Economic history of Morocco
Encyclopedia
The economic history of Morocco has largely been charted by the national government through a series of five-year plans. Centralized planning has gradually given way to moderate privatization and neo-liberal economic reforms.
, coal
, silver
, lead
, and copper
deposits, and oil-shale
development.
Since the early 1990s, Morocco has embarked on a major economic restructuring programme aimed at raising living standards, cutting unemployment and boosting growth. In pursuit of these goals, successive governments have made efforts to attract domestic and overseas investment, which has obliged them to tackle a string of other problems - such as reducing red tape and corruption, updating the financial system and privatising telecommunications, water and power.
Meanwhile, rolling back the state in terms of cutting public expenditure has also been a priority, alongside labour market reform. Both of these have been praised by international bodies such as the IMF and World Bank, but have led to frequent confrontation between the unions and the government, which since 1998 has been centre-left dominated.
The IMF, World Bank and Paris Club backed structural adjustment programmes followed by the administration first seeing dirham convertibility established for current account transactions in 1993. This marked the beginning of a phased restructuring of the financial sector, which from 1994 was joined by a phased liberalisation of basic item imports. In 1995, the investment code was reformed, and in 1996 an Association Accord was signed with the European Union (EU). This came into force in 2000, with the EU long established as the country's main trading partner - taking some 75% of Morocco's exports and providing 60% of its imports. France alone accounts for about a quarter of the country's imports and a third of its exports.
Meanwhile, the privatisation programme gained momentum in 1999 and 2000 with the sale of a 35% stake in Maroc Telecom (MT), the telecommunications provider. Morocco was one of the first Arab countries to begin a programme of state sell offs, and it has one of the most ambitious programmes, with 114 enterprises identified for sale in 1993. However, progress has been slow since then, and the programme stalled again soon after the MT stake sell off. It is now hoped that the sale of a further 16% stake in MT, the state tobacco company, several sugar firms and a clutch of power generation and water management facilities will revitalise the programme.
Drought
conditions depressed activity in the key agricultural sector, and contributed to an economic slowdown in 1999. Favourable rainfalls have led Morocco to a growth of 6% for 2000. Formidable long-term challenges included: servicing the external debt
; preparing the economy for freer trade with the European Union
; and improving education and attracting foreign investment to improve living standards and job prospects for Morocco's youthful population.
Macroeconomic stability coupled with relatively slow economic growth
characterized the Moroccan economy from 2000 to 2005. The government introduced a number of important economic reforms in that period. The economy, however, remained overly dependent on the agricultural
sector. Morocco's primary economic challenge was to accelerate growth in order to reduce high levels of unemployment.
External debt stood at around $19 billion in 2002, but the country had strong foreign exchange reserves
and active external debt management, which was allowing it to service its debts. The government continued liberalizing the telecommunications sector in 2002, as well as the rules for oil
and gas exploration. This process started with the sale of a second GSM license in 1999. The government in 2003 was using revenue from privatization
s to finance increased spending. Although Morocco's economy grew in the early 2000s
, it was not enough to significantly reduce poverty
.
Through a foreign exchange rate
anchor and well-managed monetary policy, Morocco has held inflation
rates to industrial country levels over the past decade. Inflation in 2000 and 2001 were below 2%. Despite criticism among exporters that the dirham
has become badly overvalued, the current account deficit remains modest. Foreign exchange reserves
were strong, with more than $7 billion in reserves at the end of 2001. The combination of strong foreign exchange reserves and active external debt management gives Morocco the capacity to service its debt. Current external debt stands at about $16.6 billion.
Economic growth
, however, has been erratic and relatively slow, partially because of an over-reliance on the agricultural sector. Agriculture production is extremely susceptible to rainfall levels and ranges from 13% to 20% of GDP
. Given that 36% of Morocco's population
depends directly on agriculture production, drought
s have a severe knock-on effect to the economy. Two successive years of drought led to a 1% incline in real GDP in 1999 and stagnation in 2000. Better rains during the 2000 to 2001 growing season led to a 6.5% growth rate in 2001. Growth in 2006 exceeded 9% thanks to a booming real-estate market.
The strongest point of Moroccan industry is phosphate
mining near Khouribga
and in Western Sahara
. Morocco has approximately two thirds of the world's phosphate reserves. Phosphate mining companies employ only 2% of the population, but phosphate mining is responsible for half of the nation's income.
The national government introduced a series of structural reforms in the first decade of the 21st century. The most promising reforms have been in the liberalization of the telecommunications sector. In 2001, the process continued with the privatization of 35% of the state operator Maroc Telecom
. Morocco has announced plans to sell two fixed licenses in 2002. Morocco
also has liberalized rules for oil and gas exploration and has granted concessions for many public services
in major cities. The tender process in Morocco is becoming increasingly transparent. Many believe, however, that the process of economic reform must be accelerated in order to reduce urban unemployment below the current rates above 20%.
The United States Senate
ratified the U.S.-Morocco Free Trade Agreement Implementation Act by a vote of 85 to 13 on July 21, 2004. Morocco has also signed a free trade agreement with the European Union
which is to take effect by 2010.
1960s
Morocco instituted a series of development plans to modernize the economy and increase production during the 1960s. Net investment under the five-year plan for 1960 to 1964 was about $1.3 billion. The plan called for a growth rate of 6.2%, but by 1964 the growth rate had only reached only 3%. A new three-year plan (1965 to 1967) targeted an annual growth rate of 3.7%. The plan emphasized the development and modernization of Morocco's agricultural sector. The five-year development plan for 1968 to 1972 called for increased agriculture and irrigation. The development of the tourist industry also figured prominently in the plan. The objective was to attain an annual 5% growth rate in GDP; the real growth rate actually exceeded 6%.1970s
Investment during the 1970s included industry and tourism development. The five-year plan for 1973 to 1977 envisaged a real economic growth of 7.5% annually. Industries singled out for development included chemicals (especially phosphoric acid), phosphate production, paper products, and metal fabrication. Tourist development was also stressed. In 1975, King Hassan II announced a 50% increase in investment targets to allow for the effects of inflation. The 1978 to 1980 plan was one of stabilization and retrenchment, designed to improve Morocco's balance-of payments position, but the 4% annual growth rate achieved was disappointing.1980s
The ambitious five-year plan for 1981 to 1985, estimated to cost more than $18 billion, aimed for a growth rate of 6.5% annually. The plan's principal priority was to create some 900,000 new jobs and to train managers and workers in modern agricultural and industrial techniques. Other major goals were to increase production in agriculture and fisheries to make the country self-sufficient in food, and to develop energy (by building more hydroelectric installations and by finding more petroleum and other fossil fuels), industry, and tourism to enable Morocco to lessen its dependence on foreign loans. The plan called for significant expansion of irrigated land, for increased public works projects such as hospitals and schools, and for economic decentralization and regional development through the construction of 25 new industrial parks outside the crowded Casablanca-Kénitra coastal area. Proposed infrastructural improvements included the $2-billion rail line from Marrakech to El Aaiún; a new fishing port at Ad-Dakhla, near Argoub in the Western Sahara; and a bridge-tunnel complex across the Strait of Gibraltar to link Morocco directly with Spain. Large industrial projects included phosphoric acid plants, sugar refineries, mines to exploit cobaltCobalt
Cobalt is a chemical element with symbol Co and atomic number 27. It is found naturally only in chemically combined form. The free element, produced by reductive smelting, is a hard, lustrous, silver-gray metal....
, coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
, and copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
deposits, and oil-shale
Oil shale
Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen from which liquid hydrocarbons called shale oil can be produced...
development.
1990s
Moroccan economic policies brought macroeconomic stability to the country in the early 1990s but did not spur enough growth to reduce unemployment despite Moroccan Government's ongoing efforts to diversify the economy.Since the early 1990s, Morocco has embarked on a major economic restructuring programme aimed at raising living standards, cutting unemployment and boosting growth. In pursuit of these goals, successive governments have made efforts to attract domestic and overseas investment, which has obliged them to tackle a string of other problems - such as reducing red tape and corruption, updating the financial system and privatising telecommunications, water and power.
Meanwhile, rolling back the state in terms of cutting public expenditure has also been a priority, alongside labour market reform. Both of these have been praised by international bodies such as the IMF and World Bank, but have led to frequent confrontation between the unions and the government, which since 1998 has been centre-left dominated.
The IMF, World Bank and Paris Club backed structural adjustment programmes followed by the administration first seeing dirham convertibility established for current account transactions in 1993. This marked the beginning of a phased restructuring of the financial sector, which from 1994 was joined by a phased liberalisation of basic item imports. In 1995, the investment code was reformed, and in 1996 an Association Accord was signed with the European Union (EU). This came into force in 2000, with the EU long established as the country's main trading partner - taking some 75% of Morocco's exports and providing 60% of its imports. France alone accounts for about a quarter of the country's imports and a third of its exports.
Meanwhile, the privatisation programme gained momentum in 1999 and 2000 with the sale of a 35% stake in Maroc Telecom (MT), the telecommunications provider. Morocco was one of the first Arab countries to begin a programme of state sell offs, and it has one of the most ambitious programmes, with 114 enterprises identified for sale in 1993. However, progress has been slow since then, and the programme stalled again soon after the MT stake sell off. It is now hoped that the sale of a further 16% stake in MT, the state tobacco company, several sugar firms and a clutch of power generation and water management facilities will revitalise the programme.
Drought
Drought
A drought is an extended period of months or years when a region notes a deficiency in its water supply. Generally, this occurs when a region receives consistently below average precipitation. It can have a substantial impact on the ecosystem and agriculture of the affected region...
conditions depressed activity in the key agricultural sector, and contributed to an economic slowdown in 1999. Favourable rainfalls have led Morocco to a growth of 6% for 2000. Formidable long-term challenges included: servicing the external debt
External debt
External debt is that part of the total debt in a country that is owed to creditors outside the country. The debtors can be the government, corporations or private households. The debt includes money owed to private commercial banks, other governments, or international financial institutions such...
; preparing the economy for freer trade with the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
; and improving education and attracting foreign investment to improve living standards and job prospects for Morocco's youthful population.
2000s
| Macroeconomic indicators | |
|---|---|
 |
|
| GDP (PPP Purchasing power parity In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates... ) |
US $ United States dollar The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies.... 148.1 billion (2009 est.) |
| GDP growth | 5.7% (2009 est.) |
| GDP per capita PPP Purchasing power parity In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates... |
US $4,725 (2009 est.) |
| GNI GNI GNI may stand for:* Gesher New Instructions, a computer processor instruction set* Global Network Initiative, an Internet freedom and privacy organization* Greater Nagoya Initiative, a Japanese business model project... (PPP) per capita |
US $3,990 (2009 est.) |
| Inflation Inflation In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a... (CPI) |
4,6% (2009 est.) |
| Gini index | 40.0 (2005) |
| Unemployment Unemployment Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks... |
2,1% (2008) |
| HDI Human Development Index The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries... |
0.646 (2007) |
| Labor force | 11.5 million (2008 est.) |
| Pop. in poverty | 15% (2008) |
Macroeconomic stability coupled with relatively slow economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
characterized the Moroccan economy from 2000 to 2005. The government introduced a number of important economic reforms in that period. The economy, however, remained overly dependent on the agricultural
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
sector. Morocco's primary economic challenge was to accelerate growth in order to reduce high levels of unemployment.
External debt stood at around $19 billion in 2002, but the country had strong foreign exchange reserves
Foreign exchange reserves
Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
and active external debt management, which was allowing it to service its debts. The government continued liberalizing the telecommunications sector in 2002, as well as the rules for oil
Oil exploration
Hydrocarbon exploration is the search by petroleum geologists and geophysicists for hydrocarbon deposits beneath the Earth's surface, such as oil and natural gas...
and gas exploration. This process started with the sale of a second GSM license in 1999. The government in 2003 was using revenue from privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
s to finance increased spending. Although Morocco's economy grew in the early 2000s
2000s in Morocco
In March 2000, women's groups organised demonstrations in Casablanca proposing reforms to the legal status of women in the country. 40,000 women attended, calling for a ban on polygamy and the introduction of civil divorce law...
, it was not enough to significantly reduce poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
.
Through a foreign exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
anchor and well-managed monetary policy, Morocco has held inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
rates to industrial country levels over the past decade. Inflation in 2000 and 2001 were below 2%. Despite criticism among exporters that the dirham
Moroccan dirham
The dirham is the currency of Morocco. The plural form is pronounced darahim, although in French and English "dirhams" is commonly used. Its ISO 4217 code is "MAD". It is subdivided into 100 santimat . The dirham is issued by the Bank Al-Maghrib, the central bank of Morocco...
has become badly overvalued, the current account deficit remains modest. Foreign exchange reserves
Foreign exchange reserves
Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
were strong, with more than $7 billion in reserves at the end of 2001. The combination of strong foreign exchange reserves and active external debt management gives Morocco the capacity to service its debt. Current external debt stands at about $16.6 billion.
Economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, however, has been erratic and relatively slow, partially because of an over-reliance on the agricultural sector. Agriculture production is extremely susceptible to rainfall levels and ranges from 13% to 20% of GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. Given that 36% of Morocco's population
Demographics of Morocco
This article is about the demographic features of the population of Morocco, including population density, ethnicity, education level, health of the populace, economic status, religious affiliations and other aspects of the population....
depends directly on agriculture production, drought
Drought
A drought is an extended period of months or years when a region notes a deficiency in its water supply. Generally, this occurs when a region receives consistently below average precipitation. It can have a substantial impact on the ecosystem and agriculture of the affected region...
s have a severe knock-on effect to the economy. Two successive years of drought led to a 1% incline in real GDP in 1999 and stagnation in 2000. Better rains during the 2000 to 2001 growing season led to a 6.5% growth rate in 2001. Growth in 2006 exceeded 9% thanks to a booming real-estate market.
The strongest point of Moroccan industry is phosphate
Phosphate
A phosphate, an inorganic chemical, is a salt of phosphoric acid. In organic chemistry, a phosphate, or organophosphate, is an ester of phosphoric acid. Organic phosphates are important in biochemistry and biogeochemistry or ecology. Inorganic phosphates are mined to obtain phosphorus for use in...
mining near Khouribga
Khouribga
Khouribga is a city in Khouribga Province in the Chaouia-Ouardigha region of Morocco with a population of approximately 172,000. Khouribga owes its growth to the phosphate deposits nearby.-Geography:...
and in Western Sahara
Western Sahara
Western Sahara is a disputed territory in North Africa, bordered by Morocco to the north, Algeria to the northeast, Mauritania to the east and south, and the Atlantic Ocean to the west. Its surface area amounts to . It is one of the most sparsely populated territories in the world, mainly...
. Morocco has approximately two thirds of the world's phosphate reserves. Phosphate mining companies employ only 2% of the population, but phosphate mining is responsible for half of the nation's income.
The national government introduced a series of structural reforms in the first decade of the 21st century. The most promising reforms have been in the liberalization of the telecommunications sector. In 2001, the process continued with the privatization of 35% of the state operator Maroc Telecom
Maroc Telecom
Maroc Telecom is the main telecommunication company in Morocco.IAM employs around 11,178 employees. It has 8 regional delegations with 220 offices present on all the territory of Morocco.IAM is controlled by Vivendi which has a 53% share of its capital...
. Morocco has announced plans to sell two fixed licenses in 2002. Morocco
Morocco
Morocco , officially the Kingdom of Morocco , is a country located in North Africa. It has a population of more than 32 million and an area of 710,850 km², and also primarily administers the disputed region of the Western Sahara...
also has liberalized rules for oil and gas exploration and has granted concessions for many public services
Public services
Public services is a term usually used to mean services provided by government to its citizens, either directly or by financing private provision of services. The term is associated with a social consensus that certain services should be available to all, regardless of income...
in major cities. The tender process in Morocco is becoming increasingly transparent. Many believe, however, that the process of economic reform must be accelerated in order to reduce urban unemployment below the current rates above 20%.
The United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
ratified the U.S.-Morocco Free Trade Agreement Implementation Act by a vote of 85 to 13 on July 21, 2004. Morocco has also signed a free trade agreement with the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
which is to take effect by 2010.
Development
During the last 30 years, Morocco has embarked on a gradual but solid program of human development and political liberalization. Since the 1970s, gross national income per person more than quadrupled from $550 to $2,770. The average life expectancy has increased from 55 years in 1970 to 72.5 in 2007. During the same period, the average number of births per woman has seen a dramatic decline from 6.3 to 2.3 while the number of children dying before age one has dropped from 115 to 38 (per 100,000 live births). Substantial educational improvements during the past 30 years include a primary school net enrollment increase from 47 to 93.5 percent in 2007/08. Access to safe water is expanding particularly rapidly with quasi-universal access to potable water in urban areas where 83 percent of households are connected to reliable network service and the rest rely on standpipes and vendors.Further reading
- Stewart, Charles F. The Economy of Morocco, 1912-1962. Harvard University Press: 1967.