Maker #Circular #Smart
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ECONOMIC LEAKAGE AND RELOCALIZATION: OPPORTUNITIES FOR SUSTAINABLE PROSPERITY IN MAURITIUS #Maker #Circular #Smart 1 How can Mauritius develop its economy from the inside via local demand and turn the realities of economic leakage into opportunities for growth by following the lead of inspiring entrepreneurs? A study commissioned by the MCB & conducted by UTOPIES – January 2019 3 3 or over 180 years, MCB Group has been true to its guiding principle of assisting in the advancement of individuals, corporations and the country at large by Fsupporting entrepreneurship and innovation on the island. However, in the last 10 years global challenges such as the economic crisis and global warming have sparked a deep questioning within the organization as to the ZIV]QIERMRKSJHIZIPSTQIRXVII\EQMRMRKGSQQSRP]LIPHHI½RMXMSRWSJTVSWTIVMX] ERHLETTMRIWWXSVIHI½RIXLIKVSYT´WVIWTSRWMFMPMXMIWEWEREGXMZIWXI[EVHSJXLI MWPERH´WIGSRSQMGKVS[XL A number of more agile and enthusiastic movements are emerging on the island 7PS[ *SSH7PS[ 1SRI]0SGEP ½VWX*EFPEFW© [LMGL TVSQMWI RI[ QSHIPW SJ innovation and prosperity. The MCB Group seeks more than ever to serve the development of Mauritius, a traditionally entrepreneurial island, by exploring new avenues to achieve greater prosperity from the inside out. The question is not to aim for complete self-reliance SVXSGYXXLIMWPERHSJJJVSQXLI[SVPHMRWIEVGLSJWIPJWYJ½GMIRG]RSVXSHIR]XLI MQTSVXERGISJI\TSVXW KSSHWWIVZMGIW XSYVMWQSVMRXIVREXMSREPMRZIWXQIRXJSV SYVMWPERH´WIGSRSQ]6EXLIVXLIUYIWXMSRMWXSVIMRJSVGIXLIWSPMHMX]SJXLIMWPERH´W economy by anchoring it in a new kind of globalization, one of exchanges between prosperous countries. This study set out to better understand how prosperity is achieved on the island and identify which mechanisms create wealth and how much of it is generated from local economic circuits. 3YV½RHMRKWWLS[XLEXEXXVEGXMRKI\XIVREP[IEPXLMWERMQTSVXERXERHRIGIWWEV] TMPPEVSJ1EYVMXMYW´IGSRSQ]LS[IZIVEXXVEGXMSRSJI\XIVREP[IEPXLEPSRIHSIWRSX EGGSYRXJSVRSVWYWXEMRXLIMWPERH´WTVSWTIVMX] -RHIIHRSXSRP]HSIW1EYVMXMYW´[IEPXLVIP]SRXLIMWPERH´WGETEGMX]XSEXXVEGX MRXIVREXMSREPMRGSQI I\TSVXWMRGSQIJVSQPEFSYVERHGETMXEP MXEPWSHITIRHW SR XLI GSYRXV]´W EFMPMX] XS GMVGYPEXI [IEPXL PSGEPP] MRGSQI IRXIVMRK XLI MWPERH generates more wealth locally, which generates new exchanges and income in a virtuous cycle, until this ripple effect fades. This is what we call the local multiplier effect. 1EYVMXMYW´TVSWTIVMX]VIWYPXWJVSQMXWEFMPMX]XSEXXVEGXMRXIVREXMSREP[IEPXLERH QE\MQM^I XLI MWPERH´W PSGEP QYPXMTPMIV IJJIGX *SV MRWXERGI MR 1EYVMXMYW EXXVEGXIH&R97(MRMRXIVREXMSREPMRGSQI8LIPSGEPQYPXMTPMIVIJJIGXEPPS[IH JSVEJEGXSVEQTPM½GEXMSRSJXLMW[IEPXLEGLMIZMRKEXSXEPSJ&R97(MR national income. 1EYVMXMYW´GEWIMWRSXYRMUYI-RHIIHMRXIVREXMSREPVIWIEVGLWLS[WXLEXREXMSREP prosperity is hard to achieve without a successful combination of international attractiveness and a strong local multiplier effect. The goal for Mauritius is to gain sustainable entry to the club of high-income countries, a goal which the island will not be able to reach anytime soon unless it increases its local multiplier effect. =IX[LMPI1EYVMXMYW´I\XIVREPMRGSQILEWVIKMWXIVIHWXVSRKKVS[XLSREZIVEKIJSV XLIPEWX]IEVWXLIGSYRXV]´WPSGEPQYPXMTPMIVIJJIGXLEWXIRHIHXSHIGVIEWI MR]IEVW 4 HeRGIJSWXIVMRKXLIMWPERH´WHIZIPSTQIRXGEPPWJSVEX[STVSRKIHETTVSEGLJSGYWIH SR1EYVMXMYW´GETEGMX]XSGSRXMRYIEXXVEGXMRKI\XIVREP[IEPXLERHMXWEFMPMX]XSGMVGYPEXI XLMW[IEPXL[MXLMRXLIMWPERHEWWYWXEMREFP]EWTSWWMFPI-RTVEGXMGIXLMW[SYPHVIUYMVI Fostering local response to local demand by increasingly producing in Mauritius [LEXMWRSPSRKIVSVMRWYJ½GMIRXP] produced on the island; Increasing income derived from local knowledge and heritage savoir-faire, by increasing the complexity SJXLIMWPERH´WTVSHYGXMSR %MQMRK XS MRGVIEWI 1EYVMXMYW´ PSGEP QYPXMTPMIV IJJIGX LEW RSXLMRK XS HS [MXL advocating for protectionism and higher tariff barriers, which in a globalized and VIGMTVSGEP IGSRSQ] [SYPH FI GSYRXIVTVSHYGXMZI 6EXLIV XLI MWPERH WLSYPH ½RH ways to stimulate new forms of local entrepreneurship and foster the emergence SJRI[PSGEPMRHYWXVMIW8LMWMWRIGIWWEV]MRSVHIVXSIRWYVI1EYVMXMYW´MRGPYWMSRMRE globalized economy and guarantee sustainable growth for the island. 5 EZIRYIWGERFII\TPSVIHXSJSWXIVXLIIQIVKIRGISJXLMWOMRHSJIRXVITVIRIYVWLMTSRXLIMWPERH Making Mauritius a “maker island” means increasing its ability to produce what it consumes using local resources LYQERQEXIVMEPXIGLRMGEPREXYVEP “Looping the loop” of local economic and material circuits to make Mauritius a “circular island” can be a powerful generator of wealth and innovation. ;LEXMJXLIMWPERH´WIGSRSQMG intelligence consisted in creating value rather than products? 6 However, these new avenues for economic development must be designed to ½KLXGPMQEXIGLERKI-XMWYVKIRXXSVIHYGIXLIGPMQEXIMQTEGXSJSYVPMJIWX]PIERH GSRWYQTXMSRERHXLYWVIMRJSVGIXLIVIWMPMIRGISJXLIMWPERHSJ1EYVMXMYW(IZIPSTMRK PSGEPQERYJEGXYVMRK[MXLSYXMRGVIEWMRKXLIMWPERH´WIGSPSKMGEPJSSXTVMRXQYWXWXIQ from new, more sustainable production models which contribute to solving global environmental challenges. At MCB, we are inspired by these new models to rethink our role as an active steward of economic development, imagine new services, generate new kinds of collaborations, support local creativity and foster the emergence of local manufacturing as a means of guaranteeing sustained prosperity to the island of Mauritius. For us, this report is also a contribution of the MCB Group to our island and its inhabitants, as well as an invitation to dialogue, to build together the prosperous, sustainable and resilient Mauritius of tomorrow. 7 %2-2:-8%8-3283(-%03+9) § 03/%0 -7 &)%98-*90 TVSZMHIW ER I\GIPPIRX JSYRHEXMSR JSV JSGYWMRK SR XLI MQTSVXERGI SJ incentivising local production of complex goods in order to encourage local solutions to local needs. The report meaningfully considers the inter-linkages of international revenues, local revenues, the goals of a high income economy and a sustainable development model, the value addition requirements for XLIGSYRXV]ERHXLIGEVFSRJSSXTVMRX © -XEPWSTVSTSWIWERIGSRSQMGHIZIPSTQIRXQSHIP[LMGL is resilient, sustainable and inclusive as well as the overall objectives of individual and collective well- being. This would surely form part of the ambition of a modern and forward-looking Mauritius. For the MCB, this could provide a new perspective on facilities to be provided to this emerging IGSRSQ]8LMWQE]MRGPYHI¾I\MFPITVSHYGXWXSQIIXXLIRIIHWSJXLIMRWYPEVIRXVITVIRIYVEW[IPPEW blockchain and Fintech solutions to service an emerging market with agile customers and producers. The bank may also consider means of accompanying local industries in their transformation towards QSVIGSQTPI\TVSHYGXWXLVSYKLFPIRHIHJEGMPMXMIWVMWOWLEVMRKQIGLERMWQWERH½RERGMEPEHZMGI¨ Kevin Ramkaloan, PDG, Business Mauritius « Mauritius, a small island nation off the east coast of Africa, is neither particularly rich nor on its way XSFYHKIXEV]VYMR²[VSXIXLI2SFIPTVM^I[MRRMRKIGSRSQMWX.SWITL7XMKPMX^MRMRERSTIHJSV the British newspaper, The Guardian. “Nonetheless, it has spent the last decades successfully building a diverse economy, a democratic political system and a strong social safety net. Many countries, not PIEWXXLI9RMXIH7XEXIWGSYPHPIEVRJVSQMXWI\TIVMIRGI²%QSRKXLIJEGXWXLEXMQTVIWWIH7XMKPMX^[IVI XLEX SJVIWMHIRXWS[RIHXLIMVLSQIW LEHEGGIWWXSJVIIIHYGEXMSRERHLIEPXLGEVIERHXLI GSYRXV]TEMHJSVEPPXLMWRSXF]I\TPSMXMRKSRIREXYVEPVIWSYVGIPMOISMPFYXF]KVS[MRKEHMZIVWM½IH IGSRSQ]KVS[MRKEX TIV]IEVJSVXLVIIHIGEHIW Mauritius is admirably not content to rest on what the island has accomplished over the past thirty years and now seeks to raise the income and standard of living of its citizens further. It wants to enter XLIGPYFSJLMKLMRGSQIGSYRXVMIW[MXLE[SVPHGPEWWQSHIPSJWYWXEMREFMPMX]%RHTIVLETWXLIMWPERH´W planners are aware that if they, an island economy with limited natural resources can achieve such a success, every country in the world could follow this model. 8LIGSQQMWWMSRMRKSJ03/%0-7&)%98-*90F]XLI1'&+VSYTVITVIWIRXWELYKIPIETJSV[EVHMR EGLMIZMRKXLMWSFNIGXMZI8LIWGLSPEVWEX9XSTMIWE4EVMWFEWIHXLMROXEROLEZITVSHYGIHEKVSYRH breaking analysis about the challenges and opportunities facing the Mauritius economy. They make EGSQTIPPMRKGEWIJSVVIXLMROMRKXLIGSYRXV]´WJYXYVI[MXLXLVIIKSEPWE1EOIV-WPERHXLEXMRGVIEWIW local production; a Circular Island that increases local purchasing; and a Smart Island that fosters more PSGEPMRRSZEXMSR¨ Michael H. Shuman)conomist, lawyer, author and entrepreneur. Expert in community economics §4PEGIERHGYPXYVIEVIXLI2I[)GSRSQMGW;LEXMWRIIHIHMWEGSQTIPPMRK4PEGIZMWMSRFVERH ERHWXSV]JSVEWXGIRXYV]1EYVMXMYW%RMWPERHXLEXGSYPHFIERI[QSHIPSJVIWMPMIRGI harmony, happiness, wellbeing and regenerative growth for the world. All the ingredients EVIXLIVI%RHXLI03/%0-7&)%98-*90VITSVXGLEPPIRKIWFYWMRIWWEWYWYEPXSIQFVEGIE larger community engagement and participation model - so that an empowered community GERFIYRPIEWLIH[MXLMXWGVIEXMZIGETEGMX]JSVTSWMXMZIGLERKI¨ Gilbert Rochecouste, Activist & Entrepreneur To see all the comments collected on the report and to build the suite with us visit Lokalisbeautiful.com 8 8%&0)3*'328)287 3DUW,8QGHUVWDQGLQJDQGUHGH¼QLQJSURVSHULW\LQ0DXULWLXV 10 1.1 The balance of prosperity 10 1.1.1 International wealth attraction, an indispensable pillar of the Mauritian miracle 10 1.1.2 Mauritius’ income depends on the island’s capacity to attract wealth and circulate it locally 13 1.1.3 Mauritius’ economy and the scissors effect 18 1.2.Why is Mauritius’ local multiplier effect dropping? 20 1.2.1 Imports of goods and services account for 59% of Mauritius’ GDP 20 1EYVMXMYW´I\TSVXWHSRSXWYJ½GMIRXP]FIRI½XXLIMWPERH´WIGSRSQ]