Paper short abstract:

I study the the country of Mauritius and the determinants of its well-designed regulatory regime. My analysis points to several influential factors with one of the most important ones being excellent state-business relations and a strong influence by the private sector on regulatory making.

Paper long abstract:

Regulatory quality and state-business relations and their impact on economic development have been subject to much discussion in the past years. International organizations, policy makers and researchers alike agree that regulation matters and a well-designed regulatory regime can increase economic growth. There is less consensus, however, on how to improve regulation and especially developing countries suffer from serious shortcomings when it comes to their regulatory framework. Due to methodological and data issues it is difficult to determine the drivers of regulatory change and general conclusions from cross-country studies are hard to draw. Therefore I focus on the small island country of Mauritius that has exceptional regulatory quality, trying to identify the reasons for this high regulatory quality. I argue that the private sector and the state-business relations in the country play an important role in regulatory making. Empirically, I do not find a significant "Mauritius effect", but the qualitative analysis, founded on interviews with politicians, business leaders and others indeed points to a prominent role of the private sector and its intense collaboration with the government. The case study also shows that the determinants of good regulation are not limited to only one factor, but a wide array of influences and circumstances that make Mauritius the best regulated country in Sub-Sahara Africa and also put it among the best regulated countries in the world.