Resource allocation distortions hinder the optimal growth of high-productivity manufacturing firms in Morocco. Eliminating these distortions could triple the size of more than half of these firms and nearly double the sector’s output, according to a recent study by the High Commission for Planning (HCP).
Titled « Resource Allocation and Productivity Gains in the Moroccan Manufacturing Sector, » this study, conducted in partnership with the United Nations Economic Commission for Africa (UNECA), examines the impact of distortions on the productivity of manufacturing firms in Morocco and assesses the potential benefits of more efficient resource allocation.
The study notes that the Moroccan economy has shown resilience against external influences over the decades, but has experienced significant slowdown in recent years due to a combination of cyclical and structural factors. Growth has declined from nearly 5% between 2000 and 2009 to an average of about 3% between 2010 and 2023, exacerbated by the Covid-19 pandemic and inflationary pressures in a turbulent geopolitical context.
To revive the economy, it is crucial to implement policies for more efficient resource distribution across various sectors and firms. However, barriers such as limited access to markets and financing hinder the implementation of these structural and sectoral improvement measures.
The study highlights that poor resource allocation is a major impediment to the growth of high-productivity firms. Removing these distortions could triple the size of 51.1% of these firms and nearly double the manufacturing sector’s output.
Additionally, the study reveals a substantial correlation between business climate distortions and firms operating below their optimal size. These constraints hinder their growth trajectory and compromise their ability to achieve optimal productivity.
High-performing firms face obstacles such as land restrictions, corruption, labor regulations, nepotism, and corrupt practices. Therefore, eliminating these distortions would significantly boost many firms, enhancing the productivity and efficiency of the entire Moroccan manufacturing sector.
