Transcript How to Improve Export Competitiveness in Mauritius

How to Improve Export
Competitiveness in Mauritius
Marilyn Whan-Kan
Trends in Competitiveness
• Definition of Export Competitiveness:
The ability of the country to produce and sell
goods and services in foreign markets at
prices and quality that ensure long-term
viability and sustainability.
• Loss of Mauritius’ competitiveness both
overtime and relative to its main
competitors.
Loss in competitiveness overtime
• Real wage increases not matched by
productivity growth
• Evolution of terms of trade
Loss in competitiveness relative to
competitors
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Wages and labour costs
Export prices
Growth rate of manufacturing exports
Share of overall exports in world market
Growth Competitiveness Index compiled
by World Economic Forum
-Indices of technological innovation, efficiency of financial system, and degree
of economic integration of the country with the rest of the world
Challenges related to loss of
preferential markets
• EU to allow all products from LDCs free market
access
• 2008- Cotonou Agreement on non-reciprocal
trade preferences will end
• Trade liberalisation in agriculture will affect
Mauritius as an exporter of sugar under the
Sugar Protocol
• 2005- Phasing out of WTO Agreement on
Textiles and Clothing
Policy orientation to Improve
Competitiveness
• To improve export competitiveness, one
must generally focus on one or a
combination of the following measures:
- Labour productivity increase (best policy)
- Wage rate decrease (not feasible)
- Currency depreciation (limited scope as it
increases the costs of imported inputs and
raises the value of foreign debt
denominated in local currency)
Policy Measures to increase productivity and
competitiveness in Mauritian exports
• Macroeconomic stability
- inflation: low
- Interest rate: low interest rates and
international trends in the determination of
interest rate levels
- Exchange rate: some degree of exchange
rate flexibility but at the same time
exchange rate stabilisation
Policy Measures to increase productivity and
competitiveness in Mauritian exports
• Human Resource Development and Skills Development
- Social partnership: collaboration between employers,
workers and the state to determine skill needs and
effective ways to meet them.
- Benchmarking future skill needs: have surveys of skill
needs benchmarked against competitor countries to
identify skill gaps in potential areas of comparative
advantage.
- Co-financing: make the delivery of training more efficient.
- Cost effectiveness: prioritize expenditures in training,
support and monitoring of training standards by
government
Policy Measures to increase productivity and
competitiveness in Mauritian exports
• Reduction in transactions costs and development of
infrastructure
- Public sector reform- reduce red tape bureaucracy
- Privatization of infrastructure- public-private partnerships
- Appropriate user charges- cost-reflective tariff levels to
promote efficient use of infrastructure services
- Government expenditure on infrastructure: invest a given
percentage of GDP in new infrastructure
- Regional network: cost reduction through use of regional
network to develop infrastructure
Policy Measures to increase productivity and
competitiveness in Mauritian exports
• Diversification, quality improvement and technological upgrading
• Diversification:
-products or activities requiring more skills or value-added
-higher quality
-technology-based
• Quality improvement:
-awareness on quality
-provision of tax or financial incentives to SMEs
-clusters
• Technological upgrading:
-Tax or financial incentives for SMEs to adopt new technology.
-Attract FDI to build competitiveness through technological upgrading
Conclusion
• A broader social partnership should be
used to promote productivity and
competitiveness: efforts to ensure the
long-run survival of the Mauritian economy
must be shared by the government, all
employers and workers.
END
Thank you for your attention
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