2019 Index of Economic Freedom

Morocco

overall score62.9
world rank75
Rule of Law

Property Rights57.2

Government Integrity39.2

Judicial Effectiveness47.1

Government Size

Government Spending72.7

Tax Burden72.2

Fiscal Health66.9

Regulatory Efficiency

Business Freedom70.3

Labor Freedom33.1

Monetary Freedom83.5

Open Markets

Trade Freedom77.4

Investment Freedom65.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 34.9 million
  • GDP (PPP):
    • $298.6 billion
    • 4.2% growth
    • 3.4% 5-year compound annual growth
    • $8,567 per capita
  • Unemployment:
    • 9.3%
  • Inflation (CPI):
    • 0.8%
  • FDI Inflow:
    • $2.7 billion

Morocco’s economic freedom score is 62.9, making its economy the 75th freest in the 2019 Index. Its overall score has increased by 1.0 point, with improvements in fiscal health, property rights, and judicial effectiveness outpacing lower scores for government integrity, labor freedom, and trade freedom. Morocco is ranked 6th among 14 countries in the Middle East and North Africa region, and its overall score is above the regional and world averages.

Low labor costs and proximity to Europe have helped Morocco to build a diversified and market-oriented economy. The government is taking additional fiscal consolidation measures to boost growth and improve private-sector competitiveness by strengthening public finances and introducing a more flexible exchange-rate regime. A large part of the labor force remains marginalized by inflexible labor laws, and the government has yet to confront other long-standing challenges that require deeper reforms, particularly in connection with ensuring the evenhanded rule of law.

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Background

Morocco’s Alaouite royal family dates from the 17th century. A constitutional monarchy with an elected parliament, Morocco has been a key Western ally in the fight against Islamist terrorism. Following popular protests in 2011, King Mohammed VI authorized a commission that proposed constitutional amendments, later approved by referendum, to increase the prime minister’s power and independence and provide greater civil liberties. The king retains significant power as chief executive. In addition to a large tourism industry and a growing manufacturing sector, a nascent aeronautics industry has attracted foreign investment. The United Nations has monitored a cease-fire between Morocco and the Polisario Front in the resource-rich and phosphate-rich Western Sahara since 1991, but peace talks have been deadlocked since 2008.

Rule of LawView Methodology

Property Rights 57.2 Create a Graph using this measurement

Government Integrity 39.2 Create a Graph using this measurement

Judicial Effectiveness 47.1 Create a Graph using this measurement

The rates of land titling and land rights registration are low, and the World Bank’s 2018 Doing Business survey reported that the government has made property registration more expensive. The judiciary is not independent of the palace, and the courts are regularly used to punish opponents of the government. Officials engage in corrupt practices with impunity, and anticorruption laws are not implemented effectively.

Government SizeView Methodology

The top individual income tax rate is 38 percent, and the top corporate tax rate is 30 percent. Other taxes include value-added and gift taxes. The overall tax burden equals 20.9 percent of total domestic income. Over the past three years, government spending has amounted to 30.2 percent of the country’s output (GDP), and budget deficits have averaged 3.9 percent of GDP. Public debt is equivalent to 64.4 percent of GDP.

Regulatory EfficiencyView Methodology

Procedures for setting up and registering a private business have been streamlined in recent years. The process of launching a company has become easier with reduced registration fees. Despite some improvement, labor market rigidity continues to discourage dynamic employment growth. The government is determined to continue phasing out subsidies for butane gas, fuel, sugar, and flour but will increase targeted subsidies.

Open MarketsView Methodology

The combined value of exports and imports is equal to 83.5 percent of GDP. The average applied tariff rate is 3.8 percent. As of June 30, 2018, according to the WTO, Morocco had 38 nontariff measures in force. Foreign and domestic investors are generally treated equally under the law. The financial sector is competitive and offers a range of financing options. The Casablanca Stock Exchange does not restrict foreign participation.

Country's Score Over Time

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Regional Ranking

rank country overall change
1United Arab Emirates77.60.0
2Israel72.80.6
3Qatar72.60.0
4Jordan66.51.6
5Bahrain66.4-1.3
6Morocco62.91.0
7Oman610.0
8Kuwait60.8-1.4
9Saudi Arabia60.71.1
10Tunisia55.4-3.5
11Egypt52.5-0.9
12Lebanon51.1-2.1
13Iran51.10.2
14Algeria46.21.5


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