CHAPTER FOUR 160 4. ECONOMIC GOVERNANCE AND MANAGEMENT 4.1 Overview: Challenges to economic governance and management 375. Mauritius is a small island with few natural resources. It relies mostly on its human resource base that has helped it to overcome its natural handicaps and to drive its development. Mauritius has developed into a diversified economy with annual growth rates that have averaged between 5 per cent and 6 per cent since independence. With a per capita income of above USD 6,700 in 2009, Mauritius is an upper middle-income country. 376. The economic history of the country since independence can be divided into four phases. The first one is the immediate postcolonial period. During this period, the legacy of a single-crop economy, dominated by the sugar industry and cane plantations, was continued. It was also characterised by the first attempts at diversifying the economy by implementing an import-substitution strategy in the late 1960s and early 1970s. The second period was characterised by an outward-looking, export-oriented strategy in the 1970s. It was spearheaded by the sugar and textile industries on the one hand and by tourism on the other as the major driving forces for launching and sustaining economic growth. The vital role played by preferential trade access to European Union (EU) markets for Mauritian sugar and textiles is undeniable and was one of the main drivers of the export-led strategy. New sectors were promoted during the 1990s. They included financial services. The second period lasted for more than three decades. The third period started during this decade with the crisis in Mauritius’s export-led growth strategy that began with the end of preferential access to EU markets. The country is now beginning a new era of diversifying into a knowledge-based economy. 377. Sound economic governance and management have been important drivers of Mauritius’s success during the last three decades. Resources were well used and they led to major strides in socioeconomic development. However, the country is currently facing new challenges that require the attention of government and other stakeholders. 378. The first one is the challenge of coping with the changing global environment. It requires addressing the issues of sustaining the 161