This report includes a special focus chapter focused on the dynamics of the Moroccan private sector. It is based on the results of an analysis jointly conducted with the Moroccan Observatory of Small and Medium Enterprises (OMTPME) which exploits a comprehensive database on formal firms. The productivity performance of the private sector has been lackluster, primarily due to a worsening of allocative efficiency. Larger firms tend to exhibit a lower productivity than their smaller peers, suggesting that markets are not sufficiently rewarding more efficient and innovative firms. In addition, Moroccan SMEs struggle to grow, and the density of High Growth Firms remains very low. This is problematic feature of the private sector given that in other settings such firms have been shown to disproportionately contribute to job creation. Addressing the constraints facing the private sector would help overcome the disappointing job creation capacity that the Moroccan economy has exhibited in recent years.
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