From: dean@vexcel.com (Dean Alaska)
Subject: Development policies
Organization: VEXCEL Corporation, Boulder CO
Date: Tue, 15 Dec 1992 15:59:57 GMT

After some discussions here with Gary, John and Stein, I wanted to tie a
few ideas together.  Readers might ponder why World Bank economists
did not realize that the huge export boom they promoted would not
lead to the commodity price plunge that occurred.  Did they forget
about supply and demand.  Also, just who was expected to absorb the
huge trade surpluses that would result?  Export strategies appear to
be working for a few countries in Asia, but can they work for a large
number of countries or is this a zero-sum game?  Is a strategy that
works for a few countries and fails for dozens to be recommended?

What follows is an extended excerpt of the history of this policy in
Morocco.

The story starts in the mid-1960's. Just a few years after its independence 
from France (1956) Morocco experienced financial difficulties and asked the
World Bank and IMF experts to help solve them.  The experts recommendations
became national development policy.  Their basic idea was that Morocco had 
a comparative advantage in agriculture and should maximize it by modernizing
its farming system and orienting it towards export crops like citrus fruits
and fresh vegetables.  The cost of modernizing would be paid for with
export revenues.  In practice, modernization mostly meant irrigation
(i.e., building dams).

They called it the 'dam policy' - _la politique des barrages_ - and it was
supposed to lead to 1 million irrigated hectares, or 2.5 million acres, by
the year 2000.  The modernization schemes drained between a quarter and a
third of _all_ public investment and two thirds of all investment in
agriculture.  Since this costly strategy concentrated improvements on less
than 10% of the land, resources left over for the remaining 90% were paltry,
even though the livelihoods of four fifths of the rural population depended
on the land left undeveloped.  The fortunate few with access to irrigation -
mostly large landholders - were also able to buy subsidized tractors, 
fertilizers and Green Revolution seeds at 20 to 35% below real cost.  Water
itself was sold at such a low price that it was virtually free, while farm
credit was reserved almost exclusively for large producers.

The state thus took on the financial burdens of modernization, while large
private interests made the profits.  What's more, taxes on agriculture, 
even in the prosperous export sector, were low to non-existent and never
brought in more than 1% of state revenues.  King Hassan even went so far
as to announce, in 1984, that because of the drought there would be _no_
taxes on agriculture up to the year 2000.

Since policy explicitly favored export crops, Morocco voluntarily became
a food importer.  This seemed a good idea in the 1960's, when world
food prices were low and stable, and plentiful imports helped to keep
down consumer prices for basic staple foods.  The country's own hard
wheat, the kind that makes good couscous, a delicious national dish,
gave way to soft-wheat imports, while native oil was largely replaced
by soybean oil bought from the U.S.

In the early days of the export-oriented model, in the mid-1960's,
Morocco was able to finance most of its own modernization, but soon
external financing was called upon to pay for greater and greater chunks
of this policy.  On the early 1970's the country depended on external
credit sources for 23% of the cost of its _politique des barrages_ (all
projects, not just the dams themselves).  By the mid-1970's, as dependency
on outsiders for food and farm inputs grew and the prices of both
skyrocketed, the proportion of outside funds needed amounted to _half_
of the modernization bill.  A huge gap between 1980 and 1984 brought the
external financial share to 76% - which meant an equally huge increase in
the national debt.  Debt, which in 1970 was a bearable 18% of the GNP,
hit 110% of the GNP in 1984.  Part of the debt explosion was also due to
the drastic drop in world market prices for phosphate, one of Morocco's
major exports.

The chickens (so to speak) of this policy came home to roost with a vengeance
in the 1980's.  Although cereals and legumes were still planted on 80% of
the land, farmed mostly by smallholders, they had received little or no
investment and technical support over the years.  Because of stagnant of
declining yields on one hand and population growth on the other, per
capita production wheat in 1984 was less than half of what it had been
in 1955 and even lower than in 1930.  Olive oil and legumes suffered
similar, though slightly less steep, declines.

The local food situation is hardly encouraging.  Morocco, a cereals
exporter in the 1950's, today satisfies only a fifth of its own wheat needs.
Food imports rose by an average of 17%/year between 1970 and 1983 - a
stunning 220%.  This was not accident but policy.  Exports, the object of 
the governments constant attention, increased also, but at the much
slower rate of 8% annually.  As a result, neither its markets nor the
sources of its food supply are today to be found inside Morocco but are
located in the North.  Another classic consequence of giving priority 
to the largest and wealthiest farmers was the impoverishment of the
small ones and their consequent migration to the cities, where most of
them had to get along in the 'informal' economy, a euphemism for no real
jobs at all.  Of such people, and their children, are food rioter made...

--

The previous information is from Najib Akesbi, 'Dependance alimentaire et
"verite des prix": mythes et realities', contribution to the International
Colloquium of the Association of Moroccan Economists on International
Financial Organizations and Development Problems in the Third World,
21-4-April 1986.  It is quoted from pages 80-82 from "A Fate Worse Than
Debt" by Susan George.
-- 

		dingo in boulder	(dean@vexcel.com)
Newsgroups: sci.environment