Policies to Facilitate Trade and Foreign Direct Investment in Southern Africa Technological progress with the resultant improvement in productivity is the engine of economic growth. Technology transfers can effectively take place through invest­ment in physical, human capital and trade development. The relevance of import substitution strategies creating protective walls through trade barriers, and the often wrong perception that high economic growth in isolation is possible, are increas­ingly being questioned in achieving rapid and sustainable development. The role of the state in fostering economic growth and development would empha­sise the need for government to do less in those areas where markets work or can be made to work reasonably well. It should probably restrict its role to creating the enabling environment for business to flourish, and engage itself in investing in education, health, family planning and poverty alleviation; building social, physi­cal, administrative, regulatory and legal infrastructures of better quality; mobilising resources to finance public expenditures; and finally, providing the desired macro­economic foundation and stability to inspire the necessary confidence for private investment. Briefly on Mauritius In the immediate post-independence period, Mauritius, essentially as a mono-crop economy based on sugar production, was faced with some serious socio-economic difficulties like so many other small economies in the developing world. The sugar industry, the backbone of the country, providing for the main source of livelihood, accounting for over 90% of export earnings, and employing 25% of the active la­bour force contributed a third to the Gross Domestic Product(GDP). The prospects of job creation in the sugar industry for the increasing number of job-seekers com­ing into the labour market were extremely limited; unemployment in the early 1980s was at its peak at 20%(more than 70 000 persons) of the labour force and the chronic adverse balance of payments further compounded the socio-economic prob­lems in the country. Devoid of any mineral or natural resources, the country could only build on its human capital for its economic growth. The diversification from the sugar industry sector evidently took account of the available resources. Through a programme of economic reform with assistance from international insti­tutions, government was able to adjust some of the economic fundamentals in place, such that the country experienced rapid economic growth rates by the mid-1980s. With a population of about 1 million and an active labour force of 430 000, the country registered an average annual growth rate of 7% in the late 1980s and 6% during the period 1990-1996. GDP per capita in 1996 was US$ 3 500 compared to US$ 1 100 in 1982. Full employment was reached in the early 1990s and the country resorted to imported labour. Foreign exchange reserves which were down to barely two weeks of imports in the late 1970s swelled to 20 weeks in the late 1980s. 39