its erstwhile economic model.
One dominant trend, emerging strongly from an analysis of our present strengths and weaknesses, opportunities and threats, is that we seem to possess the prerequisite conditions for establishing ourselves as a leading regional services hub.
It is not our purpose here to go into the details of such a SWOT analysis. Suffice it to say that our recent economic history, the country?s geographical attributes and the resulting competitive advantages of a middle income economy all point to this conclusion.
This approach of identifying potentially viable avenues for future growth and designing the appropriate policy architecture to support it, is probably one of the built-in historic strengths we need to carry forward despite the rapidly changing business environment.
Dani Rodrik, a Harvard academic, writes in his latest book about such a process, ?not being an activity of picking winners but rather as a process of strategic collaboration between the private and public sectors with the aim of identifying new activities, which lead to a diversification of the economy?.
No wonder Prof. Rodrik often cites Mauritius as a successful policy-driven model of economic development. (See Rodrik, Feasible Globalization, Harvard University, July 02) Within this overall strategic thrust, verticals such as logistics, ICT and ITES, knowledge, health services including medical tourism and financial services seem to offer very interesting prospects for value-added services.
Take medical tourism and knowledge hub, two of the sectors identified for action. There is a huge scope for marrying the reputation of Mauritius as a world-class tourist destination with the reputation of India as a high-tech supplier of medical services.
Joint ventures or outright Indian investments in this vertical will help Mauritius leverage its existing investments in public infrastructure and market building to add an additional offering in the markets where we are strong or in new ones mainly the African and Asian regions.
Recently at the India-Africa Summit in New Delhi, there has been a lot of talk about India offering more educational and training opportunities to African countries.
Given the restrictions and cons-traints on admissions to universities in India, there is a window of opportunity for Mauritius to work out a long-term plan with the government of India to become THE platform from which Indian institutions would dispense courses to African students.
It is clear that for historic reasons African students will feel more comfortable on a campus in Mauritius rather than in a remote area in India. For such concepts to materialize, however, it is important to devise the right approach.
Special working groups with clear, time-bound mission statements could be set up to work out the details of a framework for each vertical and propose the necessary incentives for carrying it forward.
The end of the protection/ preferential access regime offers a chance of turning a problem into a challenge by applying our minds to the numerous future avenues as resources are diverted from traditional activities, fast becoming economically unsustainable under the new paradigm of global liberalization and open competition.
In addition to the endogenous factors mentioned above, the case for opting for the development of a service-based model also rests on some very potent exogenous trends. Services will increasingly become the engine of growth of the global economy.
More than 65% of the total $43 trillion of global wealth generated last year came from services and it has been estimated that a good quarter of this $28 trillion was in tradable services i. e. $7 trillion.
Add to this the steady growth performance achieved by some of the countries of the region in Africa, over the past few years and the sense of resurgence now prevailing regarding Africa in the context of a spiralling demand for natural resources.
?Mauritius enjoys considerable comparative and competitive advantages, which it must exploit to differentiate its strategy from any potential regional competitor.
? It is against this backdrop that Mauritius has to devise the appropriate policies and incentive structure to capture even a small fraction of this trade by positioning itself as a dominant player in the region.
Mauritius enjoys considerable comparative and competitive advantages, which it must exploit to differentiate its strategy from any potential regional competitor.
Whereas developing countries, which engage in the services trade, would be expected to start at the low value end of the market by exploiting their labour cost arbitrage, Mauritius has a considerable stock of built-up capabilities, such as its governance structures (political stability, rule of law, judiciary, etc), experience in international trade, and cumulated investments in public infrastructure, including global communications networks.
It has also more or less built a brand image, which albeit needs to be thought through and consolidated, to serve this new strategy. It can positively leverage these to its advantage by developing a differentiated approach which leapfrogs the low value added stage and goes directly to more high value added services.
Value added services industry, however, is almost by definition constituted of knowledge-intensive activities. This could prove to be the Achilles? heel of the strategy.
Talent crunch ? the lack of trained and highly educated workforce, which forms the mainstay of such knowledge intensive activities is a bane with which not only emerging economies but even developed countries have to deal.
It is now conventional wisdom that the surge of India as a global player in many areas is attributable to the unleashing of a reservoir of underutilized talent, initially by the ICT industry and then by the liberalization policies adopted at the turn of the last century.
Even India today does not seem capable of increasing its talent pool fast enough to meet the new challenges of the 21st century. In Mauritius, the open door policy towards foreign professionals and the facilitation of delivery of ?occupational permits? can be short-term solutions, which mitigate the dire consequences of such dearth of talents.
Two things must be kept in mind, however. First, there are not, as some who opposed these liberalization policies, wanted us to believe, long queues of foreign professionals or entrepreneurs waiting to rush in and ?invade? the country to grab the ?opportunities? on offer.
Second, employing or facilitating the setting up of businesses by foreigners can be very helpful in bringing in a large talent pool rather quickly, but this can never substitute for the need to develop our local human resources as a matter of national policy for a socially sustainable development and growth strategy.
Securing the role of Mauritius as a regional hub for high value-added services will therefore depend on our ability to unlock the resources and initiatives, which will provide the wide range of training and education facilities for this strategy to succeed. This will be the subject of a follow-up article.
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