TRADE POTENTIAL AMONG MOROCCO AND HIS AFRICAN PARTNERS EVALUATION USING AN EXTENDED GRAVITY MODEL

Morocco - 1 June 2016

In this work, we are interested in the trade potential between Morocco and his African partners. To do this, in the first part, we analyzed the structure of foreign trade of Morocco and that of its main partner in West Africa (Senegal), and the nature of their bilateral trade. It appears that, as in most African countries, trade flows of Morocco and Senegal are largely oriented to their Western partners and Senegal is the first partner of Morocco in West Africa with a very small share in its total trade (less than 5% of Moroccan flows are heading to Africa).
In the second part and to estimate the trade potential, the natural framework with which to attack this question is the gravity model of bilateral trade. We adopted a random effects model using generalized least squares. This model focuses on a sample of 25 countries (16 African and 9 outside Africa) and spans 1998-2006. The estimation was performed to evaluate the potential of trade with Senegal and the rest of the countries in the sample.
The results reveal that the trade potential of Morocco to Senegal as for a number of African countries is very low or nonexistent. For the rest of the countries and in this case the traditional partners (Germany, France, Italy, the Netherlands), Morocco has a high potential for trade. The same result was reached in the case of Algeria and Egypt with a potential trade that exceeds 4 times the observed exports.

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