Transport and Economic Performance: The Case of Mauritius

Abstract

Transport capital is, theoretically, a key ingredient in the process of economic advancement. However it has, arguably, not benefited from the due attention of policy makers. In particular, the empirical literature has hardly dealt with small developing economies like Mauritius. The present paper applies a dynamic time series analysis in a vector error correction model (VECM) framework and uses a unique dataset over the period 1950–2000 to study the association between transport capital and economic growth for Mauritius. Transport infrastructure is shown to have significantly contributed to the economic performance of the small island state of Mauritius. Moreover, both transport and non-transport capital crowd-in private capital. Crucially, the support of the political leadership for the entire process of economic advancement is highlighted.