Trade Openness and Inclusive Growth in Morocco : Challenges and Opportunities in a Post-Pandemic World

Abstract

This study aims to determine the impacts of trade openness on economic growth in Morocco, following the SVAR approach by (Blanchard and Perotti, 2002) and using impulse response functions over the period 1990-2020. The results indicate that trade openness has an insignificant effect on economic growth in the country, in the sense that a positive shock to the degree of openness of 1% has a timid effect on economic growth. The nature of the relationship between trade openness and economic growth is justified by different external economic shocks.  Therefore, Morocco has experienced the establishment of a trade liberalization policy in the face of a macroeconomic framework that is often unstable due to the non-diversification of the country's exports and the concentration only on a few limited sectors. In addition, the existence of certain barriers and obstacles has cooperated to disrupt the freedom of trade between Morocco and the outside world including the financial crisis of 2008 (GFC) and recently the health crisis of COVID-19. Accordingly policy makers need to integrate multiple institutional, macroeconomic, human, and financial factors to achieve a model that can drive post-COVID-19 economic activity.