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Citation Information

Type Journal Article - Research Paper
Title Ethnic Diversity, Development and Social Policy in Small States
Author(s)
Volume 2
Publication (Day/Month/Year) 2013
URL http://www.unrisd.org/80256B3C005BCCF9/(httpAuxPages)/F6320383D0894B49C1257B780036165E/$file/Madhoo​and Nath.pdf
Abstract
Rapid development episodes are known to result in perceptible increases in the incomes
of individuals distributed over different income and social groups. Income growth,
however, may not translate into human capabilities to enjoy the fruits of development.
Lack of access to education, housing and health services, alongside deterioration in the
income shares of low-income citizens, poverty and disparate tax treatment of individuals,
can hamper human capabilities and welfare. Several of these changes depend upon the
quality of public policies and the institutions that implement development policies.
Historians, social researchers and institutional analysts, both in the past and present, have
pondered over the value of cultures, traditions and social structures in their social policy
discussions. But the recent revival of interest in policies and institutions among
economists is not random; it has a deep theoretical underpinning. New growth
economists have challenged the predictions of neoclassical economists that countries will
converge in terms of growth rates, giving hope that the widening gaps between poor and
rich countries will narrow and thereby social divisions will diminish. So the current
conventional wisdom in economics is that these divisions can be better addressed by
understanding the dynamics of policies and institutions emanating from societal
interactions and colonial inheritance.
The present study critically examines social policy performance in Mauritius in terms of
the quality of institutions, overall resources of the government, social welfare orientation
of government budgets and ethnic balance in social policy formulation. The historical
roots of colonization and political developments are analysed to assess their impacts on
social policies. Part 2 of the study portrays the colonial history and politics, and part 3
describes post-independence political developments that have marked the economic and
social trajectories. Part 4 depicts the social situation in terms of social indicators during
different phases of development and economic transformation. Part 5 contains an
assessment of the budgetary performance of social policy. Part 6 examines the
institutional foundations to meet the social policy challenges. The discussion in this
section is carried out in the light of the alternative strands of literature, namely
participatory democracy, power of state jurisdiction and social cohesion. An analytical
exercise is undertaken in part 7 to examine the welfare orientation of social policy with
particular emphasis on budgetary efforts to catch up with other countries in the region.
Part 8 summarizes the major findings and puts forward some guidelines for social policy
reform in small states and a tentative agenda for future research directions.
Some of the emerging conclusions are as follows. Ethnic factions in Mauritius have not
resulted in conflict for power and resources as in some sub-Saharan African countries.
Rather these factions recognize the benefits of sharing, thereby producing a congenial
environment for social cohesion and social capital growth. The ethnically divided
Mauritian society has proved to be growth and welfare promoting because of small
country size, colonial and diasporic links and a high degree of fragmentation, resulting in
a variety of human resources. Rapid economic development, institutional quality and
improved income distribution have acted as additional harmonizing factors.
iv
Empirical analysis of social expenditures confirms as expected that income and
democracy have positive impact on social expenditures. As regards the impact of ethnic
diversity and income inequality, the results are quite revealing. The findings do not
contribute to the contention that ethnic or religious factors exert any perceptible
influence on social budgets. Coming to income inequality, what is suggested is that as
income inequality increases, share of social spending in total government expenditure
does not increase commensurately. This means that if social budgets have the explicit job
of designing social policies in the light of existing income inequality, this objective is
apparently not being achieved.
In international comparisons, it is observed that small countries have allocated relatively
larger budgets to education. As regards allocations to health, there has been a slight
deterioration in health budgets in these countries. Keeping the same trend, this analysis
further shows that Mauritius has outperformed global averages only in educational
allocations and health remains the critical sector for social policy attention in the future.
Our analysis nevertheless demonstrates that there is some evidence for the effectiveness of
catch-up policy on social fronts in terms of budgetary allocations.
When compared against other small and upper income countries in sub-Saharan Africa,
Mauritius has outperformed Seychelles in allocations to social expenditure in general and
allocations to health and education in particular; and it has outperformed Botswana in
social expenditure allocation, suggesting significant outlays on social welfare in general
rather than on education or health. In other words, there is a phenomenal increase in
government expenditure on social security and protection. Transfer expenditures have
surpassed real expenditures. The dismal performance of Mauritius compared to Botswana
in sectors like health and education may however cast doubt on the consistency of
effectiveness of catch-up policy.
At the time of finalization of this research work, Yeti Nisha Madhoo was a Visiting
Research Scholar at University of California, Berkeley, United States and Shyam Nath
was a Visiting Professor at Amrita University, Kerala, India.

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