Mauritius on track to transform into high-income economy
Finally, only 14 countries were chosen with potential to make it to a high-income economy: Brazil, Chile, Malaysia, Mexico, Serbia, Macedonia, Montenegro, Poland, Botswana, Costa Rica, Antigua and Barbuda, Seychelles, Tonga and Mauritius. (Image: Mauritius Tourist Guide)
Mauritius, along with a few other developing nations, has been found to be on the right path to become a high-income economy.
Incidentally, Mauritius has a last recorded gross national income (GNI) per person of $8,570 by the World Bank in 2012 which qualifies it as an upper middle income economy (where GNI per capita ranges from $4,036 to $12,475), and it aspires to be a high income nation.
Following research conducted by the World Bank on 215 countries, senior research analyst Ehiwario Efeyini of the US Trust Bank of America Wealth Management went through the World Bank data to shortlist countries that have the potential to make it to the elite club of high-income economies.
In order to make the selection, three attributes were considered: already a middle to high middle income country; high standards of governance; and improvements to corporate and securities monitoring agencies post the 2008 financial crisis.
Efeyini then assessed the potential for each to graduate to high-income by its applicability to any of the five transition models that have helped other nations make this transition in the recent past.
This means that the economies are either World Trade Organization members or are members of economic organizations with other countries; rich in natural resources and have a focus on indigenous tech rather than tech imports to build out its knowledge-base, high skill, high pay job market.
Finally, only 14 countries were chosen with potential to make it to a high-income economy: Brazil, Chile, Malaysia, Mexico, Serbia, Macedonia, Montenegro, Poland, Botswana, Costa Rica, Antigua and Barbuda, Seychelles, Tonga and Mauritius.
It may be noted that, of these, the twin-island nation of Antigua and Barbuda has already made it to the high-income nation category according to the World Bank standards, even with a GDP per capita which is marginally under $13,000, the cut-off point for a nation to make it to the rich list.
Out of the remaining 13 countries, three sub-classifications were made: those with high potential to make it to a high-income nation – covering Mauritius, Seychelles, Mexico, Chile, Malaysia and Poland,; those with middling potential to make the transition – covering Brazil, Serbia, Montenegro, Macedonia and Botswana; and finally, those with low potential to make the strategic shift – covering Costa Rica and Tonga.
However, the report also served to identify issues that can come in the way of the Indian Ocean Island’s journey to a high-income economy.
Accordingly, the report went on to make the telling comment that even though Mauritius does have a stock exchange, it`s not an easy market for investors to put money to work. For instance, there are no Mauritius exchange traded funds. Retail investors are locked out and need to find mutual funds that have diversified into Mauritius securities.
The report went on to note that, in order to move away from subsistence levels of income, countries simply need to use produce more efficiently; but, once the easy gains have been notched up, the journey gets progressively tougher.
The report then went on to suggest ways to reach higher levels of income for economies which might find themselves stuck in a middle income trap.
It suggested that conditions need to be created for a more competitive, entrepreneurial, productive and, ultimately, high-income economy without falling into the so called ‘middle income trap’.
“In a word, governance is the perennial issue that separates emerging from developed and low- or middle- from high-income economies,” Efeyini says.
Finally, if Efeyini is correct, and these countries increase their wealth in the years ahead, it can only do wonders for assets held in those countries.