The Moorish Wanderer

‘Plan Maroc Vert’ – Grand Dams Redux?

Morocco’s Godwin Law evolves usually around the Big Dams built during the late 1960s and 1970s to burnish the economic legacy of King Hassan II.

La politique des barrages lancée par Feu Sa Majesté le Roi Hassan II dès 1967 traduit la pertinence des choix stratégiques opérés en matière de développement économique et social et de valorisation des potentialités agricoles du pays à travers le développement de l’irrigation.

(Rapport Cinquentenaire – Ressources en eau et bassins versants du Maroc : 50 ans de développement)

It also serves as the opening gambit for the strategy to justify nowadays’ “Grands Chantiers” policy. Let me go on the record to state my complete adherence to a policy designed to improve and expand public infrastructure with large public investment. There is nothing wrong with it, quite the contrary. However, the snag with the Grands Chantiers is essentially institutional: I suppose the benevolent authority only goes as far in its benevolence as its own interest lies in the mechanism design it enforce. Unfortunately, there is ample evidence that a benevolent authority in Morocco doesn’t exist: once a player gets to set the rules, these are bound to be bent to their advantages.

But this does not fall within the purview of my post today; I have had a bit of a difficulty to gather data on the matter, but here it is. In a nutshell, I am interested in the dynamics of Agricultural and Non-Agricultural GDP per effective worker since 1955. The (big) Dams have been built with the ostentatious purpose of improving agricultural output by storing and distributing water. As one might assume, such investment should have led to an increased productivity per agricultural worker: after all, production in that particular subject is subject to diminishing returns (because of the fixed stock of land) and improving the use of a vital input should, at least on paper, increase productivity per worker over time. I am no expert in agricultural economics, but there are some properties one can observe across all productive sectors: building the dams should have a positive impact on productivity per worker; otherwise, why bother spending billions of Dirhams?

Base year 1955: Non agricultural output per worker increased 7 folds. Agricultural output per worker only doubled.

To compute productivity per worker means to first split total labour force and output into agricultural and non-agricultural, and compute their respective ratios (which is no easy task since HCP does not provide data on 1955-1959) and then plot their annual growth with 1955 as base year. Output per worker radically diverges right from the early years, from 1958 to be precise.

By 2011, the gap increased to the point where an agricultural worker has to work 5 times as much to match the output produced by their non-agricultural opposite number. Not only that, but agriculture in Morocco did not improve its productivity since it has stagnated; it has exhibited an average real productivity growth rate of 1,23% versus 3,71% for the other sector. In that respect at least, dams did not do very well.

Perhaps a case can be made as to the way I have computed agricultural productivity; after all, if rural population exhibits higher demographic growth, the ratio is flawed since rural labour market is a lot more homogeneous than national or urban markets, and hence demographic growth is akin to annual growth in the labour force. If anything, rural population has proven to increase at significantly lower levels compared to nationwide and urban growth. So this precludes a demographic caveat: productivity in Morocco’s rural fields is lagging, even as the whole economy grew and made use of technological change. So, did the dams do well? To check if these have been useful, we would expect a gradual cut in output volatility. After all, much of output fluctuations (especially in Morocco) is due to rain forecast (although that particular argument is bound to be discussed too) and the dams were there precisely to alleviate the randomness of rain seasons.

Before 1967, logged agricultural output per worker was around 9.14% and gradually increases to 10.68% for an average volatility around 10.21% an empirical evidence strong enough to conclude that agricultural output grew more volatile after the dams were built. Though there is no proof of definite correlation between both events, it is safe to say that these public investments failed to achieve their initial aim. If anything, the dams and the agricultural policy pursued since then hurts the vast majority of the Moroccan farmers. The quantitative impact of these policies remains to be published by the relevant authorities.

In that respect, agricultural GDP has been a drag on the aggregate growth, because it has failed to go beyond their structural diminishing returns. It has been a drag because in the final analysis, aggregate productivity is closer to that of rural sectors, which implies disproportionate concentration of technology in one sector and deprive the other actual weakens the sum of both. In that sense, to improve GDP growth means bigger technological changes in rural output per worker.

Plan Maroc Vert has made it clear their main action allocates 80% of its funds to the top 20% already modern, mechanized and export-oriented agribusiness industries (). This concentration in technology is similar to the failed experiences carried out ever since 1958, because it will confirm strong incumbents and at the same time submit smaller farmers permanently.

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.