Examining The Economy Of Morocco Economics Essay

Morocco is a country with a population of 33 million and its area is 710850 Km2, located in the North West Africa, officially known as “kingdom of Morocco”.

Morocco has a coast on the Atlantic Ocean, reaching the “strait of Gibraltar”, into Mediterranean Sea. From north Morocco ahs water border with Spain, and land border with Algeria from east and Mauritania to the west.

Morocco is a constitutional monarchy with an elected parliament. And the prime minister is head of the government, where the king of morocco has a variety of executive rolls.

In terms of economy, Morocco has liberal economy governed by the law of supply and demand, from 1993 Morocco is privatization special sectors in its economy, Morocco is having an important effect on Africa’s affair, and it is the 5th powerful economy in Africa.

Morocco is the fourth populated country in Africa, after Egypt, Sudan, and Algeria. The official religion of Morocco is Sunni, Islam. The population is a mixture of Arabs, Berbers, Jews, and Arab-Berbers; there is also an insignificant population of European mostly from France and Spain, which are nearly 100,000.

Technology in Morocco has significantly developed in recent years. The Moroccan government has been implementing reforms to encourage scientific research in the Kingdom. While research has yet to acquire the status of a national priority in Morocco.

PEST Analysis

Politics

Business law

In Morocco, business law is greatly inspired by French law, from which it has borrowed a large number of provisions regarding contract and company law. The major principles for drafting and executing contracts will be quite familiar to foreign investors, although they may face difficulties when it comes to the actual application of the different clauses. For instance, in the event of nonfulfilment of an obligation, penalty clauses are very rarely used in Morocco and the judge alone can decide on how a conflict is to be resolved.

Given the difficulties involved in debt recovery and the somewhat random nature of legal decisions, before entering into an agreement it is best to seek advice from a company specialised in information on business repute. Care should also be taken in choosing the means of payment and the contract should be drawn up by specialists.

Taxes and Tariffs

At the core of Morocco’s effort to entice foreign business is the 1995 Investment Charter Law, whose simplified tax code superseded dozens of antiquated investment laws. The tax incentives within the Investment Charter include a 2.5 percent discounted tax rate for land acquisitions intended for housing developments; a 0.5 percent tax on any company contributing to capital formation or capital increase; and an exemption from registration fees associated with the purchase of land intended for capital investment.

As an additional incentive measure, Morocco simplified the country’s customs schedule, applying two flat-rate tariffs on all imported machinery, parts, equipment, capital goods, and accessories bought into Morocco to expand a business.

The Charter also shields foreign investors from paying value added tax (VAT) on imported equipment, materials, and goods; and exempts start-up firms from license fees, corporate taxes, and general income taxes for five years. Thereafter, new businesses are required to pay a tax that is deeply discounted.

Labor Laws

Morocco has also reformed many of its labor laws and clarified employment rules. The government is improving the country’s pool of skilled labor by stepping up funding for public learning institutions that offer vocational training.

Economic

Morocco geographical location is Northern Africa, neighboring the North Atlantic Ocean and Mediterranean Sea, between Algeria and Western Sahara. For the major resources of Morocco economy are agriculture, phosphates, and tourism. Beyond that, the others important also are sales fish and seafood.

In the industry and mining are contribute about one- third of the annual GDP. Morocco is the third-largest producers of phosphates. That was after the United States and China. On the international market the price fluctuations of phosphates are greatly influence Morocco’s economy.

Agricultural have plays an important role in the economy, accounted for 15 to 20 percent of GDP, but is depending on weather conditions, owing to its dependence on rainfall for watering; and the unceasing problem is unpredictable rainfall, which produces drought or sudden floods.

The Morocco economy are characterized by macroeconomic stability, high growth rates over the past several years; the production of textiles and clothing is a part of growing manufacturing sectors that accounted for approximated 34% of total exports in 2002, employing 40% of the industrial workforce. The largest provider to the GDP is services sector in the economy. The developed and rapidly changes of Tourism and services sectors accounted for 52 percent of the GDF therefore the employed are 35 percent of the labor forces in years 1999. In exports industry there are include textiles, shoes, clothing, and the most important is raw phosphates processed products, and also including phosphoric acid and fertilizers for agricultural use. Morocco is the world’s largest exporters of raw and processed phosphates, but the phosphates sector just only 3 percent to the GDP.

For the exchange rate in Morocco, from side to side a foreign exchange rate anchor and management policy, Morocco has grip inflation rates to industrial country levels over the past decade. Inflation fell in 2008, mainly due to the fall of world and local food prices. Result of rising international commodity prices. Regardless of criticism among exporters that the dirham had become badly overvalued, the country maintained an account surplus, to transfers from Moroccans resident abroad, tourism revenue, and foreign investment. Morocco has since run a slight deficit, but foreign exchange reserves remain strong.

In the Business cycle of the main finding show that, Morocco has witnessed since beginning of the eight complete business cycle and a ninth one not yet finished. In addition to breaking with relatively short business cycles, another qualitative characteristic of Morocco economy in recent years has been the notable decrease in GDP volatility. Many reasons can be put forward, currently observed worldwide on national economy.

In the employment rates, Morocco women’s labour force participation might be low compared to that of men, nearly 70% of women work it is more steadily compared to 56% of men.

Social

Demographics

Morocco’s population is growing at a somewhat faster rate than countries that outside the Africa. However, it is below the average for those countries that in the Middle East and North Africa. Morocco’s population is 31,627,428 (July 2010 establish). The Arab-Berber makes up 99.1% of the total population. Berbers, one of the ethnic group that consist of 33% of the population, the Berbers concentration of population are more in the northern regions of the Rif, the middle plains of the Atlas and the Sous Valley. Arabs, is other ethnic group that comprise about 66% of the population, they are more principally concentrate on the Atlantic coastal plain and in the cities. The Arabs and Berber are closely harmonious and bilingualism is common. The Jewish community played a important role in the economic life of the country, but Jews only made up 0.2% of the population. Other groups compose the remaining 0.7% of the population, this including French, Spanish, Italian and Algerian nationals living in Morocco.

Figure 3 Ethnic Groups

Most of the Moroccans are living in the west of the Altas Mountains. The city of Tangier is a major port. The people who want to go to Spain can go via this port. Casablanca also is a major port in Morocco and it is the center of Morocco industry and commerce. Most of the tourist will go to Marrakech, so it is the tourist center of the country. The seat of government is placed in Rabat and it is the capital of Morocco. The religious and cultural center is the city of fez.

In Morocco, the official language is Arabic. Most of the Moroccans are specking Berber in rural areas. However, in other local Moroccans use distinctive Arabic dialed called Moroccan Arabic. French is an unofficial second language that is taught generally and serves as Morocco’s primary language of commerce and economic.

Figure 4 Population Trend

Education

The education in Morocco is more progressive. Children attending primary school are free and compulsory. And there are about 230,000 students enrolled in fourteen public universities. However, access to education in Morocco is poor by global standards. Enrolment rates at the primary, secondary and tertiary levels all rank among the bottom 40 countries. According to Yahoo Real Estate, there are only 5.2% students have graduated degree. In addition, many children especially girls in rural areas do not attend school. In the light of SWMENA survey, the male education attainment is higher than the female; the female education attainment who dwelling in urban areas are higher than the female who dwelling in Rural areas.

Figure 5 Education attainments in Morocco (All respondents by gender)

Figure 6 Education attainment by urban and rural region

Figure 7 Morocco education statistic

Spending habit

According to the Morocco Planning Commission (HIC) in 2007, there is 41% of the Moroccan household budget is spent on food. In addition, the fruit and vegetables account for 19.4%. The priority of Moroccan is being given to health, transport and communication due to the quality of life has improved in the line with the global development. They are reducing to absorb cereals and sugar in order to take account of their healthy. 3.8% of the Moroccan household budget is spent on domestic appliances.

Figure 8 consumption expenditure by product category as % of the total expenditure

Figure 9 main consumer durables as % of households owning them

Technology

Morocco’s Casablanca Techno park was established in October of 2001 and covers a total surface of 29,400m². This is Morocco’s first industrial park in Casablanca and this project is under the supervision of Ministry of Communications of Morocco, which takes care of the Casablanca Techno park and its General Director of Rabat Techno polis, Abderrafie Hanouf. The Casablanca Techno park helped a lot to improve the industrial aspects of the city in Morocco. The industrial park proves that Casablanca is improving in all aspects including the technological aspects. Various multinational companies are investing in Casablanca because Casablanca Technopark serves various essential purposes in the society of Casablanca. Different types of activities are arranged in the Casablanca Techno park like its training and courses regarding e-learning that is very helpful for the students in Casablanca.

As of 2006, Casablanca Techno park was hosting 132 companies, which comprised of 55 start-ups, 67 medium-sized companies, 4 big companies and 6 training centers. The business incubator provides business owners with an environment that helps them establish and develop their projects in the ICT field and turns their ideas into strong businesses. By providing services to them and enabling overhead costs to be reduced by sharing facilities, the incubator aims to significantly improve the survival and growth prospects of start-ups and small firms in the early stages of development. The incubator offers a wide range of complementary services and provides dedicated office space, value-added business support, technical assistance in developing effective business planning, hands-on training in special fields, business links, advice and networking. In November 14 2003, an agreement was made removing all tariff barriers on Information Technology products, which included telecoms equipment and personal computers. This agreement made Morocco the 61st member of the WTO’s Information Technology Agreement, which was approved by The Committee of Participants on the Expansion of Trade in Information Technology Products. Morocco’s Ambassador Omar Hilale said that Morocco’s imports of Information Technology products have been increasing in recent years because of tariff cuts and by joining the Information Technology Agreement it would make prices of Information Technology inputs in Morocco more competitive and would drive a strong signal to foreign investors and promote local industries by making Information Technology products cheaper for Moroccans.

Conclusion

All in all according to the charts and information we have, morocco is a good place to start a business, low taxes, less government control, lower wages than other countries in the area, enough human resources, and Morocco’s geographical location makes this country a perfect place for shipping, the ratio of Supply and demand is quite good, and Morocco I known as a growing country, another good point that can be mentioned for Morocco is that Morocco has a good trade relation with United States. Morocco’s population is among the largest in Africa, so there is no such a thing as lake of work force, so in case the firm needs a huge work force, there are no worries about it. Since Morocco has a wide range of water border in Mediterranean Sea and Atlantic ocean, the firm can export its products easily, to Europe as well as other African countries (since Morocco is the 5th powerful economy in Africa).