Mauritius

Mauritius achieved what economists once thought impossible: a small island with no natural resources except sugar transformed into Africa's most successful economy. The dodo—that emblematic extinction—proved prophetic, but not in the way most assume. The old economy had to die for something entirely new to emerge.

When Dutch sailors arrived in 1598, they found an island where giant tortoises and flightless birds wandered unafraid—species that had never encountered predators. Within sixty years, the dodo vanished, its extinction accelerated by introduced rats, pigs, and monkeys more than by hunting. The Dutch abandoned the island in 1710, having stripped its ebony forests. France took possession in 1715, renamed it Isle de France, and established what would define Mauritius for two centuries: sugar plantations worked by enslaved Africans. By 1735, the slave population had begun its exponential climb; by the time Britain seized the island in 1810, sugar dominated entirely.

British abolition in 1835 did not end the plantation system—it transformed labor sourcing. Between 1835 and the 1920s, nearly half a million indentured workers arrived from India, creating the demographic foundation of modern Mauritius. The Franco-Mauritian elite retained economic power through sugar estates while Indian-origin Mauritians built political power through numbers. This tension—economic control by descendants of French planters, political control by descendants of Indian laborers—shaped independence in 1968.

The transformation economists call the "Mauritian miracle" began from desperation. At independence, sugar accounted for nearly all exports, unemployment exceeded 20%, and the Nobel laureate James Meade predicted failure for this overpopulated island with no resources. But Mauritius did what others couldn't: it created Export Processing Zones that attracted textile manufacturing, initially using cheap labor but gradually moving upmarket. Cyclone Claudette in 1979 and collapsing sugar prices forced acceleration. By the 1990s, tourism and financial services had joined textiles in a diversified portfolio. The strategy was deliberate ecological succession—moving from primary commodity to manufactured goods to services, each transition building on infrastructure and human capital from the previous stage.

Today Mauritius hosts over 32,000 offshore entities and has positioned itself as the "gateway to Africa" for international investment. Financial services contribute 13% of GDP while tourism generates 10%. The 2024 economic surge saw 6.1% GDP growth, driven by 1.3 million tourists and construction investment. Mauritius ranks 19th globally on the Index of Economic Freedom—first in Sub-Saharan Africa—and has achieved high-income status with GDP per capita around $12,000.

But the dodo economy haunts the miracle economy. Sugar occupies 90% of arable land yet contributes only 3-4% of GDP. Textiles face decline as competitiveness erodes. The population ages rapidly, creating fiscal pressure on the universal welfare system. Brain drain pulls skilled workers abroad while investment in manufacturing falls as a share of GDP. The same insularity that allowed endemic species to evolve without defenses leaves the modern economy vulnerable to external shocks: tourism collapsed during COVID, financial services face regulatory pressure, and climate change threatens the coastlines that attract visitors.

The 2026 trajectory tests whether successive transitions can continue. Mauritius has repeatedly proved skeptics wrong by adapting when adaptation seemed impossible—the dodo economy truly died so the miracle economy could live. Whether that miracle can survive aging demographics, climate exposure, and declining competitiveness in traditional sectors depends on whether one more transition—perhaps to tech services or green energy—can be engineered before current advantages erode.