The Export of Tradeable Services in Mauritius: A Commonwealth Case Study in Economic Transformation

This book is recommendable reading for three reasons. First, is concerned with the economic development in a small country, Mauritius (with a population of 1.3 million and per capita income of about US$10,000), that aims to move beyond its dependence of a few commodities (sugar, textile, and garment). Second, it focuses on growth through the export of five tradeable services. Third, it outlines what it takes to become a successful exporter in terms of policies such as investments, links to and integration into the world economy.

The reader should, however, be aware that the book is not reporting a success story in the sense that Mauritius has already achieved growth through the export of tradeable services. It rather deals insightfully with how a small developing economy could become a service exporter. The title of Chapter 2 of the book expresses the ambition very clearly: “Mauritius: From Plantation to Knowledge‐based Economy”.

The book consists of six main chapters and a conclusion. Chapter 1 defines the concept of services and offers a four‐dimensional classification of services with export of services through commercial presence abroad (subsidiary, etc.) accounting for 50 percent of world trade in services followed by cross border supply (e.g. call centres) accounting for 35 percent; consumption abroad (e.g. tourism) with 10‐15 percent of world trade, and presence of natural persons (e.g. expatriates) as the smallest. This chapter also provides insights into the WTO‐negotiations on services.

Chapter 2 gives an overview of the development of Mauritius from pre‐independence era up to today. At different periods, the engines of growth of the economy have been sugar, textiles/garments, tourism and some offshore financial services (p. 28). But by 2000, these sectors were showing signs of running out of steam, resulting in an increase in unemployment, which reached 10.3 percent in 2003. The key lessons learnt from the previous transformation are outlined and so are the challenges ahead and the way forward.

In 2005, a new government came to power and it saw the need for a new transformation of the economy, which should make Mauritius less dependent of trade preferences, but still integrated into the global economy – now through the offering of tradeable services.

The remaining part of the book outlines the situation and what it takes to become a service exporter in four distinct services: financial services; ICT and business process outsourcing services; healthcare services and human resource development services. Each chapter outlines the global market for the service in focus, the present situation and what it would take for Mauritius to become a regional or global player in this market. This is followed by several concrete examples of services with export market potentials.

The strength of the book is that it brings services and the export of services on the development agenda. In this way, development becomes a matter of “brains” (knowledge) and not just “hands.” The detailed analysis and concrete examples of what could be and what it would take enhances the usefulness of the book. The authors are careful to point out that the road to growth through tradable services is not in any way smooth. As a university teacher with some insights into the development of tertiary education and research, I read the chapter on human resource development with great interest. From a small base with a few mediocre universities, the road to becoming attractive academic destination to foreign students and faculty is fairly long. The authors are aware of this and point out that it will require close collaboration with world class institutions, foreign investments and local commitment and clear policies to achieve such a goal. The four services discussed are relatively knowledge intensive and they constitute no quick fix to development. We can all agree to:

Ultimately, economic transformation depends on: the will and commitment of the political class to development, mobilisation and efficient management of resources, right market positioning, investment in human capital and policy flexibility to adjust to changing circumstances (p. xi).

Have we not heard this before? However, the good thing about the book is that it goes beyond the declarations and provides us with how to go about it – in the case of tradable services. I therefore recommend the book to politicians, development planners, investors, and scholars interested in developmental issues on the African continent. Donors organizations should also read it and encourage their countries to think in terms of identifying and upgrading their services to exportable levels.