Taxation of Moroccan agriculture: an analysis of the sensitivity of the results of a dynamic computable general equilibrium model

Mohamed Karim and Amal Mansouri

Middle East Development Journal, 2015, vol. 7, issue 1, 89-107

Abstract: Agriculture has always been the subject of close attention from governments in Morocco, owing among other reasons to its relationships with other sectors, its importance in foreign trade and its role in providing foodstuffs in rural and urban areas. Indeed, agriculture accounts for 15 to 20% in GDP and employs 44% of the labor force. If we add food processing, its contribution to GDP and employment amounts to 15% and 50%, respectively. However, Moroccan agriculture suffers from low productivity, low yields and high logistics, and production costs. For these reasons, agriculture has enjoyed tax exemptions to encourage and promote private and foreign investments. Nevertheless, the tax advantages became a source of distortions and inefficient allocation of investments and resources toward this sector. To analyze the implementation impact of a new system of agricultural taxation, we built a dynamic multi-sectoral computable general equilibrium (CGE) model. This model is more preferable and suitable than macro-econometric or partial equilibrium economic models because of its dynamic structure, which makes it possible to catch the intertemporal effects of taxation on the well-being of farmers and on the economy as a whole. In addition, we run an unconditional sensitivity analysis to prove that the variability of the model as a whole is not too significant after simultaneous modification of all the parameters. To do this, the Gaussian Quadrature Method is implemented as developed by Arndt, De Vuyst and Preckel, and Piet.

Date: 2015
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DOI: 10.1080/17938120.2015.1019294

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