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.

The King’s Speech (That Shook Morocco)

Sorry, but the pun was too obvious not to state, and I always wanted to quip about John Reed’s book (‘Ten Days that Shook the World’)

Frankly, I wasn’t expecting it. I was expecting something bland, written in traditional makhzenite with blurry objectives and pompous expressions inherited from the glorious era of Hassan II. I was referring to the speech-writers of course (well, the constitution is bound to be changed, so I can afford to discuss the speech, am I not?) But no. The one thing that eluded the Monarch since he inherited the throne, the constitutional reform is finally on the table. When previous speeches read and minutely deciphered, the upheavals in North Africa and the Middle East, and domestically the stalwart dedication of ‘February 20th’ movement did play some significant part in gently pushing the core policymakers into a major shift in their political tactics (I still have doubts whether there’s a sensible strategy, or any organized thinking on the long-term)

The Blogoma already started to post on the Speech: Larbi, DocteurHo and BigBrother, to name but the well-known few, already spoke their minds (well, some did, others just plugged into propaganda-mode) and the Twittoma is saturating with opinions and 140 characters-strong discussions. I wish I could contribute too and live up to the standards they set (famous or infamous may they are). Perhaps with the benefit of hindsight, I would dismiss this very post as too premature and ill-informed, but still, I would like to venture an alternative view; Because let’s face it, historical tough it is, all indicators, hints and symbols are cleat about one thing: nothing essential is changing or likely to change.

His shadow looms over the upcoming constitutional reform

But then again, for all the disagreement with, say, DocteurHo, I should admit my gut-feeling over this: it remains a historical day (I allowed for a joyful shout briefly when I heard about the constitutional referendum!). Not for the upcoming constitutional referendum -a consultation on which I will most certainly vote ‘No’, unless some very, very unexpected project is presented to the People’s will. It is historical because less than two months ago, what was considered to be a definitely confirmed balance of political strength heavily in favour of the Monarchy, has been suddenly reset to a different equilibrium. We have moved from an executive monarchy –with no constitutional reform agenda in sight- to a blitzkrieg-style commission with a June 2011 deadline. In 10 years reign, it is going to be His Majesty’s first constitutional referendum: such electoral consultation is quite different from regular general and local elections. It is a decisive test no doubt. And contrary to ‘classical’ elections, He needs a clear win, overkill: even a 70-80% win is a half-defeat for him. This is my view of the referendum, but then again I am getting ahead of myself.  Overall, the official line is likely to be that of a giant political and institutional spring cleaning, but not in the ‘right way’ (i.e. a genuine political reform agenda). I should exercise caution here, a ‘wait-and-see’ till the commission members are officially called up. Caution doesn’t prevent one from expressing views, or speculating about the future, does it?

I did mention that as a self-defined left-wing radical, and with a lawyer like Abdellatif Mennouni heading the commission, I would find any proposal (again, unless there’s some fireworks surprise) well below my minimal set of grievances: I’d very much doubt the new constitution would abolish altogether Art. 19 or change the succession rules to be gender-neutral. I don’t expect the new constitution to even get close to confirm institutions like the Kingdom’s Mediator and existing institutions as constitutionally independent like the Supreme Court, the Court Audit or the Central Bank, I wouldn’t expect the King to relinquish all executive powers and perform essentially honorary duties. And most of all, I don’t expect the new constitution to write a precise notice of establishing a constitutional convention for all core institutional changes. But still, this is an opportunity window (small, cloistered and actual reforms are unlikely to fit in) but still, a window. I have to pluck up my good faith and summon all my hopes to say that this is a historical opportunity (again, historical because it has been broached on us, and for a long time!)

I’m actually in two minds: best case scenario, the commission gets out of (Royal) hands; a maverick like Mohamed Sassi would do wonderful damages to the cranky Makhzenian legislation, and we end up with a ‘moderate’ but certainly workable constitution that gets unanimous support. Hopefully an election is called up and a strong coalition rules with a charismatic Prime Minister. There’s another dream scenario, whereby the government calls up for a constitutional convention in a year or two years time with nationwide debates, but this is too orgasmic for me to contemplate…

Worst case scenario, the only real thing that changes is the ‘regionalization’ stuff, with an upgraded version of the 1997 local government bill. End of story, end of constitutional changes, end of the line. Next. It depends on how bold His Majesty’s moves are going to be, and whether His circle would now understand it is high time they dealt out substantial scores of Royal prerogatives and transfer them to the people’s representatives.

So here’s my opinion: I’ve heard the speech -live- and then read it in extenso. I had a quick discussion with a number of friends about it.

Realistically, it is not going to be satisfactory to me or those close to my political leanings, nor would it meet the set of grievances put forward by the Feb20 movement and the non-mainstream political parties supporting the protest. But it does show that somehow, somewhere behind the walls of Bab Assoufara, the policy-makers finally awoke to the need to change the fuse. An acquittance of mine has this interesting theory about the Makhzen and its favourite fuses:  whenever a crisis looms, Makhzen elite either hold on to the existing fuse (a political party like the USFP in 1998, or the Sahara issue since 1975) or when the incumbent burns up, there’s a quick switch, and a brand new fuse is brought in and manage to exhaust the dissidence (the fuse in question can be a technocratic don like Jettou in 2002 or Azzimane in 2010, a turned-out dissident like Herzenni or Sebbar), which gives the impression of deep reforms but concedes in reality nothing substantial. It is not remote from the realm of possibility that this seemingly audacious announcement is  a smokescreen constitutional changes.

I would selflessly contribute to such scheme by joining the Central Bank –or the Finance Ministry- for fresh input and ideas. (if anyone scanning the blog from the Royal Cabinet’s office, please contact me for more information, you’d gain a lot with a yahoo, gun-ho leftie within the Establishment, believe me !)