2014 Index of Economic Freedom

Morocco

overall score58.3
world rank103
Rule of Law

Property Rights40.0

Freedom From Corruption33.3

Limited Government

Government Spending64.1

Fiscal Freedom71.3

Regulatory Efficiency

Business Freedom76.2

Labor Freedom31.5

Monetary Freedom78.1

Open Markets

Trade Freedom58.8

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 32.5 million
  • GDP (PPP):
    • $171.2 billion
    • 3.0% growth
    • 4.4% 5-year compound annual growth
    • $5,265 per capita
  • Unemployment:
    • 8.8%
  • Inflation (CPI):
    • 1.3%
  • FDI Inflow:
    • $2.8 billion
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Morocco’s economic freedom score is 58.3, making its economy the 103rd freest in the 2014 Index. Its score is 1.3 points worse than last year due to declines in trade freedom, freedom from corruption, and monetary freedom. Morocco is ranked 10th out of 15 countries in the Middle East/North Africa region, and its overall score is just below the world average.

Over the 20-year history of the Index, Morocco’s economic freedom score has dropped by nearly 5 points, one of the 20 largest declines. Modest gains in half of the economic freedoms, including fiscal freedom, trade freedom, and financial freedom, have been overwhelmed by declines, particularly in property rights and freedom from corruption. Once ranked “moderately free,” Morocco’s economy is now rated “mostly unfree.”

Morocco has tried to integrate its economy into the global marketplace, but overall progress toward greater economic freedom has been uneven. Critical challenges include widespread corruption and relatively high government spending. Budget deficits continue, and public debt has risen to almost 60 percent of GDP. The judicial system remains inefficient and vulnerable to political influence.

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Background

Morocco, a constitutional monarchy with an elected parliament, has been a key ally in the international struggle against Islamist extremism. Constitutional amendments proposed by a commission authorized by King Mohammed VI and approved by referendum in 2011 are designed to increase the power and independence of the prime minister and provide protections for human rights. In November 2011, the Justice and Development Party became the first Islamist party to lead a Moroccan government, although the king retains significant power as chief executive. Morocco has a large tourism industry and a growing manufacturing sector. Agriculture accounts for about 15 percent of GDP and employs almost 45 percent of the labor force. High prices for fuel, which is heavily subsidized, have worsened the current account deficit.

Rule of LawView Methodology

Property Rights 40.0 Create a Graph using this measurement

Freedom From Corruption 33.3 Create a Graph using this measurement

Despite government rhetoric about combating corruption, it remains widespread in public life and in the business world. The government has tried to improve the transparency of public tenders and now requires that senior government officials declare their assets at the beginning and end of their government service. The judiciary is influenced by the king, and adjudication of cases can be slow.

Limited GovernmentView Methodology

The top individual income tax rate is 38 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT) and a gift tax. The overall tax burden is about 23 percent of GDP. Government spending accounts for 35 percent of the domestic economy. Public debt has reached almost 60 percent of GDP, and social spending has been rising in response to “Arab Spring” pressure.

Regulatory EfficiencyView Methodology

Burdensome requirements continue to hurt regulatory efficiency. Completing licensing requirements takes over 100 days and costs twice the level of annual average income. The labor market remains inefficient, and chronic unemployment and underemployment continue. Costly subsidies for basic commodities (estimated at 6.5 percent of GDP in 2012) have placed heavy pressure on government spending.

Open MarketsView Methodology

Morocco’s average tariff rate is 13.1 percent. Tariffs provide around 7 percent of the government’s revenue. Investors often find the legal and regulatory systems difficult to navigate. The financial sector is fairly well developed in comparison to other economies in the region, and banking intermediation is increasing gradually. Credit costs remain relatively high.

Country's Score Over Time

Bar Graph of Morocco Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Morocco to other economic country groups

Regional Ranking

rank country overall change
1Bahrain75.1-0.4
2United Arab Emirates71.40.3
3Qatar71.2-0.1
4Jordan69.2-1.2
5Israel68.41.5
6Oman67.4-0.7
7Kuwait62.3-0.8
8Saudi Arabia62.21.6
9Lebanon59.4-0.1
10Morocco58.3-1.3
11Tunisia57.30.3
12Yemen55.5-0.4
13Egypt52.9-1.9
14Algeria50.81.2
15Iran40.3-2.9


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