presentation un conference on employment and … · presentation un conference on employment and...

PresentationUN Conference on

Employment and Decent Workfor Poverty Eradication

Bangkok, ThailandMay 5, 2016

PresentationUN Conference on

Employment and Decent Workfor Poverty Eradication

Bangkok, ThailandMay 5, 2016

Ali ZafarSenior Macroeconomist

Macroeconomics and Fiscal Management (MFM)The World Bank

MACROECONOMICS AND FISCAL MANAGEMENT

*“Structural transformation,employment, and povertyeradication: the case of

Mauritius”*by Ali Zafar

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*“Structural transformation,employment, and povertyeradication: the case of

Mauritius”*by Ali Zafar

“We are very adaptable and we have a strong network of suppliersand buyers, which we cultivate…the government has been very niceto us.”— Mauritius CEO of garment company(Author interview, Port Louis, June 2010)

“We are far from markets. If we did not do anything, we riskedremaining poor.”

Senior Mauritius policymaker

“Mauritius is paradise..it is beautiful here and we all work together.”M. Rambonee taxi driver

“We are very adaptable and we have a strong network of suppliersand buyers, which we cultivate…the government has been very niceto us.”— Mauritius CEO of garment company(Author interview, Port Louis, June 2010)

“We are far from markets. If we did not do anything, we riskedremaining poor.”

Senior Mauritius policymaker

“Mauritius is paradise..it is beautiful here and we all work together.”M. Rambonee taxi driver

AZ1

Slide 3

AZ1 Ali Zafar, 5/1/2016

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I. Overall story II. Growth and macroeconomicmanagement story III. A tale of three sectors IV. Dynamic institutions V. Lessons

I. Overall story II. Growth and macroeconomicmanagement story III. A tale of three sectors IV. Dynamic institutions V. Lessons

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*Mauritius is one of most successfulAfrican economies combiningvisionary leadership with strongeconomic management (sugar,textiles, tourism, ICT)

* Country had strong experience instructural transformation and povertyreduction

*Mauritius’s economy grew at anaverage annual rate of 4.7 percentover 1980–2010. Inflation has been insingle digits since 1994.

* Textile industry developed in 1970sdue to government support ofpromising cluster, EPZ, zero tariffregime, and fiscal advantages;unemployment went below 5 percentby 1980s

*Mauritius is one of most successfulAfrican economies combiningvisionary leadership with strongeconomic management (sugar,textiles, tourism, ICT)

* Country had strong experience instructural transformation and povertyreduction

*Mauritius’s economy grew at anaverage annual rate of 4.7 percentover 1980–2010. Inflation has been insingle digits since 1994.

* Textile industry developed in 1970sdue to government support ofpromising cluster, EPZ, zero tariffregime, and fiscal advantages;unemployment went below 5 percentby 1980s

• Strong performance of GDP growth and percapita GDP

• Strong improvement in poverty and socialindicators

• Well-managed macroeconomy: fiscaldiscipline, monetary management,competitive exchange rate

* II. Growth story

• Strong performance of GDP growth and percapita GDP

• Strong improvement in poverty and socialindicators

• Well-managed macroeconomy: fiscaldiscipline, monetary management,competitive exchange rate

3000

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7000

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Chart 1: Mauritius GDP percapita 1975-2015 ($)

Chart 2: Mauritius GDP Growth 1976-2015

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0

1000

2000

3000

1975 1980 1985 1990 1995 2000 2005 2010 2015

Chart 2: Mauritius GDP Growth 1976-2015

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60

70

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Chart 3: Mauritius Social Indicators 1970-2015 (%)

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0

10

20

30

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Life expectancy Infant mortality Poverty rate

1970 2015

• Prudent proactive fiscal management• Good monetary management ensured

competitiveness of exchange rate (REER)

• Limited recourse to borrowing from domesticand international markets

• Innovative trade and structural policies(preferential deals, SEZ’s, clusterdevelopment)

*Good macroeconomicmanagement

• Prudent proactive fiscal management• Good monetary management ensured

competitiveness of exchange rate (REER)• Limited recourse to borrowing from domestic

and international markets• Innovative trade and structural policies

(preferential deals, SEZ’s, clusterdevelopment)

III. A Tale of Three Sectors

APPARELSUGAR

TOURISM

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INDUSTRIAL LAND FINANCE

ENTREPRENEURIAL SKILLS

INPUT COST &QUALITY

TRADE LOGISTICS WORKER SKILLS

• Very strong institutions (politicalstability, rule of law, democracy)

• Strong interaction between public andprivate; joint involvement in policymaking

• Search for consensus• Ethnic harmony between the three groups

* IV. Institutions• Very strong institutions (political

stability, rule of law, democracy)• Strong interaction between public and

private; joint involvement in policymaking• Search for consensus• Ethnic harmony between the three groups

• Good macroeconomic management matters

• Smart industrial policy to diversify economy• Leadership plus vision plus institutions are

key• Importance of anticipating crises• Opportunistic dealing with world economy• Geography is not destiny

*V. Lessons

• Good macroeconomic management matters• Smart industrial policy to diversify economy

• Leadership plus vision plus institutions arekey

• Importance of anticipating crises• Opportunistic dealing with world economy• Geography is not destiny

Thank you for your attention!

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