The expansion of export-oriented enterprises and development in Mauritius

While it is widely recognized that exports, chiefly in the manufacturing sector, are a prospective source of economic growth, the relationship between exports and economic growth and development is still ongoing. This chapter addresses the important question of whether the expansion of the export-oriented enterprises (EOEs) has contributed to the economic development of Mauritius through the use of cointegration analysis and the error correction model (ECM). An investigation into the question of whether there is a short- and long-term causality between manufactured exports (mainly by the export-oriented enterprises – EOEs) and economic development in Mauritius during the period 1987–2015 is presented here. The empirical results show evidence of a positive and significant relationship between the EOEs and development both in the short and the long term. Moreover, a unidirectional causality was reported by the results flowing from the EOEs to economic development. Finally, government expenditure is seen to be an important determinant of development, while the country’s high level of debt is reported to hamper that development.