Over the past 15 years, Morocco has made significant changes to its business environment and its public policies to modernize the economy and encourage efficiency. The efforts to improve the business climate have been recognized in many international rankings, such as the World Bank Doing Business, and owing in particular to business start-up reforms (World Bank, 2015a).<sup>5</sup> However, the business climate is still seen by most players as too unpredictable and bureaucratic and does not inspire the confidence that economic agents need to invest in the medium or long term. The importance of constraints such as burdensome, slow, complex and opaque administrative formalities and procedures is regularly confirmed in surveys of businesses. The constraints most often mentioned by the formal sector are corruption, competition from the informal sector, low workforce education levels and difficulties in accessing financing (World Bank, 2013a). For very small enterprises and small and medium enterprises (VSEs and SMEs), these barriers can be insurmountable (World Bank, 2014a).

The incidence of entrenched corruption affecting businesses in Morocco is high (EBRD, EIB, and World Bank 2016). The frequency and incidence of requests for benefits or informal payments faced by Moroccan businesses in their relations with government departments and public services, in their applications for licenses and construction permits, or in import operations or tax payments appear to be significantly higher than the MENA region average, which itself compares unfavorably to other middle-income countries that are Morocco’s competitors. Furthermore, while corruption involves the visible costs related to illicit payments and a poor allocation of resources, its highest cost is invisible and involves missed opportunities: the businesses that are not created, the investments that are not made, the loans that are not granted, and, ultimately, the jobs that are not created.

The Moroccan economy has gradually opened up to international trade. Tariff and nontariff barriers have been lowered and international trade procedures have been simplified. Modern trade infrastructure has been developed for all types of transport (such as the Tanger-Med port) and the country has been fully updating its customs regulations and its transportation and trade logistics. This has facilitated the emergence of “new” industries in sectors such as automobile, aeronautics, and electronics that occupy a more central position in the global production space and are thus a potential source of higher revenues than traditional exports.

Despite these efforts, Morocco’s share in international trade has tended to decline since the early 1980s, while most of its competitors have seen their shares increase. Morocco trade performance is slowed by high production factor costs owing to protected service sectors and rigid domestic prices, by a fixed exchange rate regime and by a skills and qualifications mismatch. To date, Morocco has been able to penetrate only a small portion of potential markets.

One of the explanations for Morocco’s difficulties in benefiting more from the development of international trade lies in the delays and costs related to mer-

> 5Morocco’s Doing Business ranking improved from the 129th position to the 68th position during 2010-2016.

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