Why has Mauritius left Fiji so far behind?

Why has Mauritius left Fiji so far behind?

Devpolicy Blog 5 May 2021 – Mauritius was recently declared by the World Bank to be a high-income country. On the other side of the globe, but with many similar characteristics, Fiji, which used to be richer than Mauritius, now has less than half the latter’s income per capita. The first in our two-blog series looked at Mauritius’s superior economic, social and political performance. This post tries to explain the huge differences observed.

Both countries were dominated by sugar cane farming in the past, and are reliant on tourism today. While Mauritius generates slightly more tourism dollars per capita than Fiji, it’s economy as a whole is less dependent on tourism. Since 1995, Fiji’s international tourism receipts as a proportion of total exports have consistently been higher than Mauritius’. Since 2010, the annual gap has been about 15 to 20 percentage points.

Mauritius’ lower reliance on tourism reflects the fact that its economy is more diversified than Fiji’s. Mauritius’ top exports in 2018 were: travel; textiles; and business, professional and technical services. These constituted 39%, 11% and 10% of total exports, respectively. On the other hand, Fiji’s top exports in the same year were heavily skewed towards travel, at 54% of total exports, with its next two biggest exports, bottled water and fish products, only representing 6% each.

Mauritius’ exports are not only more diversified; they have grown faster as well. As Figure 2 shows, Fiji’s and Mauritius’ inflation-adjusted exports were virtually the same in the first half of the 1980s. Since then, however, Mauritius’ exports have grown much faster – at least till around 2012. Its exports have been struggling since though: no doubt this is one reason why its growth has slowed (as shown in Figure 2 of the previous blog).