One Way Lalit is Different From Mainstream Parties

It doesn’t want to bail out the sugar industry while the LP, MMM and the MSM do. Rezistans ek Alternativ too wants save to this old industry. So who’s right?

3 Reasons We Are Not a High-income Country

The first one is land use. If we removed all the sugar and replaced it with what we have elsewhere our GDP per capita at the end of 2015 would have increased by 48.5% to $13,575. And given us access to the high-income club.

The next reason is currency policy. If we had kept our currency fixed at its 1985 level of 15.58 rupees to the USD -- not a lot to ask from a Tiger as the majestic cats have been known to increase their exports while their currencies appreciate -- our GDP per capita would have been 2.25X larger. That is it would have climbed to $20,608.

The final reason is the devastating effect of the 15% flat tax. If we had clocked the average 8% growth rates promised since 2005 our output per capita would have shot up to $13,136 in 2015. Or about 44% higher. Which is by the way roughly how much the crazy land use has cost us. And gives us precious information to assess relatively recent policies.

Finally if we had no sugar cane, had been very reasonable with our currency and had clipped the robust 8% growth our GDP per capita would have been $43,971 or 4.81X bigger than where it was at Christmas time in 2015. This of course would have been 83% of the corresponding number for a famous South-East Asian Tiger.

Miow.

How Mauritius Can Increase Its GDP By 50%

Remove all sugar cane and replace it with the kind of stuff we have on the other two-thirds of our land area. That would boost our GDP – and the per capita number as shown in the above chart – by almost half. And get us out of the middle-income group after being trapped there for almost three decades.

No, no, no you say. Sugar has a bright future. Really? Then let's raze all of our towns and grow sugar cane and shrink GDP by 98% or USD11.8bn. That would collapse our GDP per capita to $283 or a level close to that of South Sudan – a country which has been in civil war since 2013. We'd probably experience the same thing if we reverted back to being a mono crop. It'd take a less extreme scenario to have people in the streets. That's for sure. 

Currency Policy Incompatible With Feline DNA

GDP per capita for Mauritius was only $9,142 at the end of 2015. That placed us at spot 68. We would have done a lot better had we not adopted a policy of 'competitive depreciation' for the better of thirty years. If we had kept our currency fixed at its 1985 level -- which was not too much to ask from a Tiger -- then we'd be 32 spots higher. Or just above the Arabia of the Sauds. And in the company of other high-income countries.

We were also stuck below the $10,000 threshold because the Sithanen flat tax has broken our economy. Had we kept on growing at 5.5% since 2006 we'd be seven notches higher. Fourteen if the 8% growth rates promised by the bean-counter had materialised.

In the meantime another Tiger has confirmed her stripes. A combination of high growth rates and systematic currency appreciation -- 60% over the thirty-year period -- has pushed Singapore ahead of Germany, Sweden and even Denmark.

Only dimwits will believe that 'competitive depreciation' is painless.

38 years

This is about how long it would take the GDP per capita of Mauritius to reach that of Singapore. Indeed the USD 5,496 figure we clocked last year would attain Singapore's 2007 performance of USD 35,163 if it grew steadily at 5% until 2046.

But this assumes that the incredible south-east Asian tiger would stop growing for the next four decades and wait for us to catch up. A very unlikely event considering that since Sithanen joined politics, Singapore has been growing at 6.5% on average every year vs. our own 5.0%. Singapore's GDP per capita number is already better than those of Spain and Japan and should match Germany's before Brazil hosts the World Cup in 2014.