Import, Export and Turnover in Morocco

Abstract

International trade is commonly view as an useful tool to remove market distortions, to promote competition among firms and hence increase welfare. However, trade openness is not costless and unavoidably creates gainers and losers (Wood (1995, 1998)). Hence, a complete evaluation of the gain from trade should consider both efficiency benefits and adjustment costs. Indeed, to enjoy of the gain from trade liberalisation, some adjustment processes are required. Increasing trade will induce reallocation of resources from less efficient firms to more productive one, with a final positive effect on growth and uncertain consequences for the labour market. With increasing competition, the less efficient firms will exit from the market and the others should increase their productivity to strengthen their position. The first attempts to analyse the impact of trade on labour market focused on the net change in wage and employment levels (Bottini (2005) and Hoeckman and Winters (2005) for a review of the literature). However, further analysis have highlighted that looking at total levels of employment is likely to conceal important dynamics in the labour market and in the economic analysis (Davis and Haltiwanger, 1996). Indeed net change in total employment is derived by adding up new places available through the entry of new firms and expansion of existing firms and employment losses over shrinking and exiting establishments. Studying the link between trade liberalisation and job dynamics is hence a way to examine how increasing trade impacts on job turnover and input reallocation. Furthermore, it is important to detangle the effect of trade on labour market by dealing separately with import and export flows. The available literature shows that trade liberalisation will lead to labour reallocation, with jobs moving away from import-competing industries toward export industries (Davidson and Matusz (2001)). Intuitively, import and export flows have an opposite impact on labour market. Increasing import competition worsen market condition for domestic firms and causes firms exit and downsizing with a final negative effect on employment. On the other side, increasing exports creates more opportunities for domestic firms, induces sector expansion and creation of new jobs. Finally, trade liberalisation. has been also blamed for a “race to the bottom” in the labour market in the form of lower compliance with labour market standards, more extensive use of part-time and temporary labour, and a decrease in the job quality for the neo-employed (Goldberg and Pavcnik, 2004). Hence, it would be interesting to investigate whether trade liberalisation impact in a different way on temporary and permanent workers. The purpose of this paper is to study how import and export flows impact on job reallocation in the Moroccan economy.