Prospects of Economic Synergies Between Morocco, Jordan and the GCC
Transcript of Prospects of Economic Synergies Between Morocco, Jordan and the GCC
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Prospects of Economic Synergies:
Jordan, Morocco and the GCC
October 30th 2011
Ikaraam Ullah
Prospects of Economic Synergies: Jordan, Morocco and the GCC, October 30th 2011
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Introduction GCC Convergence Criteria
Synergies
Labour force
Goods and Services
Investment synergies
Concluding remarks
Outline
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In May 2011, the Gulf Cooperation Council (GCC) announced the bid towelcome Jordan and Morocco to join the council.
Short-term need to create opportunities across the region.
Long-term need to develop non-oil sector to diversify away from
hydrocarbons.
Post-oil: High dependency GCC budget dependence (~80%) on finitehydrocarbon resources which are vulnerable to price shocks
GCC and Morocco/Jordan share economic synergies that lead to
mutually beneficial goals.
Introduction
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Convergence
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Labour Force
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0
20
40
60
80
100
0 20 40 60 80 100
Percentage of labour force
Contribution to GDP
Very Important
Veryimportant
Jordan
Morocco
Key
GCC
Labour force participation
Source: Dubai Chamber based on data from IMF and World Bank
Size of circle indicatesrelative value of sector
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Labour force participation
Source: Dubai Chamber based on data from IMF and World Bank
Size of circle indicatesrelative value of sector
0
20
40
60
80
100
0 20 40 60 80 100
Percentage of labour force
Contribution to GDP
Very Important
Veryimportant
Agriculture
Services
Jordan
Morocco
Key
GCC
Industry
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Labour force participation
Source: Dubai Chamber based on data from IMF and World Bank
Size of circle indicatesrelative value of sector
0
20
40
60
80
100
0 20 40 60 80 100
Percentage of labour force
Contribution to GDP
Very Important
Veryimportant
Agriculture
Services
Jordan
Morocco
Key
GCC
Industry
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Labour force participation
Source: Dubai Chamber based on data from IMF and World Bank
Size of circle indicatesrelative value of sector
0
20
40
60
80
100
0 20 40 60 80 100
Percentage of labour force
Contribution to GDP
Very Important
Veryimportant
Agriculture
Services
Jordan
Morocco
Key
GCC
Industry
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Expansion of GCC Labour ForcePopulation
(millions)
Labour Force
(millions)
Est. Unemployed
(actual)
Jordan 6.1 1.7 200,000
Morocco 31.9 11.6 1,100,000
GCC 42.1 16.2
GCC
'Enlarged'48 80 18 30
Adding ... Jordan increases GCC labour force by ~10%
Morocco increases GCC labour force by ~72%
both countries increases GCC labour force by 82%
Source: IMF and World Bank estimates, ILO and Dept. of Statistics (Jordan)
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0 10 20 30 40 50
0 10 20 30 40 50
No schooling
Less than Secondary
Secondary
Intermediate Diploma
Bachelor & Above
No schooling
Less than secondary
Secondary
Intermediate Diploma
Bachelor & Above
% of unemployed
% of unemployed
Education Profile of Available Labour
Morocco
~ 1,100,000
Jordan
~ 200,000
Source: Dept. of Statistics, Jordan & ILO
ICT &services?
Agriculture?
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Pay and
Productivity
Innovation Global
Index
Poland 45 57 46
Turkey 75 58 61
Tunisia 81 43 40Romania 55 99 64
Jordan 72 70 71
Morocco 37 79 73
Competitiveness Rankings, 2011
productive
good
Source: World Economic Forum, Global Competitiveness Report 2011
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Moroccan Trade
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Moroccan Trade, 2010
Trade geographically tied to Europe
Room for increased tradethrough diversification
Source: Dubai Chamber based on COMTRADE statistics, *excluding Brasil
0.4 0.91.7 2.0 2.1 2.7 2.7
5.6
16.2
0.1 0.2 0.6 0.6 0.7 0.3
2.3 2.5
10.4
-18
-14
-10
-6
-2
2
6
10
14
18
-18
-14
-10
-6
-2
2
6
10
14
18
ASEAN 5 South
America*
Other
MENA
North
Africa
North
America
GCC Other
regions
BRICs EU
US $bn US $bn
Exports
Imports
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Moroccan Trade, 2010
-1
0
1
2
3
4
5
6
7
8
-1 0 1 2 3 4 5
Imports (US$bn)
Exports (US$bn)
Morocco Benefits
Other
country
benefits
Saudi Arabia
Bahrain, Kuwait,
Oman, Qatar, UAE
Source: Dubai Chamber based on COMTRADE statistics
Externalinfluence
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-1
0
1
2
3
4
5
6
7
8
-1 0 1 2 3 4 5
Imports (US$bn)
Exports (US$bn)
Morocco Benefits
Other
country
benefits
Saudi Arabia
France
Bahrain, Kuwait,
Oman, Qatar, UAE
Spain
Moroccan Trade, 2010
Diversification of flow
MOROCCO:Manufacturing
Source: Dubai Chamber based on COMTRADE statistics
Externalinfluence
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Moroccan Imports
Source: Dubai Chamber based on COMTRADE statistics
Imports from GCC
Fuels 68%
Plastics 12%
Sulphur 5%
Inorganic chemicals 4%
Aluminium articles 4%
Pulp 2%
Categories < 2% 6%
World Imports
Machinery 13%
Electronics 10%
Mineral fuels 9%
Vehicles 8%
Cereals 5%
Iron & Steel 3%
Plastics 3%
Articles NES 3%
Plastics articles 2%
Sugars 2%
Categories < 2% 42%
Diversification of product
US$ 2.7bn
US$ 34.4bn
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Moroccan Exports
Source: Dubai Chamber based on COMTRADE statistics
Exports to GCC
Precious stones& metals
76%
Fruit & nuts 7%
Animal products 6%
Categories < 2% 12%
World Exports
Electronic
equipment 14%
Apparel 13%
Fertilizers 9%
Phosphate & limes 8%
Apparel accessories 7%
Vegetables 6%
Precious metals 6%
Fruit & nuts 6%
Footwear 3%
Fish 3%
Mineral fuels 3%
Meat 2%
Categories < 2% 20%
Diversification of product
US$ 0.3bn
US$ 17.7bn
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Morocco GCC OECD
Cost (US$)
Exports 700 582 1,048
Imports 1,000 615 1,107
Duration (days)
Exports 14 14 11Imports 17 16 12
Morocco: Trade Costs vs. OECD averages
Free trade agreements:
European Free Trade Association EFTA, Free Trade Agreement -
FTA (US), Morocco and Turkey, Morocco/WAEMU, Arab FreeTrade Zone, Morocco-Arab Countries Trade Agreement, Arab-Maghreb Union
Source: World Bank Doing Business 2011, Morocco Trade & Invest portal
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Moroccan Investment
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-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
% %
GDP growth
(% year) Unemployment
Morocco: GDP growth and unemployment
More than a decade of solid growth
Falling unemployment 198089 199099 200008
12.8 0.6 0.1
Arab ODA (US$bn)
Source: IMF World Economic Outlook, October 2011, World Bank MENA Vice Presidency
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0
2
4
6
8
10
12
14-8
-6
-4
-2
0
2
4
6
8
10
12
14
% yearDirham
(MAD)
Inflation
Dirham/US$
Dirham/Euro
Morocco: Inflation and Exchange Rates
Stable
Stable
Source: IMF
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0
10
20
30
40
0
5
10
15
20
25
30
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% of GDP % of exports
Debt Service Ratio (RHS)
External Debt (LHS)
Morocco: External debt position
Improving debtposition
Source: IMF World Economic Outlook, October 2011
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Morocco: Foreign Direct Investment
Improving FDI
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
US $bn US $bn
Outflows
Inflows
Source: UNCTAD
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European Union 63%
France 37
Spain 8
Germany 3
Italy 3
Portugal 7
United Kingdom 3
GCC 24%
Kuwait 18United Arab Emirates 3
Saudi Arabia 2
Other countries 11%
Jordan 3
Swtizerland 4
United States 3
Moroccan Foreign Direct Investment, 2009
Less competition =potential upside?
Source: Moroccan Foreign Exchange Office
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Morocco: Agriculture
Recently created Agency for Agricultural Development (ADA) oversees
the implementation of Green Morocco Plan
Development competitive agriculture vital for the national economythrough the realization of projects with high added value in bothproduction and agro-food.
Support to smallholder agriculture through the professionalization of
small farms in difficult rural areas needed to promote greaterproductivity, greater recovery of production and sustainability of farmincome.
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Morocco: Agro-IndustriesSummary
Agricultural sector employs over 4 million people
About 100,000 in agro-industry.
Companies dealing in agriculture or stock breeding, and agriculturalcooperatives, were exempt from corporate tax until December last year.
New permissions are possible and should be discussed as per
contract with the government. Agricultural equipment and products are exempt from value-added tax(TVA) and companies exporting products and services are exempt fromcorporate tax (IS) for a period of five years. Thereafter, firms pay 50% ofthe standard IS rate.
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Renewable Energy & the EU-MENA Supergrid
US$ 555 bn
Source: Trans-Mediterranean Renewable Energy Cooperation (TREC)
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Morocco Solar Energy MasterplanKey facts
Abundant solar resources (a potential of 2 600
kWh/m/year) Target: 14% of electrical energy in Moroccofrom solar sources by 2020.
Strategic position at the heart of an energy hub(connection with Spanish Network through two
electric lines 400kV/700 MW)
Le Projet Marocain de l'Energie Solaire
Integrated electricity production driven from solar energy with a totalcapacity of 2000 MW in Ouarzazate, Ain Bni Mathar, Foum Al Oued,
Boujdour and Sebkhat Tah. Concentrated Solar Power (CSP) andPhotovoltaic technologies likely technologies
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Morocco Solar Energy MasterplanRegulation & Funding
Sector regulated under the Renewable Energy Law (No. 13-09)which aims to promote energy production from renewableresources for markets or export.
Law allows the right for an operator to produce electricity fromrenewable energy sources on behalf of a consumer or a group ofconsumers connected to the national grid.
Energy Development Fund to the equivalent to $ 1 billion from theKingdom of Saudi Arabia ($ 500 million), UAE ($300 million) and thecontribution of the Hassan II Fund for Economic and SocialDevelopment ($200 million).
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Morocco Solar Energy StakeholdersAgencies
Energy Investment Corporation (EIS) was established in 2010 with
a capital of one billion dirhams capital endorsed by the state (71%) andthe Hassan II Fund for Economic and Social Development (29%)
Moroccan Agency For Solar Energys (MASEN) mission is toensure the implementation of the Moroccan Solar Plan
National Agency for the Development of Renewable Energy and
Energy Efficiency (ADEREE) aims to contribute to the implementationof government policy on renewable energy and energy efficiency
Moroccan Association of Solar Industries and Windmills(AMISOLA) was created to promote the interests of industrialists andMoroccan professionals working in the renewable energy sector
National Electricity Office (ONE) is well known for its current role inelectrical generation
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Jordanian Trade
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Jordanian Trade, 2010
Exports toother MENAcountriesstrongest
Integrated into GCC
0.80.9
1.9
0.9
2.5
4.23.9
0.5
0.9
0.4
1.8
0.9
0.5
1.2
-5
-4
-3
-2
-1
0
1
2
-5
-4
-3
-2
-1
0
1
2
North Africa North
America
Asia Other MENA BRICs EU GCC
US $bn US $bn
Exports
Imports
Source: Dubai Chamber based on COMTRADE statistics
d d
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0
500
1,000
1,500
2,000
2,500
0 200 400 600 800 1,000 1,200
Jordanaian
Imports (US$m)
Jordanian Exports
(US$m)Jordan Benefits
UAE
Bahrain, Oman
Saudi
Arabia
Jordanian Trade, 2010
External influence
Source: Dubai Chamber based on COMTRADE statistics
J d i T d 2010
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0
500
1,000
1,500
2,000
2,500
0 200 400 600 800 1,000 1,200
Jordanaian
Imports (US$m)
Jordanian Exports
(US$m)Jordan Benefits
China
UAE
Bahrain, Oman
Saudi
Arabia
USA
India
Germany
Egypt
Jordanian Trade, 2010
JORDAN:Processing andManufacturing?
External influence
Source: Dubai Chamber based on COMTRADE statistics
J d I t
Diversification of product imports
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Jordan Imports
World Imports
Fuels 22%
Machinery 9%
Vehicles 8%
Electrical equipment 5%
Plastics 4%
Iron & steel 3%
Pharmaceutical 3%
Cereals 3%
Iron or steel articles 3%
Fabric 2%
Organic chemicals 2%
Categories < 2% 36%
Imports from GCC
Fuels 63%
Plastics 8%
Organic chemicals 3%
Iron and steel 3%
Sugars 3%Categories < 2% 20%
Source: Dubai Chamber based on COMTRADE statisticsSource: Dubai Chamber based on COMTRADE statistics
US$ 3.9bn
US$ 15.2bn
J d E t
Diversification of product exports
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Jordan Exports
Exports to GCC
Pharmaceutical
products19%
Vegetables 14%
Electrical equipment 8%
Machinery 7%
Paper & pulp 7%
Inorganic chemicals 7%
Precious stones 3%
Live animals 3%
Categories < 2% 32%
World Exports
Fertilizers 15%Apparel 13%
Pharmaceutical 10%
Vegetables 6%
Salt & sulphur 6%
Precious metals 5%
Electrical equipment 4%
Inorganic chemicals 4%
Machinery 4%
Paper & pulp 3%
Aluminium 3%
Plastics 3%
Categories < 2% 25%
Source: Dubai Chamber based on COMTRADE statistics
US$ 1.2bn
US$ 6.2bn
Jordan Trade Costs s OECD a erages
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Jordan GCC OECD
Cost (US$)
Exports 825 582 1,048
Imports 1,335 615 1,107
Duration (days)
Exports 14 14 11Imports 18 16 12
Jordan: Trade Costs vs. OECD averages
Free trade agreements:
Greater Arab Free Trade Area (GAFTA); Jordan - EU Free Trade
Association (EFTA); Jordan
US Free Trade Agreement andother FTAs: Singapore; Canada; Turkey
Source: World Bank Doing Business 2011, Jordan Trade & Invest portals
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Jordanian Investment
Jordan: GDP growth and unemployment
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-2
0
2
4
6
8
10
12
14
16
18
20
-2
0
2
4
6
8
10
12
14
16
18
20
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
% %
GDP growth
(% year)
Unemployment
Jordan: GDP growth and unemploymentFalling unemployment
198089 199099 200008
6.1 1.5 0.8
Arab ODA (US$bn)
Source: IMF World Economic Outlook, October 2011, World Bank MENA Vice Presidency
Jordan: Inflation and Exchange Rates
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0.50
0.75
1.00
1.25-4
-2
0
2
4
6
8
10
12
14
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
% yearDinar
(JOD)
Inflation
Dinar/US$ (fixed)
Jordan: Inflation and Exchange Rates
Stable
Source: IMF
Jordan: External debt position
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0
10
20
30
40
50
40
50
60
70
80
90
100
110
120
130
140
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% of GDP % of exports
Debt Service Ratio (RHS)
External Debt (LHS)
Jordan: External debt position
Improvingexternal debtposition
Source: IMF World Economic Outlook, October 2011
Jordan: Foreign Direct Investment
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Jordan: Foreign Direct Investment
Improving FDI
Source: UNCTAD
-1
0
1
2
3
4
-1
0
1
2
3
4
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
US $bn US $bn
Outflows
Inflows
Jordan ICT sector
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Jordan ICT sector
Int@j (Information Technology Association-Jordan) has been
promoting the sector over a decade. More than 80,000 jobs in the ICT sector and contributes approx 14%to GDP. Sector valued at $2.2 billion, with approximately $1bn in ITalone.
More than 270 secondary IT schools in the Kingdom.
Major export markets US (22%), GCC (~30%), Iraq (13%)
GCC spending in IT significant ~ $6.5bn, 2009-10
Online Content and Gaming
Business Process Outsourcing
E-learning
Online Content and Gaming
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Online Content and GamingEarly Success
Education in Jordan
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Education in JordanCurriculum and collaboration
Growing services industry driving qualification initiatives. Jordan is
among the region's highest spenders on education (+6% of GDPcompared to a MENA average of ~4%).
Educational industry in Jordan like other emerging markets: youngpopulation; strategic shift to the knowledge oriented sectors
Jordans educational standards attracted students from the Gulf
States, Far East, and the US.
Jordan on-cue with the demographic shift happening in the GCC
Opportunity may be appropriate to serve the training needs for thenext generation of GCC talent
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Outlook Risks
EU and US growth correlation (1990-2009)
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-0.4
-0.2
0.0
0.2
0.4
0.6
-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6
Morocco
Tunisia
Jordan
Egypt
United States
Europe
Lebanon
Syria
EU and US growth correlation (1990 2009)
Morocco correlationwith US and Europe
high relative to MENA
Source: IMF Jordan 2010 Article IV Consultation, Business Cycle Linkages
GCC and Asia growth correlation (1990-2009)
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-0.2
0.0
0.2
0.4
0.6
-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6
Morocco
Tunisia
Jordan
Egypt
GCC
Emerging Asia
LebanonSyria
g ( )
Also exposedto growth inGCC and Asia
Source: IMF Jordan 2010 Article IV Consultation, Business Cycle Linkages
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Summary
Benefits to the GCC
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Investment
- ICT (Jordan)- Education (Jordan)
- Solar (Morocco)
- Agriculture (Morocco)
social capital
technological transfer
creative & content driven industries
food security
Benefits to the GCC?
Goods
Wide range of products for product diversification
Labour Force (addition of Jordan and Morocco)
~ 1.7 million (Jordan)
~ 11.6 million (Morocco)
Post-Oil GCC
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Flexible labour markets
Targeting most competitiveindustries => maximizinggrowth
Reduce dependence on
hydrocarbons via broadrange of industries
Increasing tax-base
0
200
400
600
800
1,000
1,200
1,400
0 500 1,000 1,500
Scale of investment
Stakeholders
U
SA
Semi-
government
Large
Small
Private
sector
Medium
Government
Morocco
GCC
Jordan
Key
Post-Oil GCC
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Flexible labour markets
Targeting most competitiveindustries => maximizinggrowth
Reduce dependence on
hydrocarbons via broadrange of industries
Increasing tax-base
0
200
400
600
800
1,000
1,200
1,400
0 500 1,000 1,500
Trade
Scale of investment
Stakeholders
U
SA
Semi-
government
Large
Small
Private
sector
Medium
Government
Morocco
GCC
Jordan
Key
Post-Oil GCC
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Flexible labour markets
Targeting most competitiveindustries => maximizinggrowth
Reduce dependence on
hydrocarbons via broadrange of industries
Increasing tax-base
0
200
400
600
800
1,000
1,200
1,400
0 500 1,000 1,500
Agriculture
Trade
Scale of investment
Stakeholders
U
SA
Semi-
government
Large
Small
Private
sector
Solar Grid
Medium
Government
Morocco
GCC
Jordan
Key
Post-Oil GCC
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Flexible labour markets
Targeting most competitiveindustries => maximizinggrowth
Reduce dependence on
hydrocarbons via broadrange of industries
Increasing tax-base
0
200
400
600
800
1,000
1,200
1,400
0 500 1,000 1,500
Agriculture
Trade
Scale of investment
Stakeholders
U
SA
Semi-
government
Large
Small
Private
sector
Solar Grid
Medium
ICT
Education
Government
Morocco
GCC
Jordan
Key
Conclusion
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Page 56
Take aways
Jordan and Morocco success stories: sound economicmanagement, unemployment is falling steadily.
Ample room for trade and investment diversification with GCC
Morocco:
- Proximity to and close economic relationship with Europe- Abundant natural resources (sun, wind)
Jordan:
- Strong focus on service oriented and knowledge industries
- Sound trading relationship with the United States
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Thank you