Skip to main content
SpringerLink
Log in

Trade Openness and Economic Growth in Mauritius

  • Chapter
  • First Online:
Development and Sustainable Growth of Mauritius

Part of the book series: Contemporary African Political Economy ((CONTAPE))

Abstract

The study uses time-series data and analysis for the period 1963–2013 to investigate if the growth hypothesis led by trade openness holds true for Mauritius. In order to investigate the relationship between trade openness and economic growth, the measure of trade openness this study uses covers various indicators ranging from trade outcomes to trade policy. Overall, the results suggest that although increasing trade openness has a positive and significant influence on growth, the magnitude of the trade policy effects is however negligible. Our results also highlight the growth-enhancing contributions of imports and the value of an outward-oriented trade policy regime. These results are robust for several model specifications.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 119.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 159.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Although there is generally no multicollinearity problems, due to potential correlation between core regression coefficients (‘degree of openness’, ‘trade liberalization’ and ‘real effective exchange rate’) we undertake robustness checks by removing and adding the three core regressors for different specifications results. This allows for examination of how the three core regression estimates behave when the regression is modified. The results are found to be consistent in all specifications, hence the conclusion that the model is robust.

References

  • Aghion, P., Comin, D., & Howitt, P. (2009). When does domestic saving matter for economic growth. [Online]. Retrieved September 15, 2011, from http://www.economics.harvard.edu/faculty/aghion/files/When%20Does%20Domestic%20Saving%20Matter.pdf.

  • Alesina, A. R., & Wacziarg, R. (1998). Openness, country size and government. Journal of Public Economics, 69(3), 305–321.

    Article  Google Scholar 

  • Aoyagi, C., & Ganelli, G. (2015). Asia’s quest for inclusive growth revisited. Journal of Asian Economics, 40, 29–46.

    Article  Google Scholar 

  • Arrow, K. J. (1962). The economic implications of learning by doing. Review of Economic Studies, 29(3), 55–173.

    Article  Google Scholar 

  • Auty, R. M. (2016). Natural resources and small island economies: Mauritius and Trinidad and Tobago. The Journal of Development Studies, 4, 1–14.

    Google Scholar 

  • Awokuse, T. (2008). Trade openness and economic growth: Is growth export-led or import-led? Applied Economics, 40(2), 161–173.

    Article  Google Scholar 

  • Barro, R. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(1), 405–443.

    Google Scholar 

  • Barro, R. J. (1997). Determinants of economic growth. Cambridge, MA and London: MIT Press.

    Google Scholar 

  • Barro, R. J., & Sala-I-Martin, X. (1995). Economic growth. Cambridge, MA: McGraw-Hill.

    Google Scholar 

  • Besley, T., & Cord, L. (Eds.). (2007). Delivering on the promise of pro-poor growth: Insight and lessons from country experiences. New York: Palgrave Macmillan.

    Google Scholar 

  • Bhagwati, J. (1958). Immiserizing growth: A geometrical note. The Review of Economic Studies, 25, 201–205.

    Article  Google Scholar 

  • Bhagwati, J. (1988). Protectionism. Cambridge: MIT Press.

    Google Scholar 

  • Bheenick, R., & Schapiro, O. (1991). The Mauritian export processing zones. Public Administration & Development, 8(3), 263–267.

    Article  Google Scholar 

  • Bruckner, M., & Lederman, D. (2012). Trade causes growth in Sub-Saharan Africa. Policy research working paper series 6007, World Bank.

    Google Scholar 

  • Brueckner, M., & Lederman, D. (2015). Trade openness and economic growth: Panel data evidence from Sub-Saharan Africa. Economica, 82(s1), 1302–1323.

    Article  Google Scholar 

  • Cass, D. (1965). Optimum growth in an aggregative model of capital accumulation. Review of Economic Studies, 32(3), 233–240.

    Article  Google Scholar 

  • Ciccone, A., & Jarocinski, M. (2010). Determinants of economic growth: Will data tell? American Economic Journal: Macroeconomics, 2(4), 223–247.

    Google Scholar 

  • Clemens, M. A., & Williamson, J. G. (2001). A tariff-growth paradox? Protection’s impact the world around 1875–1997 (No. w8459). National bureau of economic research.

    Google Scholar 

  • Coughlin, C. (2010). Measuring international trade policy: A primer on trade restrictiveness indices. Federal Reserve Bank of St. Louis Review, 92(5), 381–394.

    Google Scholar 

  • Diakosavvas, D., & Scandizzo, P. L. (1991). Trends in the terms of trade of primary commodities, 1900–1982: The controversy and its origins. Economic Development and Cultural Change, 39(2), 231–264.

    Article  Google Scholar 

  • Djankov, S., & Hoekman, B. (1999). Foreign investment and productivity growth in Czech. World Bank Economic Review, 14, 49–64.

    Article  Google Scholar 

  • Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114(493), 22–49.

    Article  Google Scholar 

  • Domar, E. D. (1946). Capital expansion, rate of growth, and employment. Econometrica, 14, 137–147.

    Article  Google Scholar 

  • Easterly, W., & Levine, R. (1997). Africa’s growth tragedy: Politics and ethnic divisions. The Quarterly Journal of Economics, 112, 1203–1250.

    Article  Google Scholar 

  • Easterly, W., & Rebelo, S. (1994). Fiscal policy and economic growth: An empirical investigation. Centre for Economic Policy Research Working Paper (No. 885), London.

    Google Scholar 

  • Edwards, S. (1992). Trade orientation, distortions and growth in developing countries. Journal of Development Economics, 39(1), 31–57.

    Article  Google Scholar 

  • Edwards, S. (1998). Openness, productivity and growth: What do we really know? The Economic Journal, 53(4), 383–398.

    Article  Google Scholar 

  • Esfahani, H. S. (1991). Exports, imports and economic growth in semi-industrialized countries. Journal of Development Economics, 35(4), 93–116.

    Article  Google Scholar 

  • Falvey, R., Foster, N., & Greenaway, D. (2004). Imports, exports, knowledge spillovers and growth. Economics Letters, 85, 209–213.

    Article  Google Scholar 

  • Frankel, J., & Romer, D. (1999). Does trade cause growth? American Economic Review, 89(3), 379–399.

    Article  Google Scholar 

  • Frankel, J. A. (2010). Mauritius: African success story. HKS Faculty Research Working Paper Series, RWP10-036, John F. Kennedy School of Government, Harvard University. [Online]. Retrieved May 13, 2011, from http://web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=7410.

  • Grossman, G., & Helpman, E. (1991). Innovation and growth in the world economy. Cambridge, MA: MIT Press.

    Google Scholar 

  • Harrison, A. (1996). Openness and growth: A time series, cross-country analysis for developing countries. Journal of Development Economics, 48(196), 419–447.

    Article  Google Scholar 

  • Harrison, A., & Hanson, G. (1999). Who gains from trade reform? Some remaining puzzles. Journal of Development Economics, 59(1), 125–154.

    Article  Google Scholar 

  • Harrod, R. F. (1939). An essay in dynamic theory. The Economic Journal, 49(193), 14–33.

    Article  Google Scholar 

  • Henriques, I., & Sadosky, P. (1996). Export-led growth or growth-driven exports? The Canadian case. Canadian Journal of Economics, 29, 540–555.

    Article  Google Scholar 

  • Hinkle, L. E., & Herrou-Aragon, A. (2001). How far did Africa’s first generation trade reforms go? World Bank.

    Google Scholar 

  • Holden, M. (2001). Trade policy in a liberalizing economy. Journal of International Development, 13(6), 711–723.

    Article  Google Scholar 

  • International Monetary Fund (IMF). (2017). International Financial Statistics. Washington, DC. [Online]. Retrieved September 26, 2017, from http://imf.org/.

  • Kaplinsky, R., & Morris, M. (2008). Do the Asian drivers undermine export-oriented industrialization in SSA? World Development, 36(2), 254–273.

    Article  Google Scholar 

  • Kawai, H. (1994). International comparative analysis of economic growth: Trade liberalisation and productivity. The Developing Economies, 17(4), 373–397.

    Article  Google Scholar 

  • Kee, H. L., Nicita, A., & Olarreaga, M. (2009). Estimating trade restrictiveness indices. Economic Journal, 119(534), 172–199.

    Article  Google Scholar 

  • Koopmans, T. C. (1965). On the concept of optimal economic growth: The econometric approach to development planning. Academiae Scientiarum Scripta, 28(1), 226–300.

    Google Scholar 

  • Krugman, P. (1989). Surévaluation et accélération des productivités: un modèle spéculatif. Commerce international et concurrence parfaite, Paris, Economica, pp.121–135.

    Google Scholar 

  • Kunst, R., & Marin, D. (1989). On exports and productivity: A causal analysis. Review of Economics and Statistics, 71, 699–703.

    Article  Google Scholar 

  • Levine, R., & Renelt, D. (1992). A sensitivity analysis of cross country growth regressions. American Economic Review, 82, 942–963.

    Google Scholar 

  • Lewer, J., & Van den Berg, H. (2004). How large is international trade’s effect on economic growth? Journal of Economic Surveys, 17(3), 363–396.

    Article  Google Scholar 

  • Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42.

    Article  Google Scholar 

  • Manole, V., & Spatareanu, M. (2010). Trade openness and income: A re-examination. Economics Letters, 106(1), 1–3.

    Article  Google Scholar 

  • MacKinnon, J. G., Haug, A. A., & Michelis, L. (1999). Numerical distribution functions of likelihood ratio tests for cointegration. Journal of Applied Econometrics, 14, 563–577.

    Article  Google Scholar 

  • Mencinger, J. (2003). Does foreign direct investment always enhance economic growth? Kyklos, 56(4), 491–508.

    Article  Google Scholar 

  • Milner, C., & McKay, A. (1996). Real exchange rate measures of trade liberalisation: Some evidence for Mauritius. Journal of African Economies, 5(1), 69–91.

    Article  Google Scholar 

  • Milner, C., & Wright, P. (1998). Modelling labour market adjustment to trade liberalization in an industrializing economy. Economic Journal, 108(447), 509–528.

    Article  Google Scholar 

  • Prebisch, R. (1950). The economic development of Latin America and its principal problems. New York: United Nations.

    Google Scholar 

  • Prebisch, R. (1959). Commercial policy in the underdeveloped countries. American Economic Review, 49(1), 251–273.

    Google Scholar 

  • Ramsey, F. P. (1928). A mathematical theory of saving. Economic Journal, 38(152), 543–559.

    Article  Google Scholar 

  • Rao, B. B., & Rao, M. (2009). Openness and growth in Fiji: Some time series evidence. Applied Economics, 41(13), 1653–1662.

    Article  Google Scholar 

  • Ravallion, M., & Chen, S. (2003). Measuring pro-poor growth. Economics Letters, 78(1), 93–99.

    Article  Google Scholar 

  • Rebelo, S. (1991). Long-run policy analysis and long-run growth. Journal of Political Economy, 99, 500–521.

    Article  Google Scholar 

  • Rodríguez, F. (2007). Openness and Growth: What Have We Learned? United Nations department of Economic and Social Affairs (No. 51). DESA.

    Google Scholar 

  • Rodriguez, F., & Rodrik, D. (2001). Trade policy and economic growth: A skeptic’s guide to the cross-national evidence. In NBER Macroeconomics Annual 2000, Volume 15. MIT Press, pp. 261–338.

    Google Scholar 

  • Rodrik, D. (1999). The new global economy and developing countries: Making openness work (Vol. 24). Washington, DC: Overseas Development Council.

    Google Scholar 

  • Rodrik, D. (2000). How far will international integration go? Journal of Economic Perspectives, 14, 177–186.

    Article  Google Scholar 

  • Rodrik, D. (2001). The global governance of trade as if development really mattered. United Nations Development Programme. Background paper, New York.

    Google Scholar 

  • Rodrik, D. (2008). The real exchange rate and economic growth. Brookings Papers on Economic Activity, 2, 365–412.

    Google Scholar 

  • Rojid, S., Sannassee, R., & Fawdar, S. (2009). The net contribution of the Mauritian export processing zone using benefit–cost analysis. Journal of International Development, 21(3), 379–392.

    Article  Google Scholar 

  • Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037.

    Article  Google Scholar 

  • Romer, P. M. (1993). Idea gaps and object gaps in economic development. Journal of Monetary Economics, 32(3), 543–573.

    Article  Google Scholar 

  • Rybczynski, T. M. (1955). Factor endowment and relative commodity prices. Economica, 18(2), 336–341.

    Article  Google Scholar 

  • Sacerdoti, E., El-Masry, G., Khandelwal, P., & Yao, Y. (2005). Mauritius challenges of sustained growth. Washington, DC: International Monetary Fund.

    Google Scholar 

  • Sachs, J. D., & Warner, A. M. (1995). Economic reform and the process of economic integration. Brookings Papers of Economic Activity, 1995(1), 1–118.

    Article  Google Scholar 

  • Sachs, J. D., & Warner, A. M. (1997). Fundamental sources of long-run growth. American Economic Review, 87(2), 184–188.

    Google Scholar 

  • Sala-I-Martin, X. (1997). I have just run two million regressions. American Economic Review, 87, 178–183.

    Google Scholar 

  • Schultz, T. (1961). Investment in human capital. American Economic Review, 51(1), 1–17.

    Google Scholar 

  • Sheehey, E. J. (1992). Exports and growth: Additional evidence. The Journal of Development Studies, 28(4), 730–734.

    Article  Google Scholar 

  • Singer, H. W. (1950). The distribution of gains between investing and borrowing countries. The American Economic Review, 40(2), 473–485.

    Google Scholar 

  • Sobhee, S. K. (2009). The economic success of Mauritius: Lessons and policy options for Africa. Journal of Economic Policy Reform, 12(1), 29–42.

    Article  Google Scholar 

  • Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70, 65–94.

    Article  Google Scholar 

  • Squalli, J., & Wilson, K. (2011). A new measure of trade openness. The World Economy, 34(10), 1745–1770.

    Article  Google Scholar 

  • Subramanian, A. (2009). The Mauritian success story and its lessons. United Nations University, UNU-WIDER, Research Paper, 2009/36.

    Google Scholar 

  • Subramanian, A., & Roy, D. (2003). Who can explain the Mauritian miracle: Meade, Romer, Sachs or Rodrik? In D. Rodrik (Ed.), In search of prosperity: Analytic narratives on economic growth. Princeton University Press: Princeton.

    Google Scholar 

  • Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334–361.

    Article  Google Scholar 

  • Toye, J., & Toye, R. (2003). The origins and the interpretation of the Prebisch-Singer thesis. History of Political Economy, 35(3), 437–467.

    Article  Google Scholar 

  • Wacziarg, R., & Welch, K. H. (2008). Trade liberalization and growth: New evidence. World Bank Economic Review, 22(2), 187–231.

    Article  Google Scholar 

  • Weiss, J. (2010). Changing trade structure and its implications for growth. The World Economy, 33(10), 1269–1279.

    Article  Google Scholar 

  • Wignaraja, G. (2002). Firm size, technological capabilities and market-oriented policies in Mauritius. Oxford Development Studies, 30(1), 87–104.

    Article  Google Scholar 

  • Yanikkaya, H. (2003). Trade openness and economic growth: A cross-country empirical investigation. Journal of Development Economics, 72(1), 57–89.

    Article  Google Scholar 

  • Сое, D. T., Helpman, E., & Hoffmaister, A. W. (1997). North-South R&D spillovers. Economic Journal, 107(440), 134–149.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Accounting, Economics & Finance, University of KwaZulu-Natal, Durban, South Africa

    Vanessa T. Tang

  2. University of Johannesburg, Johannesburg, South Africa

    Fiona Tregenna & Johane Dikgang

Authors
  1. Vanessa T. Tang
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Fiona Tregenna
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Johane Dikgang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Vanessa T. Tang .

Editor information

Editors and Affiliations

  1. School of Accounting, Economics & Finance, University of KwaZulu-Natal, Durban, South Africa

    Vanessa T. Tang

  2. Department of Conflict Resolution, Human Security & Global Governance, University of Massachusetts, Boston, MA, USA

    Timothy M. Shaw

  3. University of KwaZulu-Natal, Durban, South Africa

    Merle G. Holden

Appendix

Appendix

Table 3.7 Annual data description and sources
Full size table
Table 3.8 Diagnostic tests: 2SLS results
Full size table
Table 3.9 Diagnostic tests: OLS results
Full size table
Table 3.10 Unit root results
Full size table

Rights and permissions

Reprints and permissions

Copyright information

© 2019 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Tang, V.T., Tregenna, F., Dikgang, J. (2019). Trade Openness and Economic Growth in Mauritius. In: Tang, V., Shaw, T., Holden, M. (eds) Development and Sustainable Growth of Mauritius. Contemporary African Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-96166-8_3

Download citation

Publish with us

Policies and ethics

Search

Navigation