Why institutional capacity matters for the country's next phase of development

Some 25 years ago, while pursuing my PhD in economics in Paris, I researched development strategies in small island developing states. Mauritius was considered a success story, for transforming a sugar-dependent economy into a competitive manufacturing centre. Coming from Fiji, I was fascinated by what another small island country had achieved despite familiar constraints.

In Fiji, Mauritius, and Singapore have inspired development thinking. We often ask: if they could achieve such progress, why couldn't Fiji?

Our journeys have differed. Political instability, interruptions to democracy and inconsistent reforms have affected Fiji's progress. Mauritius taught me that economic transformation requires sound policies and institutions capable of implementing them consistently and adapting to change.

Our countries share a history of sugar plantations and Indian indentured labour. My great-grandfather arrived in Fiji from India in 1907. Our ancestors travelled to different islands, and their journeys connect our societies.

A quarter-century later, I am delighted to visit Mauritius and consider its challenges.

Lessons from two island economies

Despite structural differences, Fiji and Mauritius have similar labour market realities. Their latest official annual employment surveys recorded same unemployment rates of 5.7%. Youth unemployment is around 18% in both countries, although the surveys use slightly different age definitions.

Yet female labour force participation was only 36.2% in Fiji, compared with 49.6% in Mauritius. Both have untapped potential among women and youth.

Both also face employers struggling to recruit, young people searching for suitable jobs, skills mismatches and skilled professionals leaving for opportunities abroad. Mauritius has a more diversified economy and greater demographic pressures; Fiji remains more dependent on agriculture and experiences substantial outward migration.

How can countries with identical unemployment rates face such different circumstances? Headline figures reveal patterns, but understanding causes requires analysis. Unemployment statistics alone cannot tell us whether available jobs provide decent wages, use people's skills or offer worthwhile careers.

Mauritius at a crossroads

The World Bank's recent report on Mauritius recognizes development achievements while warning its growth model is losing momentum. Productivity growth has weakened, and economic progress is generating insufficient productive, well-paid employment.

The financial services sector accounts for approximately 13% of GDP but only 3% of employment. Economic diversification does not automatically create enough good jobs.

The IMF's July 2026 assessment likewise emphasizes productivity, skills and fuller use of available labour resources. Meanwhile, the World Bank projects that the population aged 65 and above will rise from approximately 14% in 2024 to 19% by 2033.

Mauritius needs workers while some talent remains underutilized. Employers report skills shortages while qualified people seek opportunities abroad. Are wages, working conditions, skills, childcare responsibilities or demographic change driving these outcomes? Different explanations call for different policies.

Building institutional capacity for evidence-informed policymaking

Over the past decade, I have worked with governments, employers' organizations and trade unions across more than 60 countries to strengthen evidence-informed policymaking. One lesson stands out: research and statistics do not automatically produce better policies. Institutions need the skills, systems and incentives to use knowledge effectively.

Consider labour shortages. If employers cannot recruit because technical skills are unavailable, training may help. If qualified workers leave because wages or conditions are unattractive, more training alone may achieve little. If childcare responsibilities prevent women from working, affordable childcare or flexible arrangements may be more relevant. Diagnosing the problem correctly protects scarce public resources.

Institutional capacity has three dimensions.

First, individuals need practical skills to define problems, find research, assess its quality, interpret statistics, compare options and communicate findings clearly.

Second, organizations need routines that make evidence useful: information-sharing, policy reviews, cooperation across ministries and evaluation. Training people achieves little if their institutions never create opportunities to apply what they learn.

Third, collaboration matters. Employers understand recruitment challenges; workers and trade unions understand wages and conditions; universities contribute independent research. Government can bring these perspectives together through meaningful, inclusive social dialogue.

Evidence informs decisions; it cannot replace judgments about priorities, resources and competing interests. Equally, policies must be monitored and adjusted when results differ from expectations.

Mauritius already has a National Employment Policy for 2024–2028. Strengthening institutional capacity can help translate its priorities into effective programmes, assess results and improve implementation.

Turning evidence into action

On 26 October, the International Labour Organization opened a national capacity-development programme on evidence-informed policymaking in Mauritius. I am pleased to contribute and learn alongside Mauritian policymakers and social partners as we examine practical approaches to diagnosing problems, assessing research and communicating policy options.

A five-day programme cannot resolve structural economic challenges. Its value depends on what follows: whether participants apply their learning and institutions make evidence use routine.

Twenty-five years ago, Mauritius inspired me through its economic transformation. Perhaps its next contribution will be demonstrating how institutions, informed by evidence and guided by social dialogue, create better, lasting opportunities for everyone.

Dr Naren Prasad is Head of Education and Training in the Research and Statistics Department of the International Labour Organization (ILO) in Geneva. The views expressed are personal and do not necessarily reflect those of the ILO.