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Inclusive Growth and the Incidence of Fiscal Policy in Mauritius; Much Progress, But More Could be Done

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  • Antonio David
  • Martin Petri

Abstract

Using data from three household surveys, we review whether growth in Mauritius was inclusive and discuss the incidence of public expenditures and taxes. Generally, Mauritius enjoys an even income distribution and low rates of poverty. Nevertheless, over the 2000s, despite overall progress, the benefits of growth appear to have become more skewed. Employment income is the main contributor to inequality in Mauritius. Social protection expenditures reduce poverty and inequality, but could be better targeted, particularly for pensions. Income taxes are progressive, though given their small relative weight they have a negligible impact on income distribution. The VAT appears relatively progressive compared to other developing countries, although its impact on the overall distribution is also small. With better targeting of the sizable social spending, significant further progress in poverty alleviation could be achieved.

Suggested Citation

  • Antonio David & Martin Petri, 2013. "Inclusive Growth and the Incidence of Fiscal Policy in Mauritius; Much Progress, But More Could be Done," IMF Working Papers 13/116, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:13/116
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    References listed on IDEAS

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    1. Jeffrey Frankel, 2014. "Mauritius: African Success Story," NBER Chapters,in: African Successes, Volume IV: Sustainable Growth, pages 295-342 National Bureau of Economic Research, Inc.
    2. Richard M. Bird, 2006. "Is VAT the Best Way to Impose a General Consumption Tax in Developing Countries?," International Tax Program Papers 0602, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
    3. Haroon Bhorat & David Tseng & Benjamin Stanwix, 2014. "Pro-poor growth and social protection in South Africa: Exploring the interactions," Development Southern Africa, Taylor & Francis Journals, vol. 31(2), pages 219-240, March.
    4. Chu, K.-y. & Davoodi, H. & Gupta, S., 2000. "Income Distribution and Tax, and Government Social Spending Policies in Developing Countries," Research Paper 214, World Institute for Development Economics Research.
    5. Subramanian, Arvind, 2009. "The Mauritian Success Story and its Lessons," WIDER Working Paper Series 036, World Institute for Development Economic Research (UNU-WIDER).
    6. Joao Pedro Azevedo & Minh Cong Nguyen & Viviane Sanfelice, 2012. "ADECOMP: Stata module to estimate Shapley Decomposition by Components of a Welfare Measure," Statistical Software Components S457562, Boston College Department of Economics.
    7. Rodrigo Cubero & Ivanna Vladkova Hollar, 2010. "Equity and Fiscal Policy; The Income Distribution Effects of Taxation and Social Spending in Central America," IMF Working Papers 10/112, International Monetary Fund.
    8. Marito Garcia & Charity M. T. Moore, 2012. "The Cash Dividend : The Rise of Cash Transfer Programs in Sub-Saharan Africa," World Bank Publications, The World Bank, number 2246.
    9. Chris Papageorgiou & Subir Lall & Florence Jaumotte, 2008. "Rising Income Inequality; Technology, or Trade and Financial Globalization?," IMF Working Papers 08/185, International Monetary Fund.
    10. Azevedo, Joao Pedro & Inchauste, Gabriela & Olivieri, Sergio & Saavedra, Jaime & Winkler, Hernan, 2013. "Is labor income responsible for poverty reduction ? a decomposition approach," Policy Research Working Paper Series 6414, The World Bank.
    11. David E. Sahn & Stephen D. Younger, 2000. "Expenditure incidence in Africa: microeconomic evidence," Fiscal Studies, Institute for Fiscal Studies, vol. 21(3), pages 329-347, September.
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    Citations

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    Cited by:

    1. Katsiaryna Svirydzenka & Martin Petri, 2014. "Mauritius The Drivers of Growth—Can the Past be Extended?," IMF Working Papers 14/134, International Monetary Fund.
    2. repec:sgm:jbfeuw:v:2:y:2017:i:8:p:54-83 is not listed on IDEAS
    3. Mauricio Soto & Vimal V Thakoor & Martin Petri, 2015. "Pension Reforms in Mauritius; Fair and Fast—Balancing Social Protection and Fiscal Sustainability," IMF Working Papers 15/126, International Monetary Fund.
    4. Ackon, Kwabena Meneabe, 2013. "Effect of Fiscal Policy Shocks in Brazil," MPRA Paper 72534, University Library of Munich, Germany.
    5. Alexei P Kireyev, 2013. "Inclusive Growth and Inequality in Senegal," IMF Working Papers 13/215, International Monetary Fund.
    6. International Monetary Fund, 2013. "Mauritius; 2013 Article IV Consultation," IMF Staff Country Reports 13/97, International Monetary Fund.

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