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) estimated at US$8.6 billion, with a growth rate of 5.5 percent, and a 1993 inflation rate of 10.5 percent.

Agriculture
Industry
Tourism

For more recent information about the economy, see Facts about Mauritius.

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Source: U.S. Library of Congress