Abstract
The agricultural sector continues to be the backbone of the Moroccan’s economy, employing 38% of the active working population and contributing to 13% of Gross Domestic Product (GDP). However, Moroccan agriculture is subject to multiple constraints, including volatility due to climatic conditions which continue to condition the economic performance of the country as a whole, despite the decrease in the share of agriculture in the sectoral composition. The main objective of this study is to econometrically explore the causality nexus between agriculture and GDP in Morocco, especially since the sector has benefited from new development strategies. Using Moroccan time series over the period 1980 to 2017, the paper employed the Granger causality based on the vector autoregressive model (VAR) in a dynamic multivariate framework, using five macroeconomic variables: GDP per capita, agricultural GDP, investment rate, money supply, and trade openness. The empirical results from the analysis detect the presence of bidirectional Granger causality between agriculture and GDP, implying a feedback relationship, and some unidirectional causal relationships involving the other macroeconomic variables used in the VAR model. The findings have important policy implications for the government to establish effective agricultural strategies, in particular with the inauguration of the new agricultural strategy «Green Generation» in 2020.
Highlights
Agriculture is a crucial sector of the Moroccan economy
Despite the decrease in the share of agricultural value added in the sectoral composition from 23.44% in 1965 to 11.38% in 2019 (FAOSTAT3, 2020), the country's economic performance remains intimately linked to the agricultural sector, which is highly dependent on climatic hazards, in particular the drought
The study determines whether the agricultural sector leads to economic growth in Morocco and/or vice versa
Summary
Agriculture is a crucial sector of the Moroccan economy. It contributes to the economic activity of nearly 13% and employment of 38% of the active working population, and plays a vital role in the country's food security and poverty reduction in the rural areas where it provides 74% of total employment [1]. Few studies have empirically examined the agriculture-GDP nexus in Morocco to verify the role attributed to the agricultural sector. The empirical literature on the agriculture-GDP nexus is widely discussed and presents divergent results about the causality direction between the two variables [3,4,5,6].
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