The Moorish Wanderer

Growth, Convergence and Other Observations

Posted in Dismal Economics, Moroccan Politics & Economics, Morocco, Read & Heard by Zouhair ABH on March 21, 2011

One of the standard techniques to verify whether an economy has indeed created large enough output and value to lift itself from underdevelopment, is to measure how fast its output (the GDP) catches up with a reference time series. Because the US have been a most important economy over the last 50 years (the new post-1945 gave the victorious United Sates such a leverage on economic matters), and because data is much more available to this particular country [we might also add, because academia is concentrated in the US, too. stands to reason, that…] it is conventional to consider US GDP as a reference to those countries one is surveying.

Morocco lagging behind Turkey and Tunisia (not to mention Spain) and gaining only 2.75% growth on the US over 50 years

It is interesting to note that for all the boasting in growth effects and figures, Moroccan GDP  relative to that of the US has remained low, if not markedly decreasing to 1990’s and 1950’s levels. Other countries, on the other hand, fared better.

The graph compares relative GDP for Morocco and a benchmark group of countries shows that Morocco is behind in terms of convergence. it shows that for the last 50 years, relative GDP in Morocco gained a meagre 2.75% over US GDP growth.This is, quite simply, a blow to the razzmatazz of Hassan II and even Mohamed VI‘s propaganda era about ‘grand designs’. It also shows that even on that basic policy so relied upon, i.e. economic growth, results have been well below expectations.

This policy, quite simply, that to overcome the crippling effects of poverty and inequality, the surest mean to achieve such objective is basically to accumulate output, i.e. sustain rapid and durable growth. All of this at the expenses of any noticeable redistributive attempt (progressive or liberal taxation system for instance). Not only it failed, but our growth rate has been chaotic over the last half a century, and as such, failed to improve markedly when compared to that of the US. Though GDP growth volatility abated a bit with the late 1990s, but it is still too high to rely on it as an indicator that Morocco is successfully catching up.

The principle of convergence is a powerful tool to assess, on a long term basis, the efforts put in an economy to ‘develop’. One can argue that considering capital accumulation is a very crude, even simplistic criterion to assess Moroccan growth.

Productivity growth over the same period vindicates the assumption gross accumulation as a valid proxy for Morocco's growth assessment.

And it is a perfectly valid argument. However, the alternative explanation is that of endogenous growth: human capital, scientific research and knowledge, which unfortunately finds its limitations verified in our case (unless there are some top secret research facilities in Morocco, whose applications are jealously kept secret in case of a Nuclear Armageddon…) and in any case, the classic theory of capital/output accumulation fits perfectly the strategic direction our policy-makers chose for Morocco.

What about the institutional variable? There is extensive literature on how institutions can affect capital accumulation (the well-know Lucas’ paradox) and I will not venture into describing these papers, but I would like to bring about a point so much invoked as a justification for status-quo: the pace of change.

Now, according to a seemingly valid point, we radicals and nihilists should not be too hungry for change. Rome wasn’t built in a day, and change takes time to settle. The underlying justification is that history shows progress is better when slow, or quite simply that it should be so, because history shows it.

It might be true, but when I try to compare Morocco between 1956 and 1962, and the last decade, we are, quite simply, way behind the exponential changes Morocco sustained after the French protectorate was dissolved. The Moudouwana? We had a much more liberal and progressive piece of legislation passed in 1957-1958 (and amended to a more conservative setting less than 5 years ago). Legislative production before the 1962 constitution was more fruitful and with a higher quality, especially those pertaining to essential legislation, e.g. Labour regulations (the brain child of then-Labour minister Abdellah Ibrahim) Furthermore, even if levels of illiteracy were higher compared to these we are experiencing today there was a higher positive perception of liberal agenda: gender equality, individual freedom and ultimately the formalized secularization of Moroccan society.

Rapid change can and will take place. The society’s resistance is not due to its tradition, nor is it due to some ideological commitment. In my view, it is simply fear of change.