Industrial Economy: State of Affairs in Morocco
1 November 2014
Read by 1944 persons
What has been the contribution of the industrial emergence strategy to the Moroccan economy? Would this strategy have boosted growth and employment? What are its effects in terms of exports and competitiveness?
For the last thirteen years, Morocco has shifted into high gear, multiplying sectoral development strategies and large-scale structuring projects. Throughout this pivotal period, the Kingdom has witnessed a major and progressive renewal of its development status, particularly in the economic field. In this context, ambitious programs and numerous projects have been launched to enable the country to regain the path of development and economic take-off.
However, while the momentum is there, the results are not yet felt. At the macroeconomic level, for example, the country's situation has not really changed; the country still buys more than it sells, hardly produces most of what it consumes and does not consume most of what it produces. Added to this are other problems such as youth unemployment, the widening of national account deficits, etc.
Such a situation undoubtedly leads to questioning the overall effectiveness of all the public policies undertaken more than a decade ago. This article proposes to examine the case of the industrial emergence strategy and therefore to review the progress that Morocco has made in this area.
To do this, we are adopting an approach that compares the country's industrial fabric before and after the launch of this strategy. This comparison will be made mainly in terms of the sector's contribution to national production (GDP), job creation, exports, and finally, the competitiveness of Moroccan exports.
Before
Before the launch of the strategy in question, the industrial sector in Morocco was relatively small in the national economy in terms of job creation (12%) and contribution to GDP formation (16%). On the other hand, the sector is the leading source of exports, accounting for 52% of all exports, hence the significant proportion of production geared towards export.
Just like its size, diversification is also low. Indeed, the industrial sector is too concentrated, given that only two out of ten sectors, namely agri-food and textiles, account for half of the sector's GDP and contribute 68% and 72% respectively to employment and exports. It also appears that some new sectors, namely automotive and electronics, are high-growth sectors.
Other sectors appear more productive than others. This is the case of agri-food and automotive, which together employ less than 25% of the sector's workforce, while contributing considerably to GDP formation and/or export-oriented production.
Data from the sector analysis also shows that the main obstacles hindering the emergence of the sector are the development of the informal sector, the very discouraging tax regime, the qualification of the workforce, limited access to foreign resources (capital, raw materials...), and the very high energy cost.
In this sense, these elements are the factors why Morocco is being overtaken by its competitors whose supply and type of exports are relatively close, such as Egypt, Tunisia, Algeria, Jordan, Turkey, Senegal and Romania.
On the other hand, the country is in a strong position in terms of non-energy natural resources, particularly agri-food and mining (phosphates), its logistical position due to its proximity to the EU and the USA, customs and commercial access (as a result of free trade agreements), and also in terms of low cost of the workforce.
Given these elements, Morocco decided to embark on new trades, called Global Trades of Morocco, with high added value while capitalizing on its assets in traditional trades (agri-food, textiles and leather, etc.). This strategy also aimed, through the training effect or multiplication effect, to bring about significant improvements in job creation and national production. These are the "Emergence I and II" plans which aimed to strengthen the country's industrial fabric by 2015 [1].
[1] Developed by the international firm McKinsey, this plan, launched in 2005, but revised in a second version in 2009 (National Pact for Industrial Emergence), aims to increase GDP by +1.6 points/year and to reduce the trade deficit by increasing the volume of exports by 50 billion dirhams by 2015. See the presentation of the plan in the report of the Ministry of Commerce and Industry (Moroccan Observatory of Industry) "Emergence Plan", 2005 ?
Lesechos.fr
Published on October 31, 2014.
Posted online on November 1, 2014.
For the last thirteen years, Morocco has shifted into high gear, multiplying sectoral development strategies and large-scale structuring projects. Throughout this pivotal period, the Kingdom has witnessed a major and progressive renewal of its development status, particularly in the economic field. In this context, ambitious programs and numerous projects have been launched to enable the country to regain the path of development and economic take-off.
However, while the momentum is there, the results are not yet felt. At the macroeconomic level, for example, the country's situation has not really changed; the country still buys more than it sells, hardly produces most of what it consumes and does not consume most of what it produces. Added to this are other problems such as youth unemployment, the widening of national account deficits, etc.
Such a situation undoubtedly leads to questioning the overall effectiveness of all the public policies undertaken more than a decade ago. This article proposes to examine the case of the industrial emergence strategy and therefore to review the progress that Morocco has made in this area.
To do this, we are adopting an approach that compares the country's industrial fabric before and after the launch of this strategy. This comparison will be made mainly in terms of the sector's contribution to national production (GDP), job creation, exports, and finally, the competitiveness of Moroccan exports.
Before
Before the launch of the strategy in question, the industrial sector in Morocco was relatively small in the national economy in terms of job creation (12%) and contribution to GDP formation (16%). On the other hand, the sector is the leading source of exports, accounting for 52% of all exports, hence the significant proportion of production geared towards export.
Just like its size, diversification is also low. Indeed, the industrial sector is too concentrated, given that only two out of ten sectors, namely agri-food and textiles, account for half of the sector's GDP and contribute 68% and 72% respectively to employment and exports. It also appears that some new sectors, namely automotive and electronics, are high-growth sectors.
Other sectors appear more productive than others. This is the case of agri-food and automotive, which together employ less than 25% of the sector's workforce, while contributing considerably to GDP formation and/or export-oriented production.
Data from the sector analysis also shows that the main obstacles hindering the emergence of the sector are the development of the informal sector, the very discouraging tax regime, the qualification of the workforce, limited access to foreign resources (capital, raw materials...), and the very high energy cost.
In this sense, these elements are the factors why Morocco is being overtaken by its competitors whose supply and type of exports are relatively close, such as Egypt, Tunisia, Algeria, Jordan, Turkey, Senegal and Romania.
On the other hand, the country is in a strong position in terms of non-energy natural resources, particularly agri-food and mining (phosphates), its logistical position due to its proximity to the EU and the USA, customs and commercial access (as a result of free trade agreements), and also in terms of low cost of the workforce.
Given these elements, Morocco decided to embark on new trades, called Global Trades of Morocco, with high added value while capitalizing on its assets in traditional trades (agri-food, textiles and leather, etc.). This strategy also aimed, through the training effect or multiplication effect, to bring about significant improvements in job creation and national production. These are the "Emergence I and II" plans which aimed to strengthen the country's industrial fabric by 2015 [1].
[1] Developed by the international firm McKinsey, this plan, launched in 2005, but revised in a second version in 2009 (National Pact for Industrial Emergence), aims to increase GDP by +1.6 points/year and to reduce the trade deficit by increasing the volume of exports by 50 billion dirhams by 2015. See the presentation of the plan in the report of the Ministry of Commerce and Industry (Moroccan Observatory of Industry) "Emergence Plan", 2005 ?
Lesechos.fr
Published on October 31, 2014.
Posted online on November 1, 2014.
