The Impact of Liberalizing the Telecommunication Sector in Morocco

The purpose of this paper is to present the major developments recorded in telecommunication sector in Morocco and assess the impact of regulating the telecommunication sector in Morocco along the European Union lines. The basic assumption underlying this work is the following. Further liberalization of various market segments of the telecommunication sector would benefit communications intensive industries that provide key “backbone services” to the economy, such as transport, distribution and finance. It would also improve competitiveness of exporting industries by reducing their costs and facilitating their integration to transnational production networks. The quality and price of telecommunication services directly affect business costs, but also affects the capacity of firms to network and compete in foreign and domestic markets. Finally, development of telecommunication services sector would create more investment opportunities for the domestic private sector, and help attract more FDI and portfolio investment.Telecommunication services, liberalization, Morocco

Financial liberalization, saving, investment and growth in MENA countries

Over the last two decades MENA countries as much of the developing countries have experienced a wave of liberalization of financial sector. The purpose of this paper is three fold: to review the literature on the rationale for financial repression, examining why governments adopt financial repression policies; to examine the theoretical and empirical literature on the links between financial liberalization, savings and investment; to assess the effect of financial reforms on economic performance in the specific case of MENA countries. The paper attempts to capture the effects of both banking sector and stock market developments, focussing on Egypt, Jordan, Morocco, Tunisia and Turkey between 1970-1998.Financial liberalization, saving, growth, MENA countries, Morocco

Equilibrium exchange rate and misalignment In selected MENA countries

The purpose of this paper is to estimate the equilibrium real exchange rate and derive the degree of misalignment for five MENA currencies: the Algerian Dinar, the Moroccan Dirham, the Egyptian Pound, the Tunisian Dinar and the Turkish lira. Exchange rate policy represents a key tool in macro-economic management and dominates the public policy debate today. How to assess whether exchange rate is undervalued or overvalued with respect to its equilibrium value is clearly at the heart of this debate. An extensive analysis of the degree of misalignment of the five currencies is undertaken on the basis of detailed country specific data. Overall, our results pick up almost perfectly the exchange rate policy episodes in the five countries.Exchange rate; Misalignment; Equilibrium exchange rate

Labor Market and Growth in Morocco

The purpose of this paper is to investigate how the functioning of the labor market in Morocco is affecting economic growth. The first section examines the demographic factors affecting the supply side of the labor market such as the population growth, the pace of urbanization, and the increase of female labor force participation over the last decades. These three demographic factors, although dealt with jointly, don’t have the same effects on the labor market conditions and may be connected to economic growth through different channels. The second section explores the potential distorting effects of policy choices undertaken by policy makers in Morocco over the last four decades. For a long time, the government provided much more incentives to capital intensive investment at the extent of labor intensive technologies, which distorted the allocation of resources and crowded out the abundant labor force. As a consequence, formal sector has not crated enough job opportunities while survival activities in the informal sector have expanded very rapidly. The third section investigates the educational system as the main mechanism through which human capital is accumulated. As in Lucas-Uzawa framework, human capital is accumulated endogenously as a result of individual optimal investment decisions on the basis of the expected returns on the labor market. One of the key issues is the increasing rate of graduates unemployed. Does this mean that educational system is not adequately responding to the needs of the productive system? Or that the productive system is still underdeveloped to absorb all the available skilled labor supplied on the marketplace. The fourth section of the paper examines the contribution of the public sector to employment and the nature of qualifications required by public sector jobs. The public sector wage bill in Morocco is excessive and tends to put constantly pressure on the government budget, which threatens macroeconomic stability and restrains growth prospects. The fifth section presents briefly the labor market regulation in Morocco and the extent to which they are effectively enforced. It attempts to assess the extent to which the existence of minimum wage has protected the purchasing power of workers. It also deals with the impact of existing regulations imposed to the formal sector on the expansion of a large informal sector.Labor Market, Education, Public employment, Morocco

Does a free trade area favors an optimum currency area? The Case of Morocco and the European Union

The purpose of this paper is to investigate simultaneously the potential effects of European Union's Association Agreement with Morocco and the adoption of the Euro as a single currency on exchange rate regime of Moroccan Dirham. Since Morocco depends heavily on EU as a market for its exports and a source for its imports, limited variability of the DH against the Euro seems à priori, to be an appropriate policy option. This option may even be strengthened within the FTA. However, the nature and the composition of Moroccan exports are typical of North-South trade with little diversification and high concentration on textiles and agricultural products. From this perspective, the risk of asymmetric shocks is more likely, which reduces the expected gains from nominal anchorage. This paper aims at contributing to the future exchange rate regime in Morocco and focuses on three main issues. The first issue is to investigate the potential effects of the FTA on trade structure and industrial specialization in Morocco. To this end, a computable general equilibrium model is used to simulate macroeconomic and sectoral effects of the implementation of the FTA on industrial sector. The second issue is to estimate the real exchange rate equilibrium based on macroeconomic fundamentals and assess the degree of misalignment of the actual value of the Dirham. Finally, the question of exchange rate arrangement is examined by combining the expected effects of free trade area between Morocco and the European Union, the existing degree of misalignment of the Dirham, and considering the adoption of the Euro as a single currency in 12 European countries. Our results seem to suggest that the implementation of a FTA may lead to a reallocation of industrial production toward an even more specialization in labor-intensive products. Under such circumstances, the symmetry of shocks, as an important condition for anchoring the DH to the Euro, is not satisfied making this option non-desirable.Free Trade Area, CGE Model, Exchange rate

The Impact of Liberalizing International Trade of Banking Services in Morocco

The purpose of this paper is to assess welfare effects of regulating the banking sector in Morocco along the European Union lines. The agreement between the EU and Morocco, signed in February 1996 and came into force in March 2000, provides for the gradual establishment of an industrial free-trade zone by 2012 and progressive liberalization of trade in agriculture. The agreement between Morocco and the EU foresees, in addition to that, to start negotiations for a free trade area in services. The agreement contains, however, no binding commitments. But Morocco is expected to deepen further its relationships with Europe within the framework of the Neighboring Policy. The relevance of the issue of banking services’ liberalization goes beyond Morocco’s agreement with the EU. On the one hand, Morocco’s free trade agreement with the US encompasses services, more specifically financial services, in addition to manufactured goods, agricultural products, intellectual property rights, and government procurement. This agreement is expected to come into force in 2006. On the other hand, under GATS, Morocco is projected to increase its commitments and opens up further its banking sector to foreign competition. The last commitments made by Morocco in Uruguay Round were mainly under commercial presence (mode 3) as compared to cross border supply (mode 1) and consumption abroad (mode 2). Except lending to finance investment in Morocco or commercial transactions with Morocco allowed under the mode 1, no commitment has been made in other items (Achy 2002). Hence, there is a real need to understand opportunities and challenges of liberalizing banking services on the Moroccan economy.Banking services, liberalization, Welfare effects, Morocco

Taux de Change et Potentiel d'Exportation au Maroc

L’objet de ce papier est de tenter de se prononcer sur la «part de responsabilité» de la variabilité du taux de change du DH dans la régression des exportations marocaines du secteur des industries de Textile-Habillement et Cuir.Exchange rate, devaluation, textiles, Morocco

The Impact of Liberalizing the Telecommunication Sector in Morocco

The purpose of this paper is to present the major developments recorded in telecommunication sector in Morocco and assess the impact of regulating the telecommunication sector in Morocco along the European Union lines. The basic assumption underlying this work is the following. Further liberalization of various market segments of the telecommunication sector would benefit communications intensive industries that provide key “backbone services” to the economy, such as transport, distribution and finance. It would also improve competitiveness of exporting industries by reducing their costs and facilitating their integration to transnational production networks. The quality and price of telecommunication services directly affect business costs, but also affects the capacity of firms to network and compete in foreign and domestic markets. Finally, development of telecommunication services sector would create more investment opportunities for the domestic private sector, and help attract more FDI and portfolio investment