Mar 01, 2022
On the New Development Paradigm in Morocco: Development for Whom?
Mohamed said Saadi
Economist and Independent Consultant

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Mohamed said Saadi

On the New Development Paradigm in Morocco: Development for Whom? - Mohammad Said Saadi

The report of the New Development Paradigm Commission, approved by King Mohammed VI in May 2021, addresses several political, economic, social, environmental, and cultural issues. It proposes several public policies, organizational mechanisms, and executive procedures to achieve the goals set in these domains. This article will focus on critiquing the report's economic dimension as an essential component of every development project, without neglecting the fact that development must be comprehensive, "for the people and by people."

The New Development Paradigm proposed by the Advisory Committee focuses attention to several problems closely related to development challenges in Morocco. They include, for example, but are not limited to the need to bring about a transformation in the production structure by diversifying the economic fabric (encouraging large-scale value-added productive sectors and advanced technological content), addressing the third sector (the social economy), giving priority to health, education, and the environment, and the need to create a public investment bank.

However, although these aspects seem positive in general, they should not obscure the fact that the approach adopted for drafting the report and its proposals do not make a clear break with neoliberal choices (that is, giving priority to the tripartite liberalization of the economy, privatization, and macroeconomic balances) that characterized economic and social policies adopted since the 1980s, especially the so-called structural adjustment programmes. This clear bias towards the neoliberal option is manifested in the diagnosis of obstacles to development, as well as in proposals for the advancement of the Moroccan economy.

With regard to diagnosing the current situation of the Moroccan economy, the report focuses on the shortcomings that accompanied the implementation of public policies in the economic field without raising the problem of the validity, feasibility, or relevance of the latter. For example, the hypothesis on which the privatization option is based, which states that the private sector is more efficient than the public sector, is not questioned, and considers the latter to be a breeding ground for mismanagement and corruption!

The same observation is valid with regard to the adoption of the "trickle-down" theory, where opening the door wide for the private sector leads to an increase in profits and helps raise investment and the growth rate and create job opportunities. Thus, prosperity would prevail and the benefits of this economic growth gradually trickle down from the top of the society’s pyramid to the bottom!! The same applies to adopting the hypothesis of the alleged benefits of free exchange and engaging in the global capitalist economy on the basis of specialization according to comparative advantages (specialization in the production of goods and services with low relative cost compared to other countries).

Another dimension tackled by the report is related to institutional obstacles, good governance, and sound management. The absence of an "integrated and integrative approach when preparing strategies and reforms" hinders coordination between them and limits their effectiveness, especially in the absence of coordination mechanisms. However, this approach reduces the institutional issue to its procedural dimension, as it does not raise the question of who makes the decisions regarding the policies and strategies followed, and to what extent responsibility is linked to accountability during their assessment. In other words, this question refers to the political dimension of the new development paradigm and the problematic of democracy in the Moroccan political system. In this regard, a clear bias is observed on the part of the report to executive ownership, as the only condition regarding strategic options and the basic directions that govern the development of Morocco and decide its destiny.

This option poses fundamental problems that the report overlooks, despite its emphasis on the importance of the democratic dimension in the development process. The dominance of the executive monarchy over the institutional structure makes the government a sub-organ of the palace, subjected to interference and watching decisions taken without its knowledge, as was admitted by Mr. Abdelilah Benkirane during his government tenure in one of his media appearances. On the other hand, singling out strategic decisions contradicts the nature of the democratic process, which calls for opening a responsible public dialogue in which all national actors participate. Last but not least, the monopoly of executive control over strategic decisions without the possibility of activating the principle of accountability is incompatible with the conditions of sound democratic governance. These conditions alone are sufficient to correct errors and carry out the necessary reviews in the event of the failure of strategies and policies.

The third dimension related to diagnosing the failure of past economic choices revolves around the spread of the logic of rentierism and interests that curbs the initiative and slows down the "structural transformation of the economy." There is no doubt that the authors of the New Development Model report were right in raising these obstacles that expose the rentier and unproductive nature of the private sector in Morocco. However, this diagnosis remains incomplete and partial for at least two reasons.

It turns a blind eye to the deep negative effects of the logic of poverty, which it limits to poor productivity. In fact, rentier and unproductive economic behavior contributes significantly to deepening economic and social disparities through the concentration of income and wealth. It hits the purchasing power of the weak and middle groups alike due to price increases resulting from the anti-competitive practices of the oligopoly that dominates several industrial, commercial, and financial sectors. This issue was particularly evident through the rise in fuel prices after the liberation of this sector by the government of the Justice and Development Party. As a result of complicity, companies dominating the sector reaped additional exceptional profits estimated at 17 billion dirhams by a parliamentary fact-finding committee! These rentier practices also help in weakening the bargaining power of wage-earners, as private sector lobbies press for the adoption of the so-called "flexibility of professional relations," which is in fact a hellish manner of spreading fragility among the Moroccan working people!

Another shortcoming in the report is the absence of the strong relationship that links economic influence with political power, knowing that they are two sides of the same coin. Recent studies on "crony capitalism" in Morocco showed the privileges and preferential treatment enjoyed by politically connected companies and groups in the areas of commercial policy and administrative procedures, for example, compared to economic actors who do not have political ties. In the same vein, the absence of independent economic supervisory institutions such as the National Transportation Regulatory Agency and the Competition Council from the political authority, given that the head of the institutional hierarchy is at the same time one of the largest economic actors in Morocco, is one of the main obstacles to the efficiency of their work.

The second issue in discussing the report relates to proposals for the advancement of the national economy. The main observation in this regard is that the report’s editors are limited to adopting the basic recommendations made by the OECD Development Center (a club that includes the world’s richest economies) in 2018 in a report entitled "A multidimensional study of Morocco, an in-depth analysis and recommendations. These recommendations are emphasized by various international and multilateral organizations (World Bank, IMF, EIB) and controlled by the conquering capitalist triad consisting of the US, the EU, and Japan.

The various recommendations center around the need to bring about a structural transformation in the Moroccan economy by engaging in global value chains (that is, as defined by the ILO: "the cross-border organization of activities necessary to produce goods and services and deliver them to consumers through development, production, and delivery inputs"), specialization in related activities, and high added value and advanced technological content (such as the automotive and aviation industries and renewable energies). To achieve this goal, it is necessary to take care of human capital and promote "good governance" (particularly improving the business climate and reforming institutions) in order to stimulate the private sector, especially foreign capital. For this purpose, the state and the public sector must invest in infrastructure (transportation, roads) and provide tax incentives to investors (for example, the report proposes a significant reduction in the corporate tax rate for economic sectors open to international competition).

These proposals call for the following observations. Firstly, it is noted that the neoliberal conceptual and linguistic (or "verbal") framework has not changed compared to what is applied in official speeches and government reports, where the focus is on vocabulary and phrases such as "competitiveness", "attracting foreign investment", and "structural reforms" (all of which are directed at serving domestic and foreign capital), "flexibility of the labor market", and the priority of "creating value for the benefit of the shareholder/investor." On the other hand, the report does not pay the slightest attention to values ​​such as "social justice" (it was only mentioned once or twice in the 152 page report), "workers' rights", and "gender relations". This linguistic narrative exposes the political and ideological nature of the report, which is biased in favor of capital and aims to serve the interests of the dominant social classes in Moroccan society.

Secondly, the bet on "climbing" global value chains in favor of activities with high added value and advanced technological content is not guaranteed for at least two main reasons. On the one hand, global economic prospects are characterized by much uncertainty and doubts about the possibilities of recovery from the devastating effects of the COVID-19 pandemic and the possibility of a return to austerity policies that are harmful to the economic cycle in advanced capitalist countries. The issue drew attention to, for example, the two recent UNCTAD reports, which do not exclude "another decade of lost development" by 2030 for the countries of the South. On the other hand, even if we assume that Morocco has succeeded in engaging in global value chains according to the perspective of the New Development Paradigm report, the benefits that it may reap seem insignificant. This is because what distinguishes global production chains is the monopoly of multinational companies, namely the backend that includes innovation activities protected by Intellectual Property Rights (IPRs) and the front end consisting of marketing and distribution activities.

The double monopoly of global production chains generated rentier profits enabling these companies to acquire the largest part of the added value of global supply chains. This division of labor leads to restricting the countries of the South to purely productive activities, which know intense competition. It also makes the share of producers and workers in the added value very limited, without ensuring respect for decent work conditions, as pointed out by many studies contained in ILO and UNCTAD reports in particular. In addition, specialization in some of the productive links of global value chains limits the possibility of real industrialization in Morocco, which is an indispensable condition for achieving comprehensive economic development.

In conclusion, it is clear that the "new" economic growth strategy that the New Development Paradigm report recommends is nothing more than a consolidation and deepening of the neoliberal choices that showed their limitations in the past, despite an attempt to mitigate their effects by adding a smear of the "third sector" and "participatory democracy". Therefore, breaking with the obsession with economic growth based on exports is an essential entry point for the emergence of a virtuous cycle between economic growth and social development. This alternative development path is based on the priority of paying attention to the internal market by improving the purchasing power of the toiling and vulnerable social groups (mainly workers, small farmers, traders, traditional craftsmen, and the informal sector) and addressing socio-economic disparities and redistributing wealth. This requires fiscal justice through the adoption of a progressive tax on income, a tax on wealth, fighting tax evasion, and the elimination of unproductive tax privileges.

On the other hand, the advancement of industrialization requires focusing on the developmental role of the state, similar to the successful experiences of the rise of some East Asian countries (China and South Korea in particular). It is obvious that the adoption of this alternative scenario depends on the availability of "policy space" (or margin for maneuvering) away from the dictates of international organizations affiliated with the countries of the rogue capitalist triad (especially the World Bank, the IMF, and the WTO). Last but not least, this alternative developmental conception necessarily passes through raising the pace of social struggles and citizen mobilization for the sake of another Morocco, a Morocco of dignity, democracy and social justice.

Mohammad Said Saadi

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