How to Improve Export Competitiveness in Mauritius Marilyn Whan-Kan.
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Transcript of How to Improve Export Competitiveness in Mauritius Marilyn Whan-Kan.
![Page 1: How to Improve Export Competitiveness in Mauritius Marilyn Whan-Kan.](https://reader035.fdocuments.net/reader035/viewer/2022072010/56649dc45503460f94ab6972/html5/thumbnails/1.jpg)
How to Improve Export Competitiveness in Mauritius
Marilyn Whan-Kan
![Page 2: How to Improve Export Competitiveness in Mauritius Marilyn Whan-Kan.](https://reader035.fdocuments.net/reader035/viewer/2022072010/56649dc45503460f94ab6972/html5/thumbnails/2.jpg)
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.
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Loss in competitiveness overtime
• Real wage increases not matched by productivity growth
• Evolution of terms of trade
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Loss in competitiveness relative to competitors
• 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
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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
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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)
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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
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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
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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
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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
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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.