Structural Determinants of Total Factor Productivity in Morocco and Peer Economies: Evidence from CCE and DCCE Panel Estimators

Résumé

Total factor productivity accounts for the largest share of long-run income differences across countries, yet the conditions under which trade integration translates into productivity gains remain contested. Existing panel studies of productivity in emerging and converging economies rarely combine an explicit treatment of unobserved common factors with heterogeneous slope coefficients, and comparative evidence centered on Morocco is almost absent from this literature. This paper addresses that gap by estimating the long-run structural determinants of total factor productivity for a balanced panel of six economies, namely Morocco, the Czech Republic, Greece, Poland, Portugal and Romania, observed annually from 2000 to 2023. Using the Common Correlated Effects (CCE) estimator of Pesaran (2006) and its dynamic extension (DCCE) by Chudik and Pesaran (2015), we estimate long-run elasticities while controlling for unobserved common factors and cross-sectional dependence. The two estimators are mobilized in a deliberately complementary manner, the static specification identifying long-run associations under a multifactor error structure and the dynamic specification recovering the speed of adjustment and separating short-run responses from long-run effects. Preliminary diagnostics confirm significant cross-sectional dependence among the regressors and non-stationarity in levels with stationarity in first differences. Four quantified results stand out. Productivity is highly persistent, with an autoregressive coefficient of 0.93 implying that only about 7 percent of the gap to long-run equilibrium closes each year. Trade openness carries a contemporaneous effect of -0.18 and a lagged effect of 0.22, which yields a long-run elasticity of 0.61. Real exchange rate appreciation displays a long-run elasticity of -1.56, the largest absolute effect in the model. Most consequentially, a threshold regression locates a critical human capital index of 2.92 below which the openness coefficient is negative and above which it turns positive, and Morocco lies furthest of the six economies below that threshold. These findings highlight the importance of trade integration and exchange rate competitiveness for productivity convergence in emerging economies, with direct policy implications for Morocco.

JEL Classification : C23, F43, O47, O55.

Paper type : Empirical Research.