Mauritius Competitiveness Overvie CAON deck - FINAL-FINAL.pdfThis presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage

This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press, 1990), “Building the Microeconomic

Foundations of Competitiveness,” in The Global Competitiveness Report (World Economic Forum), “Clusters and the New Competitive Agenda for Companies and Governments” in On

Competition (Harvard Business School Press, 2008), “Creating Shared Value” (Harvard Business Review, Jan 2011), the Social Progress Index Report (Social Progress Imperative)

and ongoing related research. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical,

photocopying, recording, or otherwise - without the permission of Michael E. Porter. For further materials, see the website of the Institute for Strategy and Competitiveness

(www.isc.hbs.edu), FSG (www.fsg.org) and the Social Progress Imperative (www.socialprogressimperative.org).

Mauritius Competitiveness Overview

Professor Michael E. Porter

Harvard Business School

BSP International Conference

Pont Fer, Phoenix, Mauritius

April 2nd, 2014

http://www.isc.hbs.edu/







http://www.fsg.org/

http://www.fsg.org/

http://www.fsg.org/

http://www.fsg.org/

http://www.fsg.org/

http://www.socialprogressimperative.org/





Copyright 2014 © Professor Michael E. Porter 2 20140402—BSP Group Competitiveness Presentation—FINAL

• Competitiveness depends on the long-run productivity and efficiency of a

location as a place to do business

- The productivity of existing firms and workers

- The ability to achieve high participation of citizens in the workforce

• Competitiveness is not:

- Low wages

- A weak currency

- Jobs per se

A nation or region is competitive to the extent that firms operating there are able

to compete successfully in the regional and global economy while maintaining

or improving wages and living standards for the average citizen

What is Competitiveness?


1. Mauritius Performance

2. Drivers of Competitiveness

3. Economic Development Strategy

Agenda


Note: Upper middle income as defined by the World Bank includes countries with GNI per capita of $4,036 to $12,475

Source: EIU (2014), authors calculations

Prosperity Performance Mauritius vs. Upper Middle Income and Neighboring Countries

Albania

Algeria

Angola

Argentina

Belarus

Belize

Bosnia and Herzegovina

Botswana

Brazil

Bulgaria

Colombia

Costa Rica

Cuba

Dominica

Dominican Republic

Ecuador

Fiji

Gabon

Grenada

Hungary

India

Iran

Iraq

Jamaica Jordan

Kazakhstan Lebanon

Libya

Macedonia

Madagascar

Malaysia

Mauritius

Mexico

Mozambique

Namibia

Panama

Peru

Romania

Russia

Serbia

Seychelles

South Africa

St Lucia

Suriname

Tanzania

Thailand

Tonga

Tunisia

Turkey

Turkmenistan

Venezuela

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

PPP-Adjusted GDP per Capita, 2013 ($USD)

Growth in Real GDP per Capita (PPP-adjusted), CAGR, 2003-2013

China

(12.0%, $10,060)

Azerbaijan

(13.3%, $14,050)

Average: +5.6%

Average: $11,457


Labor Productivity Growth vs. GDP Growth Mauritius vs. Upper Middle Income and Neighboring Countries


Source: EIU (2014).

Average: 5.3%

Average: 5.7%

China

(12.0%, 12.1%)

Azerbaijan

(13.3%, 13.7%)

Albania

Algeria

Angola

Argentina

Botswana

Brazil

Bulgaria Colombia

Costa Rica

Cuba

Dominican Republic

Ecuador

Fiji

Gabon

Hungary

India

Iran

Jamaica

Jordan

Kazakhstan

Libya

Macedonia

Madagascar

Malaysia

Mauritius Mexico

Mozambique

Namibia

Panama

Peru

Romania

Russia

Serbia

South Africa

Tanzania

Thailand Tunisia

Turkey

Venezuela

0%

2%

4%

6%

8%

10%

12%

14%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

Growth in GDP (PPP) per Labor Force

Participant, CAGR, 2003-2013

Growth in GDP per Capita (PPP-adjusted), CAGR, 2003-2013



Source: EIU (2014), World Bank, authors calculations

The Role of Workforce Participation Mauritius vs. Upper Middle Income and Neighboring Countries

Improving Participation Declining Participation

Workforce Participation Rate

Labor Force Size

Population Age 15-64 =

Albania

Algeria

Angola

Argentina

Azerbaijan

Botswana

Brazil

Bulgaria

China

Colombia

Costa Rica

Ecuador

Gabon

Hungary

India

Iran

Jamaica

Jordan

Kazakhstan

Libya

Madagascar

Malaysia

Mauritius

Mexico

Namibia

Panama

Peru

Romania

Thailand

Tunisia

Turkey

Venezuela

40%

50%

60%

70%

80%

90%

100%

-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%

Labor Force Participation (2013)

Change in Labor Force Participation Rate, 2003-2013

Average: 1.2%

Average: 66.6%


Productivity Level and Growth

Country Competitive Environment

Domestic

investment Imports

Outbound

foreign direct

investment

Domestic

innovation

Inbound

foreign direct

investment

Exports

Competitiveness Indicators and Enablers


Albania

Algeria

Angola

Argentina

Botswana

Brazil

Bulgaria

China

Colombia

Costa Rica

Cuba

Dominican Republic

Ecuador

Fiji

Gabon

Hungary

India

Iran

Jamaica

Jordan

Kazakhstan

Libya

Macedonia

Madagascar

Malaysia

Mauritius Mexico

Namibia

Panama

Peru Romania

Russia Serbia

South Africa

Tanzania

Thailand

Tunisia

Turkey

Venezuela

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

-8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22%

Gross Fixed Investment (% of GDP), 2013

Change in Gross Fixed Investment (% of GDP), 2003-2013

Mozambique

(+27.7%, 50%)

Domestic Investment Performance Mauritius vs. Upper Middle Income and Neighboring Countries

Average: 24.0%

Average: +3.1%

Note: Includes inbound FDI. Upper middle income as defined by the World Bank includes countries with GNI per capita of $4,036 to $12,475

Source: EIU, 2014


Albania Algeria

Angola

Argentina

Azerbaijan

Botswana

Brazil

Bulgaria

China

Colombia

Costa Rica

Cuba

Dominican Republic

Ecuador

Fiji Gabon

Hungary

India

Iran

Jamaica

Jordan Kazakhstan

Libya Macedonia

Madagascar

Malaysia

Mauritius

Mexico

Mozambique

Namibia

Panama

Peru

Romania

Russia

Serbia

South Africa

Tanzania

Thailand

Tunisia

Turkey Venezuela

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-30% -20% -10% 0% 10% 20% 30% 40%

Exports of Goods and Services (% of GDP),

2013

Change in Exports of Goods and Services (% of GDP), 2003-2013

Export Performance Mauritius vs. Upper Middle Income and Neighboring Countries



Average: 40.7%

Average: 2.0%


Albania

Algeria

Angola

Argentina

Botswana

Brazil

Bulgaria

China

Colombia

Costa Rica

Cuba

Dominican Republic

Ecuador

Fiji

Gabon

Hungary

India

Iran

Jamaica

Jordan

Kazakhstan

Libya

Macedonia

Madagascar

Malaysia

Mauritius

Mexico

Mozambique

Namibia

Panama

Peru

Romania

Russia

Serbia

South Africa Tanzania

Thailand

Tunisia

Turkey

Venezuela

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-30% -20% -10% 0% 10% 20% 30% 40%

Imports of Goods and Services (% of GDP),

2013

Change in Imports of Goods and Services (% of GDP), 2003-2013

Import Performance Mauritius vs. Upper Middle Income and Neighboring Countries



Average: 4.4%

Average: 44.0%


Albania Algeria

Angola

Argentina

Azerbaijan

Belarus

Belize

Bosnia and Herzegovina

Botswana

Brazil

Bulgaria

China Colombia

Costa Rica

Dominica

Dominican Republic Ecuador

Fiji

Gabon

Grenada

Hungary

Iran Iraq

Jamaica

Jordan

Kazakhstan

Lebanon

Libya

Madagascar

Malaysia

Maldives

Mauritius

Mexico

Mozambique Namibia

Palau

Panama

Peru

Romania

Russia

Serbia

Seychelles

South Africa

Thailand

Tonga

Tunisia

Turkey

Turkmenistan Venezuela

0%

20%

40%

60%

80%

100%

120%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

Inward FDI Stocks as % of GDP, Average 2001-

2011

FDI Inflows as % of Gross Fixed Capital Formation, Average 2001-2011

Inbound Foreign Investment Performance Mauritius vs. Upper Middle Income and Neighboring Countries


Source: UNCTAD, World Investment Report (2013)

Average: 23.1%

Average: 40.7%

Montenegro

(87.2%, 98.27%)





Agenda


Macroeconomic Competitiveness

Microeconomic Competitiveness

Sophistication

of Company

Operations and

Strategy

Quality of the

Business

Environment

State of Cluster

Development

Endowments

Human Development

and Effective

Political Institutions

Sound Monetary

and Fiscal Policies

What Determines Competitiveness?

• Productivity ultimately depends on improving the microeconomic capability of the economy and the

sophistication of local competition revealed at the level of firms, clusters, and regions

• Macroeconomic competitiveness sets the economy-wide context for productivity to emerge, but is not

sufficient to ensure productivity

• Endowments, including natural resources, geographical location, population, and land area, create a

foundation for prosperity, but true prosperity arises from productivity in the use of endowments


ISC Competitiveness Model Mauritius Competitiveness Profile, 2012

Mauritius’ GDP per capita rank is 58th

versus 140 countries

Source: Institute for Strategy and Competitiveness, Harvard University (2012), based in part on survey data from the World Economic Forum; analysis prepared based on research findings by Scott Stern, Mercedes

Delgado, and Christian Ketels.

Macroeconomic

Competitiveness

36

Political Institutions

31

Rule of Law

35

Human

Development

44

Microeconomic

Competitiveness

39

Macroeconomic

Policy

52

National Business

Environment

38

Company Operations

and Strategy

43

Country Competitiveness

37

Significant disadvantage

relative to income

Significant advantage

relative to income

Moderate advantage

relative to income

Moderate disadvantage

relative to income Neutral


Competitive Disadvantages

Relative to GDP per Capita

Competitive Advantages


Macroeconomic Strengths and Weaknesses Mauritius, 2012

Government debt* 1

Effectiveness of law-making bodies 13

(Low) Organized crime 15

Efficiency of legal framework 20

Efficiency of legal framework to settle disputes 20

Efficiency of legal framework to challenge regulations 21

Property rights 29

Gov. effectiveness in reducing poverty and inequality 30

Judicial independence 30

(Low) Wastefulness of government spending 32

Transparency of government policymaking 32

Accessibility of healthcare services 34

Rule of Law (WB) 35

Control of Corruption (WB) 38

Voice and Accountability (WB) 39

(Low) Irregular payments by firms 40

Ethical behavior of firms 40

Safety 41

(Low) Diversion of public funds 43

Quality of primary education 44

Quality of healthcare services 46

(Low) Tuberculosis incidence 50

Public trust of politicians 50

Reliability of police services 51

Freedom of the press 53

(Low) Favoritism in decisions of government officials 55

(Low) Business costs of crime and violence 57

(Low) Gender inequality 59

Government surplus/deficit 60

(Low) Infant mortality 66

Secondary enrollment 66

(Low) Malaria incidence 68

Primary enrollment 70

Inflation 77

Health expenditure 80

Life expectancy 81

Note: Rank versus 140 countries; overall, Mauritius ranks 58th in 2012 PPP adjusted GDP per capita and 37th in Global Competitiveness.

*Each of the 105 countries judged to have government debt within a safe range are assigned rank 1

Source: Delgado, Mercedes, Christian Ketels, Michael E. Porter, and Scott Stern. “The Determinants of National Competitiveness.” NBER Working Paper Series, No. 18249, July 2012.






Sophistication of Company Operations and Strategy Mauritius, 2012

Value chain breadth 26

Control of international distribution 29

Extent of staff training 34

Nature of competitive advantage 35

Degree of customer orientation 39

Organizational practices 39

Internationalization of firms 41

Production process sophistication 43

Extent of incentive compensation 43

Reliance on professional management 44

Strategy and operational effectiveness 51

Prevalence of foreign technology licensing 52

Firm-level technology absorption 53

Willingness to delegate authority 55

Extent of marketing 58

Company spending on R&D 84

Capacity for innovation 108

Note: Rank versus 140 countries; overall, Mauritius ranks 58th in 2012 PPP adjusted GDP per capita and 37th in Global Competitiveness



Assessing the Quality of the Business Environment

Context for Firm Strategy and Rivalry

Related and Supporting Industries

Factor (Input)

Conditions

Demand Conditions

• Sophisticated and demanding local

needs

– e.g., Strict quality, safety, and

environmental standards

– Sophisticated demand in the private

sector or government

• Many things matter for competitiveness

• Successful economic development is a process of successive upgrading, in which the business environment improves to enable increasingly sophisticated ways of competing

• Local rules and incentives that

encourage investment and productivity

– e.g. incentives for capital investments,

IP protection

• Sound corporate governance

• Open and vigorous local competition

− Openness to competition

− Strict competition laws • Improving access to high quality

business inputs

– Qualified human resources

– Capital availability

– Physical infrastructure

– Scientific and technological

infrastructure

– Administrative and regulatory

infrastructure • Availability and quality of suppliers and

supporting industries






Diamond Strengths and Weaknesses Mauritius, 2012

Factor (Input)

Conditions

Paying Taxes: Payments number (WB) 9

(Low) Time required to start a business 13

Soundness of banks 13

Regulation of securities exchanges 17

Protection of minority shareholders’ interests 18

Administrative infrastructure 19

Number of procedures required to start a business 25

Capital market infrastructure 26

Ease of access to loans 32

Financial market sophistication 33

(Low) Burden of government regulation 34

Quality of the educational system 34

Domestic credit to private sector 37

Quality of math and science education 37

Financing through local equity market 38

(Low) Burden of customs procedures 40

Telephone lines per 100 population 42

Quality of port infrastructure 45

Quality of roads 48

Quality of air transport infrastructure 48

Venture capital availability 51

Logistical infrastructure 55

(Low) Brain drain 57

Quality of management schools 60

Innovation infrastructure 62

Getting Credit Legal rights index (WB ) 63

Internet access in schools 64

Quality of electricity supply 66

Percentage of households with computer 68

Quality of domestic transport network: business 69

Communications infrastructure 71

Utility patents per million population 76

Internet users per 100 population 80

University-industry research collaboration 80

Tertiary enrollment 81

Mobile telephone subscribers per 100 population 84

Quality of scientific research institutions 85

Availability of scientists and engineers 101

Quality of railroad infrastructure 119








Context for Firm Strategy and Rivalry


Business impact of rules on FDI 6

Tax impact on incentives to work and invest 9

Effect of taxes and subsidies on competition 10

Strength of investor protection 13

Efficacy of corporate boards 15

Strength of auditing and reporting standards 20

Prevalence of trade barriers 22

Intensity of local competition 33

FDI and technology transfer 34

(Low) Tariff rate 34

Effectiveness of antitrust policy 37

Regulatory quality 37

Cooperation in labor-employer relations 38

Disruption from state-owned enterprises 43

Pay and productivity 55

Intellectual property protection 55

Prevalence of foreign ownership 67

Extent of market dominance (by business) 75








Demand Conditions


Presence of demanding regulatory standards 12

Laws relating to ICT 41

Buyer sophistication 42

Government success in ICT promotion 53

Stringency of environmental regulations 59

Gov’t procurement of advanced tech. 75








Related and Supporting Industries


Local supplier quantity 33

Availability of latest technologies 42

Local supplier quality 52

Availability of research/ training services 60

State of cluster development 68

Extent of collaboration in clusters 89




What is a Cluster? Kenya’s Cut Flower Cluster

Plantstock

Greenhouse; Shading Structures

Irrigation Technology

Pre-Cooling Technology

Fertilizers, Pesticides, Herbicides

Agricultural Cluster

Horticultural Cluster

Post-Harvest Cooling

Technology

Grading / Packaging Sheds

Packaging & Labeling Materials

Refrigerated Trucks

Freight Forwarders

Clearing and Forwarding Agents

Air Carriers (Commercial /

Charters)

Tourism Cluster

Flower Farming Post-Harvest

Handling; Transport to Market

Horticultural Agencies, NGOs & Industry

Associations Horticultural Crops Development Authority (HCDA) Government Export Policies Targeting Horticulture

Non-Government Organizations (e.g., The Rural Enterprise Agri-Business Promotion Project)

Trade & Industry Associations (e.g., Kenya Flower Council)

Education, Research & Quality Standards

Organizations Research Institutions

(e.g., Kenya Agricultural Research Institute)

Public Universities with Post Graduate Degrees in Horticulture (e.g., University of Nairobi)

Quality & Standards (e.g., EUREGAP Standard, Kenya Plant Health Inspectorate Services)

Sources: MOC student team research by Kusi Hornberger, Nick Ndiritu, Lalo Ponce-Brito, Melesse Tashu, Tijan Watt, Harvard Business School, 2007


Empirical Evidence on Clusters Strong Clusters Drive Economic Performance

Source: “Cluster and Entrepreneurship” by Mercedes Delgado, Michael E. Porter, and Scott Stern (2010); “The Economic Performance of Regions” by Michael E. Porter (2003)

• Specialization in strong clusters

• Breadth of industries within each

cluster

• Strength in related clusters

• Presence of a region‘s clusters in

neighboring regions

• Job growth

• Higher wages

• Higher patenting rates

• Greater new business formation,

growth and survival


Mauritius National Cluster Export Portfolio 2001-2011

Mauritius Overall

World Export Share: 0.014%

Change in Mauritius Overall World Export Share: -.005%

= $30 million

Apparel

Business Services

Transportation and Logistics

Agricultural Products

Fishing and Fishing Products

Textiles

Construction Services

Metal Mining and Manufacturing

Medical Devices

Processed Food

Leather and Related Products

Lighting and Electrical Equipment

Chemical Products

Plastics

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

-0.12% -0.10% -0.08% -0.06% -0.04% -0.02% 0.00% 0.02% 0.04% 0.06%

World Export Market Share, 2011

Change in World Export Market Share, 2001-2011

Hospitality and Tourism

(.02%, .15%)


Established Mauritius Export Products Leading Exports by World Share, 2011

Rank Industry Cluster

World Export

Share

Change in Share

(2001-2011)

Export Value

(in thousands)

1 Clock, watch, spectacle glasses Lighting and Electrical Equipment 1.87% 0.08% $7,485

2 Miscellaneous prepared or preserved fish, crustaceans, etc. Fishing and Fishing Products 0.57% 0.38% $267,769

3 Men’s or boys’ shirts Apparel 0.49% -0.36% $143,865

4 Waste of man-made fibers Chemical Products 0.49% 0.43% $3,390

5 T-shirts, other vests, knitted Apparel 0.48% -0.50% $352,348

6 Synthetic or reconstituted precious stones Jewelry, Precious Metals and Collectibles 0.43% 0.34% $8,970

7 Sugars, molasses and honey Agricultural Products 0.35% -0.67% $304,341

8 Yarn of wool or animal hair Textiles 0.26% 0.07% $17,599

9 Braid, trim, tassels, pompons Textiles 0.21% 0.20% $2,017

10 Men’s or boys’ shirts, knitted Apparel 0.20% -0.05% $33,638

11 Women’s or girls’ blouses, shirts and shirt-blouses, knitted Apparel 0.20% 0.09% $23,749

12 Men’s or boys’ trousers, breeches and shorts Apparel 0.15% -0.27% $94,819

13 Miscellaneous time measuring equipment and accessories Metal Mining and Manufacturing 0.15% 0.01% $18,179

14 Pile fabrics, knitted or crocheted Apparel 0.14% -0.24% $8,731

15 Waste and scrap of cast iron Metal Mining and Manufacturing 0.12% -0.07% $4,920

16 Women’s or girls’ underwear, nightwear, knitted Apparel 0.11% 0.11% $24,077

17 Meal & flour of wheat, meslin Processed Food 0.11% -0.07% $10,377

18 Women’s or girls’ suits, dresses, skirts, trousers, knitted Apparel 0.09% -0.04% $47,251

19 Leather apparel and clothing accessories Leather and Related Products 0.07% 0.07% $11,129

20 Women’s or girls’ trousers, breeches and shorts Apparel 0.07% -0.20% $36,642

21 Imitation jewelry Jewelry, Precious Metals and Collectibles 0.07% -0.01% $8,467

22 Parachutes and parts Aerospace Vehicles and Defense 0.06% -0.67% $254

23 Jerseys, pullovers, cardigans, waistcoats, knitted Apparel 0.06% -0.18% $58,293

24 Live animals Agricultural Products 0.06% 0.00% $23,030

25 Flours, meals of meat, fish or aquatic invertebrates for animal feeds Agricultural Products 0.06% $6,261

26 Women’s or girls’ underwear, nightwear and similar articles Apparel 0.05% -0.01% $2,265

27 Other knitted or crocheted fabrics Apparel 0.05% 0.04% $21,534

28 Brassieres, corsets, braces, suspenders, garters Apparel 0.05% -0.03% $9,609

29 Men’s or boys’ overcoats, outerwear, knitted Apparel 0.05% 0.05% $2,060

30 Pasta, uncooked, unprepared Processed Food 0.05% 0.05% $3,716

31 Cotton fabrics, woven Textiles 0.05% -0.06% $24,530

32 Aluminum doors, windows and frames Building Fixtures and Equipment 0.04% 0.03% $1,830

33 Women’s or girls’ blouses, shirts and shirt-blouses Apparel 0.04% -0.06% $8,968

34 Spectacles and frames Medical Devices 0.04% -0.02% $8,857

35 Parts of wine, cider or similar beverage making machinery Processed Food 0.03% $65

36 Gold, silver jewelry or ware Jewelry, Precious Metals and Collectibles 0.03% -0.03% $44,171

37 Shawls, scarves, veils and the like, knitted Apparel 0.03% 0.01% $959

38 Cotton yarn, excluding thread Textiles 0.03% 0.01% $8,109

39 Food waste, animal feeds Agricultural Products 0.03% 0.01% $12,883

40 Miscellaneous made-up clothing accessories Apparel 0.03% 0.03% $586

Top 40 Industries as % of Mauritius’ Total Exports: 87.9%


Marine

Equipment

Cluster Relatedness

Furniture Building

Fixtures,

Equipment &

Services

Fishing &

Fishing

Products

Hospitality

& Tourism Agricultural

Products

Transportation

& Logistics

Plastics

Oil & Gas

Products &

Services

Chemical

Products

Biopharma-

ceuticals

Power

Generation &

Transmission

Aerospace

Vehicles &

Defense

Lighting &

Electrical

Equipment

Financial

Services

Publishing

& Printing

Entertainment

Information

Technology

Aerospace

Engines

Business

Services

Distribution

Services

Forest

Products

Heavy

Construction

Services

Construction

Materials

Prefabricated

Enclosures

Heavy

Machinery

Automotive

Sporting,

Recreational &

Children’s

Goods

Production

Technology Motor Driven

Products

Metal

Manufacturing

Jewelry &

Precious

Metals

Textiles

Footwear

Processed

Food

Tobacco

Medical

Devices

Analytical

Instruments Education &

Knowledge

Creation

Apparel

Leather &

Related

Products

Note: Clusters with overlapping borders or identical shading have at least 20% overlap (by number of industries) in both directions.

Communications

Equipment

and Services


Furniture Building

Fixtures,

Equipment &

Services

Fishing &

Fishing

Products Hospitality


Products Transportation

& Logistics

Plastics

Oil &

Gas

Chemical

Products

Biopharma-

ceuticals

Power

Generation

Aerospace

Vehicles &

Defense

Lightning &

Electrical

Equipment

Financial

Services

Publishing

& Printing

Information

Tech.

Communications

Equipment

and Services*

Business

Services

Distribution

Services

Forest

Products

Heavy

Construction

Services

Construction

Materials

Prefabricated

Enclosures

Apparel

Leather &

Related

Products

Jewelry &

Precious

Metals

Textiles

Footwear

Processed

Food

Tobacco

Medical

Devices

Analytical


Knowledge

Creation

Note: Mauritius’ overall share of world exports is .0211%. * Data reflects Communications Services only.

Marine

Equipment

Aerospace

Engines

Heavy

Machinery

Sporting

& Recreation

Goods

Automotive

Production

Technology

Motor Driven

Products

Mining & Metal

Manufacturing

Entertainment

Cluster Relatedness and Economic Diversification Mauritius, 2001

0.01% - 0.021%

0.0211% - 0.1%

>0.1%

World Export Share


Furniture Building

Fixtures,

Equipment &

Services

Fishing &

Fishing

Products Hospitality


Products Transportation

& Logistics

Plastics

Oil &

Gas

Chemical

Products

Biopharma-

ceuticals

Power

Generation

Aerospace

Vehicles &

Defense

Lightning &

Electrical

Equipment

Financial

Services

Publishing

& Printing

Information

Tech.

Communications

Equipment

and Services*

Business

Services

Distribution

Services

Forest

Products

Heavy

Construction

Services

Construction

Materials

Prefabricated

Enclosures

Apparel

Leather &

Related

Products

Jewelry &

Precious

Metals

Textiles

Footwear

Processed

Food

Tobacco

Medical

Devices

Analytical


Knowledge

Creation

Marine

Equipment

Aerospace

Engines

Heavy

Machinery

Sporting

& Recreation

Goods

Automotive

Production

Technology

Motor Driven

Products

Mining & Metal

Manufacturing

Entertainment

Cluster Relatedness and Economic Diversification Mauritius, 2011

0.01% - 0.014%

0.0141% - 0.1%

> 0.1%

World Export Share

Note: Mauritius’ overall share of world exports is .0141%. * Data reflects Communications Services only.


Clusters as a Tool for Economic Policy

• A forum for collaboration between the private sector, trade associations,

government, educational, and research institutions

• Brings together firms of all sizes, including SME’s

• Creates a mechanism for constructive business-government dialog

• A tool to identify problems and action recommendations

• A vehicle for investments that strengthen multiple firms/institutions

simultaneously

• Fosters greater competition rather than distorting the market

• Enhances the efficiency and effectiveness of traditional economic policy

areas, such as training, R&D, export promotion, FDI attraction, etc.

• Sound cluster policy addresses all clusters, and does not pick winners





Agenda


National Value Proposition

The Need for an Economic Strategy

• What is the distinctive competitive position of the nation given its

location, legacy, existing strengths, and potential strengths?

– What unique advantages as a business location?

– For what types of activities and clusters?

– What roles with the surrounding countries and the broader global economy?

Developing Unique Strengths Achieving and Maintaining Parity

with Peers

• What elements of the business

environment can be unique strengths

relative to peers/neighbors?

• What existing and emerging clusters

can be built upon?

• What weaknesses must be addressed to

remove key constraints and achieve parity

with peer locations?

• Priorities and sequencing are a necessity in economic development


Tests of an Economic Strategy

• Does the strategy articulate a distinctive position for the country or region?

– That will create a positive identity?

– That will inspire citizens?

• Does the strategy build on existing or potential strengths?

– Are the strengths realistic versus neighbors and other peer countries?

• Does the strategy fit with trends in the neighborhood and the world economy?

• Is the strategy realistic given the country’s or region’s weaknesses? Can weaknesses that retard the strategy be neutralized?

• Are social and political reforms integrated with economic reforms and pursued simultaneously?

• Is there the political will and the political consensus to implement the strategy?


Tests of an Economic Strategy Continued

• Do the policy priorities fit the strategy?

– The choice of policies, and their design?

– The sequence in which policies are implemented?

• Has the strategy been communicated clearly to all stakeholders?

• Is the private sector engaged?

• Is government organized around the strategy?

• Is there an overall coordinating structure for economic development?

• Is the quality of governmental agencies and other institutions sufficient for effective implementation?

• Are there mechanisms to measure progress and review / modify the strategy as prosperity improves or conditions change?


Old Model

• Government drives economic

development through top down policy

decisions and incentives

New Model

• Economic development is a

collaborative process involving

government at multiple levels,

companies, educational and research

institutions, and private sector

organizations

• Competitiveness is the result of both top-down and bottom-up processes in

which many companies and institutions take responsibility

• Translating policy into action is decisive in determining success

The Process of Economic Development Shifting Roles and Responsibilities

Documents

Mauritius Competitiveness Overvie CAON deck - FINAL-FINAL.pdfThis presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage