Economic Reform in Morocco: Stabilisation versus Adjustment

Abstract

Morocco has undergone more than two decades of economic reform supported by IMF and World Bank policy-based lending. This has led to a paradox: despite reform, sustained export-led growth has not been achieved. After an initial recessionary period between 1983–5, reform seemed to pay off in terms of a significant period of export-led growth and employment creation, especially in the manufacturing sector. However, this could not be sustained into the 1990s when growth again stagnated and unemployment and poverty rose. More recently, since the late 1990s there has been yet another growth upswing. However, much of this growth has been fuelled by domestic demand financed by tourism revenues and migrant remittances, although there are some signs of export diversification, especially in the service sector. Sustainability is also called into question by the fact that the recent growth has been extensive, that is, based on increased factor inputs especially capital, rather than intensive, that is, based on productivity improvements.