more balanced. While “Personal travel services” is still the single most important service category – representing USD$6.7 billion in 2010 – their importance has diminished, passing from two thirds to one half of the total between 1995 and 2010. More recently, Air and Sea transport services have gained momentum, reflecting Morocco’s increasing importance as a regional hub in North Africa for shipping logistics, assembly, production and sales. Similarly, “Miscellaneous business, professional, and technical services,” and Telecom now add up to close to 20 percent of Morocco’s service exports (Table 3). This shift in service exports is positioning Morocco with a more balance service export basket than the average country in Middle East and North Africa or compared to what is typical among lower‐ middle‐income countries. In part, this outcome reflects successful efforts to attract foreign investments in key sectors.

||Table 3:<br>**% of**|Service E<br>**total ser**|xports in<br>**vice expo**|Morocco<br>**rts**|**Billio**|**ns of Cu**|**rrent U**|**SD**|
|---|---|---|---|---|---|---|---|---|
||1995|2000|2005|2010|1995|2000|2005|2010|
|Personal Travel|66.9|66.5|56.3|52.2|1.3|2.0|4.6|6.7|
|Air Transport|8.9|8.0|9.7|11.1|0.2|0.2|0.8|1.4|
|Misc. business, prof., and tech.|11.8|5.3|15.2|15.0|0.2|0.2|1.2|1.9|
|Telecom Services|0.0|3.7|4.0|5.5|0.0|0.1|0.3|0.7|
|Sea Transport|11.5|6.8|5.2|3.3|0.2|0.2|0.4|0.4|
|Other Private Services|0.8|3.7|3.1|9.8|0.0|0.1|0.3|1.3|
|Government Services|0.0|5.9|6.5|3.2|0.0|0.2|0.5|0.4|
|Total|100.0|100.0|100.0|100.0|1.9|3.1|8.2|12.8|

Source: Authors' calculations using IMF Balance of Payment Statistics

# **5 Conclusion**

This paper analyzes the evolution of Morocco’s structure of goods exports and its implications for future structural change. The conclusions of this paper are exclusively derived from empirical evidence from international trade patterns. In sum, the analysis finds that, in recent decades, Morocco has developed a revealed comparative advantage (RCA>1) for a set of rapidly growing medium‐ and high‐tech products, in 2010 representing around 40 percent of total merchandise exports. While these developments are encouraging, a relatively small number of products accounts for most of the growth, making the country quite vulnerable to external shocks. Moreover, whatever its contribution may have been, this export transformation has not been sufficient to raise per capita growth to the average level for middle‐income countries.

To date, Morocco’s capabilities are primarily in products with a relatively low income potential. Morocco’s GDP level and growth in the last decade closely match what would have been predicted in light of the evolution of the income potential of its merchandise export basket. In terms of the underlying network of production, Morocco’s structure is such that diversification into more sophisticated products still remains difficult. Overall, there is a trade‐off between sectors that are within reach and sectors that offer higher potential gains in income or diversification.

Our simple projections of Morocco’s exports up to 2025 suggest a continued but slow shift toward higher technology content with an aggregate growth rate for merchandise exports that is similar to the record since 1990. Considering Morocco’s natural resources and PS indicators based on its current exports, at a disaggregated level, phosphate‐based 21