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The Port Of Durban From An Economics Perspective Economics Essay

3.1 Introduction This chapter will examine the Port of Durban from an economics perspective and will seek to expand on the general theory presented in the literature review and apply it specifically to the Port of Durban. This chapter will also serve as a foundation for the proceeding chapter which will analyse the various CBA options and data for Durban. The ports significance and impact will be examined in the context of the South African and local economy through its income and employment generating effect. Though the quantity of cargo moving through a port is important, of more interest is the type of cargo that a port focuses on.
3.2 The South African Port Sector Before examining the Port of Durban in isolation, it would be prudent to briefly discuss the South African Port scenario in a broader sense. In South Africa, ports are considered national assets and are managed by the government run recently by SAPO. South Africa is a major sea-trading nation comprising of approximately 8 trading ports, namely, Durban, Richards Bay, East London, Port Elizabeth, Mossel Bay, Cape Town, Saldanha and the under construction Coega. South Africa has evolved into a major sea-trading nation over the last four or so decades and in 2002 handled 3.6% of world sea trade by volume. In terms of ton miles or real activity, this figure increases to 6% of global trade, placing the country within the top 12 globally and resulting in a global maritime activity share that is more than 20 fold its global GDP share. Sea trade constitutes more than 90 percent of trade in South Africa and ports play a critical social and economic role both nationally and regionally. The majority of the port activity is concentrated on the east coast of South Africa. A stark illustration of this fact is that Durban and Richards Bay together make up 76% of sea trade in the country. Traffic growth in the 1990’s was derived from two primary regional points and sources, namely Durban from a general cargo perspective and Richard’s bay from a raw materials perspective. Richards Bay, which deals primarily in bulk goods, such as coal, ore and steel, has seen its annual tonnage increase from 55 million tons in 1989 to in excess of 90 million in 2000. Viewing perceived value in terms of tonnage is a flawed approach since in terms of economic linkages and value-adding, handling a ton of coal is not the same as handling a ton of refined goods. The figure below illustrates the breakdown of sea trade activity by port in South Africa. It can be seen clearly that Durban and Richards Bay are giants in comparison to the other ports. (Chasomeris, 2003 and Jones, 2002)
Fig 17: Total Traffic Volume in South Africa Source: Department of Transport, 1998 and Jones, 2001 The South African Ports sector experienced significant capital intensive investment in the 1970’s and 1980’s, which was biased towards the bulk shipping sector. However, world trends have seen a migration towards containerisation and unitisation and South Africa is no exception, with the country utilising containers for the first time in1977. Up until 1990, the available capacity could cater for national traffic levels of approximately 1 million TEU’s level. The lack of adequate container capacity, combined with growing demand, brought with it a multitude of problems. On the demand side, South Africa became a democracy and re-entered the globalised world, resulting in a noticeable rise in seaborne container volumes, due to liner carriers returning to the South African trades and increased trade liberalisation. The upsurge in volumes produces inevitable negative consequences of delays and vessel queues. By 2000 the combined amount of annual TEUs handled in South African ports was 1.8 million and this was encompassed using with the same basic container quays that had been constructed in 1977. There was some limited capital investment in strategic area’s in the 1990’s, such as cargo extensions to bulk and neo-bulk facilities in Richards Bay. The new millennia brought with its bolder and more ambitious port investment initiatives. A new industrial hub status port in the Eastern Cape, which was earlier envisioned but never actioned upon, was now being constructed. Secondly, the Durban general cargo infrastructure has received significant upgrades and extensions such as extensions to landside facilities as well, deepening and extending cargo handling superstructure and infrastructure as well as deepening and widening the harbour entrance. Because of the age and mismatch of the cargo handling infrastructure, productivity has lagged that of international levels, resulting in congestion that is a constant feature of local ports. There were also supply side issues to deal with such as liner route becoming more specific and centred around hub status ports. As such, hub status ports have to provide capacity that exceeds national demand, making attainment of hub port status difficult in capacity constricted scenarios. This is compounded by the reluctance of ship-owners to migrate shorter routes such as Port Elizabeth in South Africa. South African ports relative competitive stance with their southern hemisphere counterparts can be gauged from the table below. Looking at both indicators, South African ports emerge as clear leaders on both the African and Southern Hemisphere front. Richards Bay is ranked first on the table in terms of total traffic, as it has a large amount of coal and other bulk cargoes passing through its doors. Durban, although ranked 3rd overall, is ranked 1st in the container category it is clear that Durban is the leading multi-purpose port in South Africa and the Southern Hemisphere. (Jones, 2003; Jones, 1997; Department of Transport, 1998 and Lawrence, 2000)
Figure 18: African and Southern Hemisphere Port Traffic Port Total Port Traffic
(m tons)
Rank
Container
Traffic
(TEUs 000s)
Rank
Richards Bay
91.5 1 5 15 Newcastle
73.9 2 9 14 Durban
49.7 3 1291 2 Santos
43.1 4 945 4 Sydney
24.6 5 999 3 Melbourne
22.3 6 1322 1 Casablanca
19.8 7 311 9 Abidjan
14.6 8 434 7 Auckland
13.3 9 561 6 Cape Town
11.8 10 395 8 Lagos
9.1 11 1782 11 Mombasa
8.9 12 219 10 Buenos Aires
7.8 13 716 5 Dakar
7.2 14 149 13 Port Louis
4.7 15 161 12 Source: ISL, Bremen, 2001, Jones 2003 (Selected ports, 2000)
3.3 History of the Port of Durban The port is situated on the east coast of South Africa at coordinates 31o 02’E in longitudinal and at 290 52’S in latitudinal terms. Trading activities in the port of Durban can be traced back since 1824, with the port quickly gaining a favoured status among seafarers amd traders due to it being a natural harbour. Interest in Durban Bay grew tremedously in the early years of its operations, with imports doubling between 1849 and 1850. This, coupled with larger vessels, resulted in a much needed expansion to the harbour entrance. Over a century later, Durban has 63 berths and 6 repair berths, which can be broadly seperated into five main segments of the port. The first segments has two piers and has a multipurpose function thats handles general, parcel and unitised cargo. The second segment of the port is located by Salisbury Island and Island View. A third segment is the Maydon Wharf area, which contains private terminals as well as terminals controlled by Transnet. The Point terminal area and the Bayhead area’ are the fourth segment and fifth segment respectively. Below is a picture of the port of Durban that illustrates the five segments discussed.
Figure 19: The Current Layout of Durban Port Source: Google Earth, 2010 3.4 Economic Significance of the Port of Durban As, can be seen in figure 17 above, the logistical strength of the national shipping infrastructure, rests primarily in KZN. The port of Durban, like all other public ports in South Africa, is an example of a port under national jurisdiction, its official name being the National Ports Authority (NPA), thereby allowing centralised planning. Durban is a port of choice because of its infrastructure in place enabling it to be a full service general cargo and container port . In addition to this, durban is well serviced by an adequete rail and road infrastructure, which links it to the economic hub of South Africa, Gauteng. In addition to this, the KZN region is a large economic region in itself and is second only to Gauteng in South Africa. Figure 21 below, illustrates a snapshot of the South African port sector for 2009. In terms of total cargo tonnes handled, Durban has 20% of the market and is dwarfed by Richards which has more than double Durban’s tonnage handled, at more than 40%. Richards Bay, which was constructed in the 1970’s, has had an enormous impact on Durban’s port planning and functions. The primary reason for its existence was to serve as high-mass export point for raw materials such as coal. Richards Bay also diversified its goods base to include, at a lower cost, goods types that were traditionally the domain of Durban such as neo-bulk cargo like steel, alloys and forest type products. At the time of Richards Bay construction, Cape-sized bulk vessels were too large to enter Durban. (Jones, 2003 and Stats SA, 2010)
Figure 21: Port Cargo and Vessel Statistics in South African Ports
RICHARDS BAY DURBAN CAPE TOWN SALDANHA BAY TOTAL SA PORTS Durban as a % of Total TOTAL CARGO HANDLED: 77,631,154
37,419,282
3,058,601
56,475,625
182,735,369
20%
GENERAL CARGO VESSELS: 247
705
220
373
1,648
43%
BULK VESSELS: 1257
930
320
921
3,603
26%
CONTAINER VESSELS: 42
1883
897
784
4,233
44%
TANKERS: 184
646
159
344
1,542
42%
VESSEL TOTAL: 1874
4848
2440
3489
15,879
31%
TOTAL TEUS HANDLED: 6,273
2,395,175
1,382,052
NA
4,334,612
55%
Source: NPA, 2009 (Note table has been edited) Looking again at figure 21 above, it can be observed that even though Durban lags other ports in gross tonnage of cargo, it still has by far the most number of vessels docking. One of the major reasons for this was the emerging dominance of Richards Bay, which forced Durban to concentrate on lower-volume bulk, break-bulk and liquid-bulk. This enabled great diversity within the port in terms of cargo type as well vessel type and quantity. Additionally, vessels that carry break bulk are traditionally far smaller than that of traditional bulk, thus explaining why more vessel docking are in Durban than Richards Bay for the same amount of cargo ceterus paribus. With reference to the figures above, it can be observed that Durban has 43% of total general cargo vessels, 42% of total tankers and 44% of total container vessels. The most important figure, in relation to Durban, is that of TEU’s handled since this is where its dominance and significance come to the fore. Durban has the ideal structure to handle containers and since Richards Bay has inadequate structure for containers, Durban’s dominance in containers was from the outset. Jones (2003) show that a growing international trend of shipping lines with regards to containers is to organise trade and activities around so called “hub” ports which meet and cross at “sub-regional transhipment nodes”. This arrangement is biased for the existence of a single hub type port on the eastern shores of the Southern region of Africa. Since, Durban is the country’s major container port, is well frequented by major shipping lines, has terminal and hub status, it is quite reasonable for it to remain South Africa’s primary container port. The other alternatives on the eastern sea board are not really competitors when it comes to containers. Richards Bay is primarily a bulk port and does not have the adequate infrastructure to extend its activities beyond this scope. Maputo has large deviation costs from traditional shipping lines as well as limited depth and capacity. Port Elizabeth has weak land side links to Gauteng as well as having limited local demand to justify a major port there. (Suykens, 1984; Jones, 2001 and Jones, 2003)
Even though Durban lags Richards Bay in terms of pure tonnage, this in itself is a poor yardstick of economic impact and significance since no account is taken of cargo value or employment propensities of infrastructure required. Generally, in terms of economic and employment impacts, general cargo provides the most followed by dry-bulk cargo and lastly liquid-bulk. Bearing this in mind, comparing two ports only on the basis of tonnage is frivolous and more specifically in Durban’s case it can be seen that from a ports perspective, it handles higher valued cargo than Richards Bay. This is especially evident when one considers one job is created per 47000 tonnes of cargo handled at Richards Bay, whereas in Durban, one job is created per 7500 tonnes of cargo handled. Figure 22 below further illustrates the economic richness and opportunity that containers present. Additionally, in 2004 an average container vessel spent R2.94 million per port call, far exceeding the R1.8 million for a breakbulk cargo vessel as well as exceeding the R1.3 million for a bunker vessel. (Suykens, 1984; Jones, 2001, Tempi, 2006 and Jones, 2003)
Figure 22: Port of Fremantle’s Economic impact by Cargo Type
Cargo Type Output ($m)
Value Added ($m)
Household Income ($m)
Employment (no.)
Direct Effects Containers
177
121
73
1331
Other General Cargo
45
30
18
340
Liquid Bulk
35
20
8
158
Dry Bulk
83
44
25
459
Other
1
1
0
7
Total
341
215
124
2294
Direct Indirect Effects Containers
382
240
125
3195
Other General Cargo
96
59
31
800
Liquid Bulk
67
38
17
441
Dry Bulk
181
100
50
1339
Other
2
1
1
19
Total
728
440
223
5792
Source: Bureau of Economic Transport Economics Australia, 2000 As is the case with South African ports, the port of Freemantle in Australia, shown in figure 22 above, derives the most economic prosperity from containers from both a direct and indirect perspective. Even though containers account for only 13% of activity in the port, they contribute 55% to economic activity. Consequently, containers have the greatest employment generating effects, followed by dry bulk and the liquid bulk. Though dynamics differ from port to port in terms of infrastructure, administration, socioeconomics and geography, a broad consensus can be reached from the figure above encompassing a kind of “rule of thumb” approach. As such, containers offer the most economic opportunity for a port and since Durban already focuses on this area, it would be prudent to continue with this trend. Thus, it is quite evident that both the present and future comparative advantage of Durban port rests in the realm of containerised cargoes due to reason shown above. Also, since the port is so aptly designed for and dependant on containerised cargo, the removal of this great economic magnifying source would be particularly devastating on the Durban region as a whole. (Jones, 2001 and Jones, 2003)
Looking at figure 23 below, it can be seen that the Durban port has seen an extraordinary increase in containers, with annualised growth of between 8% and 10% for the last decade. As was shown above, containers form an integral cog in the Durban port machine from an economics and social perspective since they provide a source of trade, income and employment. Container growth has been driven by a range of factors such as rising volumes of world trade and reduced trading barriers, the migration of cargo to containers from other handling systems, South Africa’s improved economic performance and rising per capita incomes. The facets examined below are containers landed, shipped and empty and as the diagram shows, all three categories have increased from 2002-2007. The growth between 2002 and 2007 is nothing short of spectacular, but this growth has not come without costs and constraints. However, needing containers and providing adequate space for them are two entirely different things and this will be explored below. Also, we have seen that general cargo is the richest form of cargo and has the largest employment benefits. South Africa needs extended general cargo capabilities and in this respect, Durban’s needs are similar to national needs. It is thus clear that Durban needs the container industry for continued survival and prosperity, but whether the container industry needs Durban as much remains to be seen. (Jones, 2003)
Figure 23: Total TEUs Landed, Shipped

Dissertation Unemployment And Economic Growth Economics Essay

THE REPUBLIC OF MAURITIUS is a democratic country whose whole population has familial origins elsewhere such as, India, Africa, China and Europe. The countrys economy was surviving by the production and export of sugar. After World War II, economic and social conditions contributed to the political conflicts. The expectations for the Mauritians began to rise as the provision of pension, health, education and other public welfare services extended. In 1940s and 1950s diseases like malaria was decreasing resulting in an increase in the life expectancy of poor people, hence the population was increasing by 3 percent per year. But however there was a decrease in population growth rate between 1960s and 1970s as the Mauritians was taking family planning measures but labor force continued to increase rapidly. The figure of the registered unemployment stood at more than 12 percent of the work force on the before of independence, that is, in the year 1968. There were a rapid growth in the tourism and the manufacturing sector after the independence in 1968, the government was diversifying the economy resources in the tourism and manufacturing sector. Despite many differences, the major political parties have worked successfully toward the country’s economic welfare.
Mauritius has moved from a first and foremost agricultural monocrop economy dominated by high unemployment, low salaries, and boom-or-bust cycles to one marked by manufacturing, tourism, and expanding financial services. Mauritius is established democracy with positive human rights record and regular free elections. The country has attracted considerable foreign investment and has earned one of Africa’s highest per capita incomes. As Mauritius faces the future, it can look back on its dazzling economic performance in the 1980s and attempt to build on that success by continuing its tradition of political stability, foresight, and prudent development planning. To examine the health or strength of an economy, economists naturally look at its growth rate, unemployment rate, inflation rate, balance of payment, currency exchange rate. The welfare of an economy is not only the concern of economists and politicians but for the population also, that is, the state of the country’s performance affects its entire population. Mauritius has recorded very high economic growth rate and constant increases inhuman development indicators due to a good mixture of fine macroeconomic policies and strong institutions as from the year the 1970s.
Economic Growth of Mauritius In general terms, economic growth is defined as a positive change in the level of production of goods and services by a country over a certain period of time. Whereas, Nominal growth is defined as economic growth including inflation, while real growth is nominal growth minus inflation.
Economic growth is usually brought about by technological innovation and positive external forces. Gross Domestic Product (GDP) is the measure most often used to assess the economic well-being of a country. Besides measuring the pulse of a country, it is the figure used to compare living standards in different countries. Economic growth is measured as a percentage change in the Gross Domestic Product (GDP).The graph below is the GDP growth rate on an annual basis adjusted for inflation and expressed as a percentage for Mauritius.
As you can see below, the graph above can be divided into 3 decades. The first decade is the year 1980s that is year 1980 to 1989. The second one is the 1990s, that is year 1990 to year 1999. And the final one is the year 2000 to the year 2011.
Let us study theon to providing the benefits of a FTZ, these zones offer other incentives such as exemptions from certain taxes and business regulations. In 1986 Mauritius had its first trade surplus in twelve years. Tourism also boomed, with a concomitant expansion in the number of hotel beds and air flights.
In the second decade, the value of EPZ exports in 1993 was approximately Rs15.8 billion. Since the year 1975 Mauritius has had an export quota of about 500,000 tons per year under the Sugar Protocol of the Lomé Convention, the largest share of all nineteen signatories. The guaranteed price in 1991 was nearly twice the world free market price. In 1992 Mauritius exported 597,970 tons of sugar. The GDP rate was approximately 10.2 percent in the year 1992. Mauritius has been largely dependent on trade taxes for revenue hence import duties have continuously been an important source of revenue. By 1993 however, all export taxes were abolished. Eventually, spanning over the years 1994-2001, a series of tariff reforms have emerged: import levy was abolished, the maximum customs duty shrank from 600% to 100%, discriminatory tariff regime against “non-scheduled” countries (minor trading partners of Mauritius) trade was eliminated, and, duties were minimized on more than 4000 items. Resulting to increase imports in Mauritius for the 1990s.
New challeng GDP Growth rate more clearly, in the first decade, that is 1980s, the GDP rate was approximately 11.3 percent. Four cyclones strike on island between December 1979 and March 1980, sugar production plummeted resulting in a decrease in GDP rate by approximately 9 percent. Trying to reform the country with a third IMF program, by the government of Mauritius followed by its first structural adjustment loan from the World Bank in 1981, but the immediate results were disappointing. The economy of Mauritius experienced stable growth, declining inflation, high employment, and increased domestic savings thanks to an extensive political consensus on broad policy measures. The Export processing zone (EPZ) came into its own, surpassing sugar as the principal export-earning sector and employing more workers than the sugar industry and the government combined previously the two largest employers. Export processing zone is a type of free trade zone (FTZ), set up generally in developing countries by their governments to promote industrial and commercial exports.
In addities have been facing Mauritius and its economic performance has quite deteriorated since the year 2000, resulting from its loss of preferential access to the European Union (EU) sugar and textile markets. In the textile sector, Mauritius is facing increased competition from cheaper Chinese and other East Asian country exports. The GDP growth rate was approximately 1.9 percent. The unexpected low growth rate is due to the poorer performance of the four main economic sectors. First of all, sugar production in the year 2005 was expected to be around 520 000 tonnes, instead of 550 000 tonnes, this decrease was because of the excessive rainfall in September 2005. Secondly, due to the end of the textile trade quotas in January 2005, the export processing zone (EPZ) has contracted by approximately 13 percent, coupled with competition from low-cost textile producing countries. Thirdly, the construction sector contracted by 3.7 percent in 2005, this was mainly because of delays in or the non-execution of several projects. Fourth one is because, the non-EPZ manufacturing sector grew by only 2.5 percent as a result of increased competition from imported goods faced by the domestic-oriented manufacturing industries.
A 5-year Sugar Sector Strategic Plan (2001-05) was implemented to reorganize and rationalize the sugar industry. The goal was to decrease the number of sugar mills from 14 to 7 or 8, so as to benefit from any increasing returns to scale, to reduce by up to 7 000 the current labour force of 30 000. The government seized the bull by the horns in the 2006/7 budget and raised the prices on price controlled items such as medicines, petrol, transport and food items and announced its intention to liberalize markets by abolishing price fixing entirely. To further reduce the budget deficit import and excise duties were raised or added and measures were taken to improve revenue collection and reduce tax avoidance. In 2006/7 further cuts in current government spending were made. The economy proved to be remarkably resilient, for real GDP growth, which had barely averaged 3.5 percent between 2001 and 2005, quickened from 3.1 percent in 2005 to 3.6 percent in 2006 and then to 4.5 percent and 4.8 percent in 2007 and 2008 respectively.
Unemployment Rate of Mauritius Even with a strong economic growth, a “U”-curve unemployment trend can be observed in Mauritius. The economy continued to stagnate when Mauritius became independent from Great Britain in 1968 and the unemployment problem remained sensitive. The years which followed since the independence were extremely difficult and were marked by a high unemployment rate reaching 27 percent at times. Unemployment is defined as a state where someone of working age is not able to get a job but would like to be in full time employment. That is, it is an economic condition marked by the fact that individuals actively seeking jobs remain unhired. Unemployment is expressed as a percentage of the total available work force. The level of unemployment varies with economic conditions and other circumstances. In the Mauritian context unemployment refers to the share of the labor force that is without work but available for and seeking employment, according to International Labour Organization (ILO). Definitions of labor force and unemployment differ by country.
The diagram below shows the unemployment rate from the year 1980 to 2011. Unemployment Rate (% of Labour Force) for Mauritius in year 2010 is 7.453 percent. Mauritius was listed No. 55 in world rankings according to Unemployment Rate in year 2010. The world’s average Unemployment Rate value is 4.82 % hence; Mauritius is 2.63 more than the average. In the previous year, that is 2009, Unemployment Rate for Mauritius was 7.33 percent. Unemployment decreased from 21 percent to less than 4 percent between the 1980s and the 1990s, however this phenomenon was reversed and the rate augmented to around 10 percent in the 2000s.
The diagram below is the graph of unemployment rate in Mauritius divided into 3 decade. As mentioned earlier first decade represent the year 1980 to 1989, decade 2 represent the year 1990 to 1999 and finally the decade 3 will be representing the year 2000s, that is, year 2000 to 2011.
In the first decade, with a high unemployment rate in 1980s, the increased entry of women into the labour force is a major reason for this rapid labour force growth. Unemployment rate of Mauritius was approximately 19% in the year 1983. Female labour force participation has increased from 25 percent in 1983 to 36 percent in 1995, due in part to the demand of EPZ textile enterprises which prefer women workers. In 1970, the government issued a policy paper for 1971-1980 decade, prioritizing job creation measures.
In the year 1990s, that is, the second decade, the unemployment rate increases from approximately 2.8 percent to 7.6 percent. The high unemployment rate in recent years along with high inflation rate has contributed to a loss of purchasing power and in particular with respect to women as indicated by unemployment trends. Since the early 1990s, the financial services and tourism industries have emerged as new growth sectors, requiring higher skilled workers. In 1999, the unemployment rate was 11.3 percent for female workers and 4.0 percent for male workers compared to 2.2 percent for females and 3.0 percent for males in 1991.
The Central Statistical Office estimates indicate that unemployment was surging around 8 percent at June 2000, the highest recorded since 1986. While the male unemployment rate has increased from 3.1 percent in 1990 to 5.7 percent in 2000, the rate for women jumped from 2.3 percent in 1990 to 12.3 percent in 2000. In periods of recession women are among the first employees to lose their job. There were two new pillars were developed during the 1990s in Mauritius, that is, the financial services and high tourism sectors, reflecting to a large extent deliberate government industrial policy. These new pillars were mainly sponsored through a redirection of domestic savings that were accumulated in the traditional sectors. The government supported the new pillars by providing their basic infrastructure and incentives to investors.
In the third decade, unemployment rate of Mauritius increases approximately from 6.5 percent to 9.5 percent in the year 2000 to 2005. As from the year 2000, Mauritius was facing new difficulties and its economic performance has deteriorated, resulting from its loss of preferential access to the EU sugar and textile markets. Recent poor economic performance has meant that the unemployment situation and public finances have deteriorated. Unemployment has risen steadily since 2000 to peak at around 10 percent in 2005. In the textile sector, Mauritius is facing increased competition from cheaper Chinese and other East Asian country exports. There were several reasons behind the poor performance of the economy in the 2000s.
First, because of the extreme rainfall in the year 2005, there were a decrease in sugar production by around 30 000 tonnes. Moreover the area under sugar cultivation has fall by approximately 4000 hectares between 2001 and 2005. Secondly, the export processing zone (EPZ) has decreased by 13 percent due to the end of the textile trade quotas in January 2005, coupled with competition from low-cost textile producing countries. Third, the non-EPZ manufacturing sector grew by only 2.5 percent as a result of increased competition from imported goods faced by these domestic-oriented manufacturing industries.
But however the unemployment rate has decreased from around 9.5 percent to 7.5 percent from the year 2005 to 2010. Gross foreign earnings from tourism were amounted to around 23 billion rupees in year 2004. The first semester receipts for 2005 were 5 percent higher in rupee terms compared to the first semester of 2004. Finally, the number of employees in large hotels has increased by 12 percent between March 2004-2005. After having pursued structural reforms since 2006, Mauritius has gained a strong policy and institutional environment, earning first position in Africa on many fronts. Given the problems in other areas of the economy of Mauritius, tourism has partly contributed either directly or indirectly to the reduction of the unemployment problem and has also generated economic growth. According to the World Tourism Barometer, world tourism recovered more strongly than expected from the adverse impact of the global financial crisis and economic recession of 2008 and 2009.Hotels and restaurants sector grew by 6.0 percent in 2010 as compared to a contraction of 5.9 percent recorded a year earlier when the sector suffered from weak economic conditions. The manufacturing sector recorded a growth rate of 2.1 per cent in 2010, same as in 2009.
Conclusion The diagram below shows the graph of GDP Growth rate and unemployment rate. In the year 1983 Unemployment rate were 19.429% and the GDP rate was 5.899%. It is a widely accepted view in economics that the growth rate of the GDP of an economy increases employment and reduces unemployment. This theoretical proposition relating output and unemployment is called “Okun’s Law”. It has been discussed and updated by much economic research this law states that a 1% reduction in the unemployment rate would reduce approximately 3% more output. As you can see in the diagram below, from the year 2003 to 2004 unemployment rate rise from approximately 7.6% to 8.3% but still the GDP rate has increase from approximately 4.2% to 5.5%. One reason for this might be productivity. Productivity in Mauritius increased to 137.90 Index Points in June of 2011 from 133 Index Points in June of 2010, according to a report released by the Central Statistics Office, Mauritius. Historically, from 1996 until 2011, Mauritius Productivity averaged 110.81 Index Points reaching an all time high of 137.90 Index Points in June of 2011 and a record low of 83.50 Index Points in June of 1996. This page includes a chart with historical data for Mauritius Productivity.

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