Adjustment and the rural sector: a counterfactual analysis of Morocco

The present paper examines the effects that the structural adjustment process in Morocco had - or might have had if fully implemented - on the rural sector and its relationship with the rest of the economy. This is done through a counterfactual analysis based on a general equilibrium approach. We focus on the more "structural', or microeconomic-oriented measures that were included in the initial adjustment package. We analyse in some detail the likely effects of the most important measures included in the Structural Adjustment Loans (SAL) agreement signed between Morocco and the World Bank in 1985 and which concern financial and trade liberalisations. Section 2 offers a brief summary of the recent evolution of the Moroccan economy, concentrating upon the macroeconomic stabilisation policies which have actually been implemented, their effects and the measures in the 1985 SAL agreement. The model used for the simulation of the effects of these measures is briefly sketched in Section 3. Simulations are analysed in Section 4 under alternative sets of assumptions concerning the "closure rules' of the Moroccan economy. There is a discussion, with diagrams, by S.Devarajan. -from Authors