Publication: Product and Factor Market Distortions: The Case of the Manufacturing Sector in Morocco
Date
2017-10
ISSN
Published
2017-10
Author(s)
Abstract
This paper studies the effect of market
distortions in the manufacturing sector in Morocco. Recent
microdata are used to calculate the extent of resource
misallocation associated to these distortions and the
potential total factor productivity (TFP) gain resulting
from their removal. Market distortions in the manufacturing
sector in Morocco are higher compared with developed
countries and slightly more important compared with other
developing countries, such as China and India. These
distortions decreased between 2007 and 2013. Full
liberalization would raise TFP by about 84 percent. If
distortions are removed to the level of selected developed
countries with better resource allocation, the increase in
TFP would be of 56 percent. The paper also finds that
industries that are more opened to competition
(international and domestic) such as machinery and textiles
industries present lower levels of market distortions
compared with more protected industries with relatively
little competition, such as the food industry. Besides, a
higher level of TFP can be achieved if more resources are
allocated to “young” and “small” firms. The main results of
the paper are robust to an alternative estimation that uses
a different methodological framework with a less extensive
theoretical framework. The paper discusses policies to
further limit the extent of product and factor market
distortions in Morocco.
Citation
“Chauffour, Jean-Pierre; Diaz-Sanchez, Jose L.. 2017. Product and Factor Market Distortions; Product and Factor Market Distortions: The Case of the Manufacturing Sector in Morocco : The Case of the Manufacturing Sector in Morocco. Policy Research Working Paper;No. 8218. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/28553 License: CC BY 3.0 IGO.”
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