The Moorish Wanderer

Agriculture, EU and Morocco’s GDP: Some Evidence To Consider

Posted in Dismal Economics, Moroccan Politics & Economics, Morocco, Read & Heard by Zouhair ABH on January 5, 2012

The IMF annual report published last month showed a startling correlation between EU’s and Morocco’s respective GDPs (p.20) and it got me thinking: what if Agricultural GDP was no longer the main variable conditioning the overall economic growth, but rather the EU’s own economic performances? It would then mean that Hubert Lyautey‘s “Gouverner, c’est pleuvoir” would no longer hold, and apart from proving that Morocco has fully integrate itself in global trade, it would mean that policy-makers would have the means to correct, stabilize and expand GDP growth.

Robust growth for both EU and Morocco starting from the early 2000s

It would also mean that many dysfunctional mechanisms within governmental policies, regarding agricultural taxes, agrarian reforms and a host of other agriculture-related issues would no longer be justified: since the working axioms seems to be “don’t fix it if it ain’t broken” when applied to agriculture, I submit the actual strength correlation between Morocco’s and EU’s GDP would direct policy-makers rather to implement structural reforms in agriculture, because it needs it, and because global trade and the versatile nature of the Moroccan economic structure have made these reforms compelling.

First off, both the EU and Morocco have enjoyed relatively high levels of growth with the beginning of the 2000s: in fact, most of the emerging and advanced economies did at the time up to 2007-2008. I argue Morocco benefited somehow from the expansion in EU countries, by means of trade -and we shall have a look at the exports later on- as well as DFI (Direct Foreign Investment) both of which are directed to and received from the EU. Accordingly, and given a pre-specified statistical device, we can even predict with some precision when the first signs of recessions in the EU will bite and influence Morocco’s GDP – what was a blessing during the good years might turn out to be a curse in the bad ones.

As for agriculture, the strong correlation observed with the EU GDP proves it no longer conditions growth for Morocco’s overall output. The usual justification that growth was weak because it didn’t rain hard enough for a good harvest no longer stand precisely because other variables influence GDP growth, and these do allow for government policy, and thus increase public authorities’ responsibility for delivering on growth and a whole lot of other targets: fiscal redistribution, targeted subsidies, unemployment and job creation, many issues that can and must be accounted for – from all government branches, elected or not.

All correlations are robust beyond the 99% IC

A technical note perhaps: growth rates do not seem to be of any stochastic process nature, and problems of autocorrelation or multicollinearity did not arise – not at significant levels, anyway; therefore, the figures that are shown below are free of any hidden correlation. I’ve got a bit confused here – I may be compelled to post on the subject in more details later on.

A couple of crude but good indicators: Since 1970, correlation between non-Agricultural GDP and total GDP has been stronger (.999) than that between the latter and Agriculture GDP (.984) and that correlation increases over time (and if only I can lay my hands on quarterly data, I can show you more reliable figures too) Not only that, but EU GDP correlates almost equally with both Non-Agriculture and total GDPs (respectively .977 and .976)

When normalized correlation is considered, EU and Non-Agricultural GDP stand out as most correlated to total GDP; the assumption that any relationship beween EU, Non Agriculture and total GDP is stronger than that between total and Agricultural GDP. The next step is now to define, as precisely as possible, a model that would capture the contribution of each component in the total GDP growth;

Now, when considered in broad macro aggregates, EU’s GDP doesn’t do so well: in fact, the basic model, while it vindicates the assumption of a preponderant contribution of non-agricultural GDP on total GDP, the model and the various tests are not really affected by the introduction of EU growth – in facts, the usual tests applied to determine its contribution to the model point out to a marginal effect – and regressed coefficients on Agri and Non-Agric GDP attest to that;

Effect and correlation EU-Non Agricultural GDP is stronger than EU-total GDP

So there it is: EU influences non-Agricultural GDP, a major component of total GDP – and the long term trend is that agricultural output has less an effect on overall growth, even though the last two years have displayed a relatively robust growth thanks to a good harvest. This actually vindicates the initial argument that agriculture contributes less to total output: when compared to other GDP component, it remains the most volatile sub-group GDP, and thus may not be reliable for future growth.

Regression results

The latest communication from HCP’s survey of national aggregate may prove my point:

Au niveau de la demande, la croissance économique a bénéficié notamment de l’impulsion de la demande intérieure au cours du troisième trimestre 2011. Les dépenses de consommation finale des ménages se sont accrues de 7,3% au lieu de 4,4%. Leur contribution à la croissance a été de 4,1 points. La formation brute de capital, de son côté, a augmenté de 4,6% au lieu de 5,4%, portant sa contribution à la croissance à 3,7 points.

En revanche, le solde des échanges extérieurs de biens et services a contribué négativement à la croissance économique de 3,8 points. C’est ainsi que les exportations de biens et services qui ont augmenté de 5,3% au lieu de 10,1% ont contribué de 1,6 point à la croissance du PIB, alors que les importations qui se sont accrues de 14,8% contre une diminution de 1,6% ont enregistré une contribution négative de 5,4 points.

In the event of a generalised recession with the most significant commercial partners with the European Union, we should almost certainly expect a decrease in non-Agricultural GDP and by the same token, lower growth rates for total GDP.

[More to come on that later, I have bitten more than I can chew on this one…]

What’s Next?

Posted in Tiny bit of Politics by Zouhair ABH on July 15, 2011

Jed Bartlet‘s favourite catchphrase applies fully to the post-referendum environment in Morocco. Both domestically and abroad, Makhzen authorities have reasserted their strength and mastery of the national political agenda. I will certainly have an opportunity to go back on more details regarding the turnout, its geographical distribution and how its significance is more important as a symbol than their intrinsic levels.

First off, let us have a look at the various feedbacks to our Basri-era phenomenal figure of 73.46% and:

Rabat – Le nombre des votants qui se sont prononcés en faveur du projet de nouvelle constitution a atteint 9.653.492, soit 98,50 pc, selon les résultats provisoires du référendum constitutionnel du vendredi, a indiqué, samedi, le ministre de l’Intérieur, M. Taieb cherqaoui. […] Selon les résultats provisoires du référendum tel que proclamés par les 39.969 bureaux de vote mis en place sur l’ensemble du territoire national, le nombre des inscrits a été de 13.451.404 électeurs, dont 9.881.922 votants, soit un taux de participation de 73,46 pc, a ajouté le ministre. (MAP Communiqué)

— Rabat. the total number of voters supporting the new draft constitution amounted to 9,653,492, i.e. 98.5% following provisional results from Referendum Day held on Friday. Interior Minister Taieb Cherqaoui announced on Saturday. […] provisional results are proclaimed accross the 39.969 polling stations spread across the nation. Total number of voters amounted to 13,451,404 among which 9,881,922 showed up, reaching a turnout of 73.46%

French foreign minister Alain Juppé supported the Referendum results in these terms:

“Selon les résultats partiels donnés par le Ministère de l’intérieur marocain, le pourcentage des votants qui se sont prononcés en faveur du projet de nouvelle constitution a été de 98,49 pour cent des personnes inscrites sur les listes électorales. Le nombre des votants s’est élevé à 9.228.020, soit un taux de participation de 72,65 pour cent.

Nous devons bien entendu attendre les chiffres définitifs, mais il apparait d’ores et déjà que le peuple marocain a pris une décision claire et historique. […] La révision de la constitution a été conduite à partir de consultations étendues, associant tous les partis politiques, les syndicats et une large palette de représentants de la société civile.

Nous saluons la forte participation du peuple marocain à ce référendum. Elle a donné lieu à des débats animés et substantiels, reflétés dans les médias et notamment sur internet.[…]La France se tient naturellement aux cotés du Maroc pour l’accompagner dans cette nouvelle ère et forme des vœux pour que la mise en œuvre de cette nouvelle constitution s’accompagne de nouveaux progrès et de nouvelles réussites.”

As for the United States State Department, the language was equally praising and very supportive of the Referendum, but more cautious and overall non-committal to the whole process, indeed:

The United States welcomes Morocco’s July 1 constitutional referendum. We support the Moroccan people and leaders in their efforts to strengthen the rule of law, raise human rights standards, promote good governance, and work toward long-term democratic reform that incorporates checks and balances. We look forward to the full implementation of the new constitution as a step toward the fulfilment of the aspirations and rights of all Moroccans.

Short, succinct and positively abstract. The State Department commits to nothing and keeps its options open.

Finally, the European Union press release doesn’t deviate from the quasi-unanimous praises of our referendum:

“We welcome the positive outcome of the referendum on the new Constitution in Morocco and commend the peaceful and democratic spirit surrounding the vote,” EU foreign policy chief Catherine Ashton and neighbourhood policy commissioner Stefan Fuele said in a joint statement. […]

“The reforms proposed in it constitute a significant response to the legitimate aspirations of the Moroccan people and are consistent with Morocco’s Advanced Status with the EU,” the said. “Now we encourage the swift and effective implementation of this reform agenda,” the statement said.

[…] “The European Union is ready to fully support Morocco in this endeavour.”

So in diplomatic terms, our significant partners are basically accepting the result, and this international support -some might consider it to be a blank check- makes the regime more secure and confirms its hegemony over the Moroccan political discourse.

"How on earth did they manage such a score?"

This is even more obvious domestically: even though charges of ballot-stuffing and incoherent figures tarnished the referendum’s credibility, lambda Moroccans will not gainsay the result. The typical Moroccan voter (Male, Father of three children and living in a rural or sub-urban area) is more than likely to have voted for the constitution, not because what they would have read was interesting and appealing to their grievances, but because of multifarious factors: their social environment does not allow for criticism, individual decision-making or the use of Cartesian logics. Do I sound elitist and full of contempt? Perhaps I do. But the figures speak for themselves: the highest turnout figures were recorded in regions like Oued Ed-Dahab-Lagouira (92.19%) Guelmim-Es Smara (86.76%) Laâyoune-Boujdour-Sakia el Hamra (84.05%) and Doukkala-Abda (80.06%) All three regions are very tribal, and rely heavily on Makhzen administration for favours and other privileges, thus the higher outcome compared to national turnout. Conversely, low turnout in Casablanca and Rabat (respectively 57.17% and 72.39%) are thus because of its more individualistic, or shall we say more community-oriented settings, plus local administration has less leverage over its denizens, and so less likely to persuade them to vote (one way or the other).

The pro-democracy platform needs to pack up and look for new issues to campaign on, simply because the showdown that took place ever since February 20th is coming to an end, and not the movement’s advantage. The referendum might have been fixed, perhaps there will never be a solid body of evidence to suggest a nation-wide ballot-stuffing, and the absence of impartial scrutiny has a lot to do with it -perhaps if the retained option was a No-vote instead of an all-out boycott, there would have been some civic control over referendum proceedings. Furthermore, and because of the comparatively few people who took to the streets last week and today only confirm Moroccan apathy -and implicit acceptance- towards the referendum results.

The whiff of fresh air brought by the Feb20 demonstrations into the hermetical Moroccan political house, it seems, is losing speed. The long overdue New Politics many of us have been awaiting is yet again postponed to an unspecified date. Subsequently, there is a need to turn the public’s attention to more relevant issues: the national economy and the economics of national debt; the crumbling standards in public sector departments like Health and Education. More down to earth, issues that matter to the public are few and pressing: employment, standards of living and education for the future generations.

Paradoxically, these are the issues that explain the already existing and dangerously exacerbated social tensions between the haves and havenots. In between, our very own “squeezed middle” are the ones paying for these tensions, whether in demonstrations or just as a scapegoat for social resentment. I wish there was some sociological review of Feb20 prominent members; I would bet good money that many of these are of Middle-Class background, and those attacking them -the so-called “Baltagyas”- are from lower income and social classes. In any case, waging a political agenda does not seem to gather a lot of durable support, and that is why something else needs to be done.

Constitutional reforms can no longer be used as flag to rally dissatisfied individuals and communities. Rather, a more down-to-earth set of agenda focused on these immediate needs can win favours and support to build on more political and strategic grievances later on.