As the Lomé Convention of 1974 opened up export space for textiles and garments, as the India-Mauritius DTA introduced substance into our international financial business, we have to keep in store springboards for getting into emerging new businesses at the global level
For centuries since the French occupation, Mauritius centred its economic activity around sugarcane. What a pleasant sight it was all around, with sprawling green fields all over the island! The entire national debate was around sugar. It was about the very survival of this sector of activity due to international fluctuating prices, compensation of workers, difficulties faced by small planters, rate of remuneration paid to planters for sugar and its by-products, the growing rate of unemployment, etc.
Imagine if Mauritius had carried on solely with sugar. Not only would we have faced even greater vicissitudes due to additional uncertainties which have affected the international sugar market. Our very culture would have become sheer agriculture. It would have been nigh impossible to reach out to new and more gratifying economic adventures.
We should be grateful, however. Sugar gave us our first trade unions and pioneering political parties. Equipped in this manner, we were able to debate bigger issues, including economic diversification.
Keep running in order to keep pace
Economic diversification took us into textile and garment manufacturing, the hospitality services which include construction of luxury villas, financial services including the provision of international financial services, shopping malls, the creation of essentially call centres in what is referred to as the ICT sector, seafood processing as well as some amount of other manufacturing activities.
The impact of these newer developments has been to project us increasingly to rely on external markets for our further development and for economic survival. Had all these activities not implanted themselves in the country, our horizons would have shrunk and we would have made even less endeavours to surpass ourselves.
But, having internationalized more intensely our trade exchanges, we are forced to keep our eyes on international happenings in order to make more economic progress. As Lord Meghnad Desai said in an interview to this paper, Mauritius has to “keep running in order to keep pace” with the outside markets with which it has joined its destiny in the process. It is the rule that applies to every economy which has broken away from its set pattern to become part of the global mainstream.
The world is not waiting for us
This mainstream has kept embracing additional areas of production, meeting new demands of an age far removed from the sugar period. We can keep pace with it by partnering with advanced producers in other countries and by grooming up our domestic resources to fit in into the evolving international situation.
Strong institutions of government, a globally competitive private sector and a well educated population are essential ingredients to create this kind of a forward-thrusting workplace for the country. We’ve been running short of all of these. We’ve given too much attention to less important things.
Since 1994, when the Internet first became available to the general public, demand on world markets based on digital technologies has remained sustained. Countries which understood that this was the beginning of a new chapter for international trade quickly took steps to embed themselves into it.
Mauritius chose however to be an importer and not an exporter into an activity that was taking on world markets by storm. Take the case of the smartphone. The American company Apple brought it to the mass consumer market in 2007. Of the $300 it charged per unit, $150 went to Apple for innovation, marketing and profits, $7 to the Chinese manufacturer, and the balance to component suppliers, transporters and other minor partners. We’ve had no production share in this growing market but had every reason to make ourselves fit to catch up with it one way or another.
Countries like South Korea which were wrecked by war some 70 years ago have become one of the world’s biggest suppliers of smartphones to global markets. Others from different parts of the world also joined the race to meet an ever-growing market for the product. There are more than one billion smartphones in use in the world today. It is estimated that demand will keep increasing into the several billions in the short space of time ahead.
Scouts’ motto: Be Prepared
Smartphones are only one example of how fast and quickly digital technologies are capturing market space. According to what is known as Moore’s law, computing power is said to double every two years. This is why digital technology is becoming the springhead of all sorts of new things like Artificial intelligence, Robotics, 3D Printing, Big Data, The Internet of Things.
As automation increases with the help of these technologies, more jobs which are being done today by humans will become automated. Demand will shift. It is the more intense application of digital technology across the board that will make the next generation of productivity breakthroughs in diverse fields of economic activity all over the world.
We must position ourselves. To do so, we need to nurture and have ready a sufficient stock of domestic skills for the business, so we could get a share somewhere in the chain of production and export ourselves into yet another new line of production. We need to establish solid contacts with those who can set up here and bring their expertise to our shores and launch business. As the Lomé Convention of 1974 opened up export space for textiles and garments, as the India-Mauritius DTA introduced substance into our international financial business, we have to keep in store springboards for getting into emerging new businesses at the global level.
There are other areas of production than those we already host over here which trigger demand. Consider urbanisation. The UN estimates that up to 50% of the world’s populations were living in cities in 2012; it forecasts that this number will increase to 66% by 2050. Even better, it expects that 90% of additional urbanisation will take place in Africa and Asia. All this will call for reshuffling the chairs on the decks, smarter arrangement of urban space, integration of modern technologies in them in the smartest possible way. It’s services and construction works for which there is pent-up demand.
We have to have more ambition
If we really wanted to make a breakthrough in this area, we would construct our integrated smart cities ourselves and learn the skills which may then be exported to at least some of our neighbours. We should be able to showcase our know-how in this domain. This is how we could integrate an additional mainstream of export production yet. We must dare to put our arms on existing giants’ shoulders.
Going to meet the emerging sophisticated global demands may look like a wild flight of fancy for a small island state like Mauritius. But was there not a horde of disbelievers when we decided to attract to our shores investors into the textile and garments sector way back in the 1970s and 1980s? Was it not being said that this was an impossible mission for Mauritius not having the know-how and the raw materials and that we would merely be throwing up incentives to fly-by-night investors?
We took the risk and were able to make it. Were not similar strong reservations expressed in public when we decided to set up our international financial services sector? As in the case of sugar in past centuries, we may not pull up the economy too far unless we move up into newer domains.
Experience has shown that taking firmly the first bold steps forward was part of the global industrial adventure for us. We have made serious mistakes in the past. Our universities could have been transformed into brimming centres of R&D in respect of digital technologies. Our place would thereby have been humming with potential suppliers of part of the goods in high demand on world markets. Students would have flocked to our place.
That required world-class academic leaders to push us in this direction. Some came over but had to leave. Similarly, we could have joined mainstream global research in biotechnology. Instead of that, we indulged in cheap politics and ended up undermining whatever little credentials our teaching institutions had accumulated so far. Much to our loss, the future of individuals became more important than that of the institutions and their potential.
We need to restore all of this and not lose the thread again by fixing attention on puny things that distract from our GDP.
* Published in print edition on 5 June 2015