Globalisation and Mauritius.

Discuss

Name: MOHINI DEVI KUSRUTSING

Course: BSc Business Management Year 3 Semester 1
Course Code:
Student ID number: 130300479

Globalisation and Mauritius. Discuss

Globalisation is a process of interaction and integration among the
population, companies and governments of different nations. In Mauritius
various institutions like politics, socioeconomic status, environmental and
cultural practices are positively and negatively affected by the process of
globalisation. It is of utmost importance to understand the crucial role and
effects of globalisation in Mauritius.
Globalization is a historical process that began with the first movement of
people out of Africa to other parts of the world. Traveling short, then
longer distances, migrants, merchants, and others have always taken
their ideas, customs, and products into new lands. The melding,
borrowing, and adaptation of outside influences can be found in many
areas of human life.
Mauritius was known as the key and the star of the Indian ocean due to
its strategic position on the journey to India and China. Traders considered
Mauritius as a pit stop on their route and thus the popularity of Mauritius
increased over the years.
Mauritius became an important base on the trade routes from Europe to
the east before the opening of the Suez canal. Mauritius promotes itself as
a hub for the Indian Ocean trade. Ships from round the world deliver their
cargo in Port-Louis and load up for onwards trips to Asia ,Europe, Africa
and America. Two hundred years ago ,the island as a thriving French
colony known as the key stop for international ships along the lucrative
trading routes to India and China. Mauritius has indeed evolved and
changed as the island marched through history ,shedding its French and
English colonial powers and turning itself
into a prosperous and
diversified economy that is often held up as an economic success for
Africa. Like the 1780s international trade dominates the Mauritian
economy. Mauritian economic planners in the 1970s set out to diversify
the economy by encouraging export-oriented manufacturing within the
EPZ system. Mauritius is positioning itself as an international hub for trade
and information technology for the Africa and Indian ocean region and is
diversified its routes even further by taking advantage of new export
opportunities into the American market created by African growth and
opportunity act (AGOA).
In the last three decades transactional interactions have been intensified
dramatically from the globalisation of production systems and financial
transfers to the world wide dissemination of information and images
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through the media and mass movements of people , whether as tourists

or migrants workers. Mauritius, being a strategic global business centre
situated in the Indian Ocean region is seen to be one of the most open
and financially sound economies in Sub - Saharan Africa. Mauritius is
being recognised as being an excellent place for doing business. The
countrys adoption of international best practices and sustainable
development policies has been acknowledged by international agencies
such as
organisation for economic co-orperation and development
(oced),the financial Action task force and the world bank. With the dawn
of globalisation , international business is becoming increasingly
popular .Multinational organisations like Kentucky ,coca-cola are the most
profitable in the world. International business affects every aspects of an
individual, s life including religion, food, transport, language ,music and
clothing and also the economical ,political cultural ,social aspects of the
Mauritian people. Multinational organisations like Kentucky ,Coca Cola are
the most profitable in the world. According to the financial times (special
report March 2009),Mauritius enjoys the second most improved economy
over the past years. Mauritius has also the highest standards of livings in
Africa. Globalisation
has opened the door to many benefits for the
Mauritian economy. It has promoted open societies and open economies
and encourage a free exchange of goods and services ,ideas and
knowledge ,create employment, have more quality goods and other
benefits which will be discussed later. On the other hand economic
performance has also suffered ,resulting from its loss of preferential
access to the EU sugar and textile markets and globalisation gives rise to
some other threats which will be discussed later
Drivers of globalisation
Cost Drivers : With globalisation ,the cost of moving products around the
world has significantly reduced. The aim of every entrepreneurs or
businessman is to maximise profits and minimise costs. Therefore
businessman allow production facilities to be located wherever costs are
the lowest and profit the greatest. For example Labour cost is cheaper in
Madagascar than in Mauritius, explaining why Mauritian businessmen
prefer operating in Madagascar.
Market Forces: The world trade and investment have grown rapidly with
many attractive market places opening up in China, india, and eastern
Europe thus leading to the growth of global companies. Multinational
companies such as Kentucky fried chicken and Mc-Donald ,have already
established themselves throughout the world including Mauritius. Thus the
demand for those global products are increasing since customers are also
going global ,i.e they are looking for products ,ignoring the national
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boundaries seeing best price and quality rather than national location.
Moreover some organisations also develop global advertising such as
coca-cola , Reebok, Loreal and the same advertising campaign are
broadcasted throughout the world.
Government drivers: The fact that government has promoted free trade
and reduced trade barriers in Mauritius has contributed towards
globalisation .Government of Mauritius gives incentives to foreign
investors such as tax incentives, payment facilities . Mauritius offers a
stable economic and political environment, modern
infrastructures a
good and reliable judiciary system, and a highly skilled and a dynamic
workforce
.
Mauritius being a member of SADC has to implement the SADC trade
Protocole that is the gradual elimination of custom duties and tariff. The
governments development strategy centers on expanding local financial
institutions and building a domestic information telecommunications
industry. Government of Mauritius offers lots of facilities to offshore
companies. for example the rate of tax applied by the government in the
jurisdiction in which an offshore company is incorporated is either low or
zero. The Financial Services Commission, as an integrated regulator for
non-banking financial services and global
business, has adopted a
business-friendly approach to regulation. The Commissions statutory
functions include promoting the development of the financial services
sector, and we make sure that our regulatory policies and practices do
promote such development. Consequently, Mauritius has attracted more
than 9,000 offshore entities, many aimed at commerce in South Africa,
and investment in India and the banking sector alone has reached over $1
billion. Mauritius, with its strong textile sector, has been well poised to
take advantage of the Africa growth and
opportunity act (AGOA).
Mauritius has attracted US$10.98 billion in foreign direct investment
inflows. Top sectors attracting FDI inflows from Mauritius (from January
2000 to December, 2005) are electrical equipment, telecommunications,
fuels, cement and gypsum products and services sector (financial and
non-financial). A transparent and well-defined investment code and legal
system have made the foreign investment climate in Mauritius one of the
best in the region. Taxation is competitive and efficient.
Information technology and the internet:
Information technology is a
driving factor in the process of globalisation.
In fact globalisation
accelerates the change of technology. In nearly every corner of the world,
from Mauritius to Paris , one cannot enter a caf or walk down the street
without seeing someone talking ,texting ,or surfing on their cell phones,
laptops or tablet. Multinational company is able to reach customers within

seconds and also manage operations throughout the world.IT sector has
encouraged a lot of companies to go global.
Effects of international business in the local context
The main effect of international business is foreign investment.
International investment is important to most economies and can be
particularly vital for developing countries. Mauritius being a developing
country has both the demand for good and service and labour and natural
resources to supply it. But very often there is a lack of capital necessary to
begin producing .Therefore foreign investment provides essential capital
to help entrepreneur to start their business. Foreign direct investment is
an investment in a business by an investor from another company for
which the foreign investor has control over the company purchased.
Businesses that make foreign direct investment are often called
multinational corporations. Foreign direct investment is be a source of
external capital for a developing country like Mauritius and can lead to
economic development. Foreign direct investment has been very
successful in Mauritius, to its economy and to both rural development
(luxurious hotels on the coast) and urban development (building and
construction at Ebene). For example , if a foreign investors decide to set
up a factory in Mauritius ,they will have to utilise at least some local
labour ,equipment and materials to construct it .Once the factory is
constructed ,the factory will hire local employees and use local raw
materials and services . Consequently new jobs will be created and foreign
money will be pumped into the economy and some new businesses will be
created. Overseas investments have also helped Mauritius to shift from
over dependence on agriculture to a diversified and dynamic economy
with new sectors of focus such as manufacturing , tourism ,and financial
services. This has a positive effect on the economy of Mauritius.
The globalization of the production and distribution of goods and services
is a welcome development for many people in that it offers them access
to products that they would not otherwise have. ,For example there is s
free flow of all kinds of vechicles in Mauritius BMW ,Mercedes ,Toyota
,Saab etc. However, some are concerned that the changes brought about
by globalization threaten the viability of locally made products and the
people who produce them. For example, the new availability of foreign
foods in a marketoften at cheaper pricescan displace local farmers
who have traditionally earned a living by working their small plots of
family-owned land and selling their goods local. Globalization, of course,
does more than simply increase the availability of foreign-made consumer
products and disrupt traditional producers. It is also increasing
international trade in cultural products and services, such as movies,
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music, and publications. The expansion of trade in cultural products is

increasing the exposure of all societies to foreign cultures. And the
exposure to foreign cultural goods frequently brings about changes in
local cultures, values, and traditions. Although there is no consensus on
the consequences of globalization on national cultures, many people
believe that a peoples exposure to foreign culture can undermine their
own cultural identity.
International business leads to international production where two or
more different production companies are working . It refers to the
possibility of sourcing of goods and services from different locations
around the world in order to take advantage of national differences in the
cost and quality of factors of production. For example If a firm is producing
t-shirts,ra-materials for t-shirts are produced around the world for example
cotton in India ,jerseys fabrics from China ,dyes from Madagascar, cheap
labour in Mauritius. In addition ,increase in the production capacity due to
an expansion in sales in foreign markets ,allows firms to benefit from
economies of scale.
Production life cycle: When a product is introduced to the domestic
market, responding to local market demand for such products ,We classify
this as the initial production step of new products. As the products evolve
in the market, its demand also spread across countries ,domestic market
becomes saturated and finally local firms decide to operate internationally
inorder to generate more revenue. Thus we can say that the products is
experiencing growth as shown in the product life cycle. When the product
matures , and become saturated ,cost of producing the product become
an important issue to the producer as he will expand production to export
to other countries.
As production capacity is expanded ,Producer will shift to a low cost
producing country and finally the developing country will become net
exporter to those industrialised countries who previously were the first to
enjoy these products. Countries trade for goods that they can produce
themselves but which are more cheaply made elsewhere. For example In
Mauritius we import sugar even though, we produce sugar as it costs
cheaper for Mauritius to import refined sugar than to refine it locally.
Influence of globalisation in the local business environments
Globalisation is a leading concept which has become the main factor in
business life during the last few decades. It affects the economy ,
business life and society and environment in different ways. In Mauritius
globalisation leads to increased competition as it is much difficult to
operate at international level rather than national level
. Nowadays
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customers have a large multitude of choices in the market as globalisation

has facilitated the movements of goods and services throughout the world
at low cost.

One of the most striking manifestations of globalization is the use of new

technologies by entrepreneurial and internationally oriented firms to
exploit new business opportunities. Our local business environment is now
using electronic commerce commonly known as e-commerce or ebusiness .It is the trading of good and services using computer network
such as internet. Local customers are now using on line shopping which
allows consumers to directly buy goods and services from a seller over the
internet using a web browser.
E-commerce has a faster buying and selling procedure as well as easy to
find products. It is also easier for businessman to start and manage a
business. Customers can easily select products from different providers
without moving around physically. However there is no guarantee of
product quality
With globalisation, local business environment has to use the latest
technology for increasing their sales and product quality.. These
companies have to have efficient technology management and efficient
research and development management as they have to compete ith
global markets.
Culture: Multinational corporations promote a certain kind of consumerist
culture, in which standard commodities promoted by global marketing
campaigns create similar lifestyles for example Coca-Cola.
Benefits of international trade
International trade is necessary to achieve the gains that international
specialisation make it possible. Trade allows each individual ,region or
nation to concentrate on producing those goods and services that it
produces relatively efficiently while trading to obtain goods and services
that it would produce less efficiently than others. for example Places with
lots of sunshine and sandy beaches specialise in the tourist trade and
cool regions can produce dairy products and wool. The cool region is said
to have an absolute advantage over the sunny region in the production of
dairy products and wool when an equal quantity of resources can produve
more dairy products and wool in the cool region than in the sunny region..
Large investment of foreign capital has created job opportunities in the
IT/BPO sector that has benefitted unemployed persons. The number of
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companies in the IT/BPO sector has increased from less 100 in 2004 to
400 in 2010 employing 18000 professionals fromover in Mauritius.
Globalisation has contributed in the expansion of the tourism industry.
Tourism is the third pillar in the economy of Mauritius after manufacturing
and agriculture. It has contributed significantly to the economic growth of
the country and created 40000 full time jobs.
With international trade a country is able to earn valuable foreign currency
when exporting its goods thus increasing our foreign reserve.
International trade has contributed in increasing the standard of living of
people as more jobs are being created .Moreover since there is a
reduction in imports duties ,Mauritian customers are getting quality goods
at reasonable prices. One examples is the Chinese electronics goods
which are both better quality and lowpriced, have flooded the Mauritian
markets. The availability of imported quality goods at lo rates has led to
improvement of Mauritian people. Even common people are enjoying
goods and services that ere beyond their reach earlier.
International trade removes rivalry between different countries and
promotes international peace and harmony .It creates dependence on
each other, improves confidence and good faith. It also fosters exchange
of culture and ideas between countries having greater diversities. A better
way of life, dress, food, etc can be adopted from other countries.
International trade enables us to face emergencies. In case of natural
calamity goods can be imported to meet necessaries.
Politically, globalisation has brought Mauritius with more nations into the
decisions-making process on international issues. For example Mauritius is
a member of different international organisations the Indian Ocean
commission, the common market for eastern and southern Africa
countries(COMESA), the southern Africa Development community (SADC)
and the world trade organisation (WTO)
International trade and Globalisation do not always amount to blessings.
With globalisation, the world of international business has progressed at a
fast pace and foreign companies often employ unfair means to get hold
over the market. They offer better bargain ,gifts and spend huge amount
of money on publicity. All these encourage Mauritian people to spend
rather than saving their money.
Another major drawback of globalisation is a deficit in the balance of
payments. Mauritius is facing a deficit in its current accounts of 36.2
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billions in the balance of payment as published by the bank of Mauritius

fiscal year 2012-13.Mauritius are importing more goods and services from
Asian countries rather than exporting. Moreover ,about 650,000 tons of
sugar was exported to European Union at preferential rates through the
ACP/EU sugar protocol. But unfortunately, the EU has decided to remove
the preferential rates in 2008.This cut had translated into lower earnings
of approximately 4 billon rupees. Mauritian sugar producers are finding it
difficult to compete on the international market their production costs are
much higher than the world market price. The local textile sector is also
finding it difficult to compete with other exporting countries including
China and India
Globalisation may increase inequality. The major concern for developing
countries is economic liberalisation. Developing countries are at the mercy
of multinationals. International investment leads to changes in the use of
technology and may shift production in lower skill sectors into developing
countries that have lower prevailing wage levels. The lowest wages may
also be falling in industries struggling to compete with new imports, while
higher-paying export industry jobs are increasing in number but remain
unavailable to the unskilled labour force. Moreover firms will shift
production to developing countries where they can benefit from cheap
labour causing an increase in unemployment in developed countries.
Textile factories can easily replace Mauritians workers with Bangladeshi or
chinese workers for lover wages.
With globalisation ,the risks of HIV/aids, environment disaster and
computer viruses have all grown with the rapid movement of people ,
goods and information.
In Mauritius , the amount of resorts and hotels is increasing every year to
accommodate the increasing number of tourists visiting the country. The
coastal sites chosen for tourism are largely exploited for their beauty and
exotism. From an environment perspective ,hotels and other tourist
infrastructure are spoiling the coastal landscape and the natural
environment.
lCulture is a major export in the world. It displays and promotes values
and lifestyle worldwide. The "culture consumer" in other countries is
sometimes overwhelmed by American ideas. Some critics argue that
globalisation means
Americanisation as more people around the
world are exposed to the American culture and lifestyle in the food they
eat movies they watch. Imported culture may be a danger to Mauritian
teens as it may replace the local culture.
Conclusion
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Globalisation the increasing integration and interdependence of domestic

and overseas markets has three sides the good side, the bad side,and the
ugly side. Although globalisation is often thought of in economic terms
(i.e global market place),this process has many social and political
implications. Globalisation is usually associated with modernisation. Those
in favour of globalisation thought that societies is becoming richer through
trade and to bring knowledge and information to people around the world
others perceive globalisation as contributing to the exploitation of the
poor by the rich and as a threat to traditional cultures. The global era has
raised many questions related to social, political and workers. Does
globalisation harm workers interest ? Many theoreticians dont believe in
this question. Those against globalisation ,perceive globalisation as the
parallel world between the rich and the poor. Discontent with perceived
disastrous economic and social manifestations of globalisation has led to
large and growing demonstrations at recent intergovernmental meeting
including meeting of world trade organisation,International monetary fund
and world bank.However
we cannot deny that globalisation has
contributing enormously in improving the standardof living of Mauritian
people.

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