This pilot report explores the roots of Morocco’s declining competitiveness in the 1990s based on the results of an investment climate survey of 859 manufacturing establishments (the World Bank's Firm Analysis and Competitiveness Survey) jointly conducted by the Ministry of Commerce and Industry and the World Bank. Notwithstanding Morocco’s progress in several areas, the report identifies the principal macro- and microeconomic dimensions of declining competitiveness. Among the issues highlighted:
1) An appreciation of the real effective exchange rate of 22 percent between 1990 and 2000.
2) Heavy bureaucracy and red tape.
3) Regional infrastructure deficiencies, including high energy and shipping costs and limited development of the telephone and road networks.
4) High interest rates and financial sector inefficiency.
5) Low education level of the workforce.
As a pilot report, this assessment does not provide detailed policy recommendations but argues that at current wage levels, Moroccan manufacturing cannot sustain the strategy of relying on low-tech, low- quality, low-skills content products. The country has to move progressively to higher value added/skill intensive hence high wages products in the future. To achieve this objective, the Government, industry associations and individual firms should work in partnership to lay the foundations of a knowledge-based manufacturing sector.
Bibliography: Washington, D.C., World Bank, February 2002.
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