Senegal and Morocco have significant advantages to develop bilateral trade. Trade between the two countries is in favor of Morocco. The estimation of the trade potential of the two countries based on an augmented gravity model reveals that this potential is underexploited vis-à-vis African trade partners and other parts of the World (Europe, Asia, and Latin America). The trade performances of Senegal and Morocco should be improved through the implementation of a supply policy and targeted support to exporting firms.
The deep integration of economies is one of the key features of the second half of the twentieth century. However, Africa is characterized by its low participation in international trade, its share amounting below the 5% threshold. Therefore, intra-African trade is considered as one of the responses to marginalization and one of the ways of improving the resilience of African economies, in a context characterized by the recurrence of international shocks. Several initiatives of regional integration or of trade agreements have been taken by African countries in the different sub-regions of the continent. Thus, there are thirteen regional trade agreements and each African country is a member of at least one regional economic group [
Senegal and Morocco have considerable advantages (geographic proximity, cultural affinities, common language, etc.) to develop trade, even if they have some similarities (large share of the tertiary sector, exports of phosphates, and phosphate-based and fish products). These two countries with very strong cultural ties have signed a trade agreement in 1963, and an additional protocol in 1981. However, due to its commitments with the West African Economic and Monetary Union (WAEMU), Senegal suspended the implementation of the agreement since January 2000. In addition, Senegal had, since 2003, tariff preferences granted by Morocco to least developed African countries, as part of a royal initiative.
This paper aims to answer this question: what is the trade potential of Senegal and Morocco? The extent to which the two countries will make better use of their strengths and characteristics to develop trade flows between them and their main partners is the focus of this work.
After introducing the evolution of international trade from Senegal and Morocco in Section 2, Section 3 presents a synthetic literature on the gravity model. Finally, Section 4 is devoted to the estimation results of the trade potential of both countries.
Trade flows from Senegal and Morocco have experienced changes during the past 15 years, characterized by a reorientation of exports and imports of the two countries.
Senegal exports grew much more significantly to African countries. Thus African countries, which have absorbed a quarter of Senegal exports in the second half of the 90s, represented nearly half of Senegal customers between 2007 and 2011. The reorientation of Senegal exports to African countries has been detrimental to traditional European partners, the share of these countries in total exports dropped by about 22 points. Exports to Asian emerging countries stabilized around 16% of total exports over this period.
Recent data (
Regarding intra-African trade, in 2011 Morocco exports mainly to Algeria, Tunisia, Senegal, Mauritania and Egypt, while the main African countries customers of Senegal consist of Mali, Guinea, The Gambia, Côte d’Ivoire and Guinea-Bissau (
The evolution of imports from both countries (
In 2011, (
Countries | Percentage of total exports | |||||||
---|---|---|---|---|---|---|---|---|
Africa | Developed countries of Europe | Developed countries of America | Emerging Asian countries | |||||
1996-2000 | 2007-2011 | 1996-2000 | 2007-2011 | 1996-2000 | 2007-2011 | 1996-2000 | 2007-2011 | |
Morocco | 4.1 | 6.0 | 71.6 | 63.5 | 4.9 | 4.4 | 10.7 | 15.4 |
Senegal | 25.4 | 48.0 | 44.5 | 22.9 | 1.0 | 0.6 | 16.3 | 16.0 |
Source: UNCTAD (2013) [
Countries | Destination of exports by order of importance | Part in total exports (%) |
---|---|---|
Morocco | Algeria, Tunisia, Senegal, Mauritania, Egypt | 44.6 |
Senegal | Mali, Guinea, The Gambia, Côte d’Ivoire, Guinea-Bissau | 70.4 |
Source: UNCTAD (2013) [
Pays | Percentage of total imports | |||||||
---|---|---|---|---|---|---|---|---|
Africa | Developed countries of Europe | Developed countries of America | Emerging Asian countries | |||||
1996-2000 | 2007-2011 | 1996-2000 | 2007-2011 | 1996-2000 | 2007-2011 | 1996-2000 | 2007-2011 | |
Morocco | 5.3 | 5.6 | 56.8 | 51.4 | 7.7 | 7.6 | 14.2 | 23.6 |
Senegal | 16.4 | 17.0 | 56.6 | 46.6 | 5.1 | 3.7 | 13.9 | 22.6 |
Source: UNCTAD (2013) [
Regarding imports from Africa,
Overall,
Trade between Senegal and Morocco is characterized by an imbalance in favor of Morocco. The Senegal coverage rate of imports from Morocco is relatively low (
Faced to the dynamism of exports of Morocco, Senegalese exporters are less aggressive and do not manage to significantly penetrate the Moroccan market.
Since the seminal work of Tinbergen [
where:
Countries | Five main sources of imports in order of importance | Part in total imports (%) |
---|---|---|
Morocco | Algeria, Egypt, Tunisia, Nigeria, South Africa | 90.7 |
Senegal | Nigeria, Côte d’Ivoire, South Africa, Morocco, Tunisia | 88.4 |
Countries | 1996-2000 | 2001-2006 | 2007-2011 |
---|---|---|---|
Morocco | 2.3 | 2.3 | 3.5 |
Senegal | 10.0 | 13.5 | 14.8 |
The basic gravity model applied to international trade, due to Tinbergen [
where:
Thus, the size of economies acts as a trade attraction force, while transportation costs are detrimental to international trade. The augmented version of the gravity model takes into account other factors that influence trade:
・ The level of economic development measured by per capita income (which influences trade through consumers purchasing power);
・ Cultural factors (common language, common colonizer) that influence consumption patterns;
・ Common border and trade agreements (that reduce barriers to trade);
・ etc.
The augmented gravity model can be specified as follows [
where:
Despite a lack of theoretical foundations, the gravity model had a great empirical success because of its ability to predict bilateral trade. Then, several studies have been developed to address knowledge gap of the gravity model. Thus, Anderson [
The restrictions of the Armington assumption are lifted as soon as we reason in a context of monopolistic competition [
The gravity model was also derived following different approaches to explain international trade. Thus, Deard off [
The gravity model has been subjected to several applications. It can be used to measure the impact of economic integration experience in the volume of trade or the impact of borders on trade flows. Given its functional form, it can be used to calculate the trade potential between partner countries. This model is used to estimate the trade potentials of Senegal and Morocco.
Calculation of Trade PotentialThe approach used to calculate the trade potential is composed of several steps [
1) estimating a gravity model on a sample of countries;
2) calculation of simulated trade flows from the estimation results of the model;
3) calculating the adjusted simulated flows;
4) computation of trade potential as the average of gross simulated flows and adjusted simulated flows.
Adjusted exports, denoted
The model used is an augmented version of the gravity model. It is specified as follows:
The specification retained is in the log-linear form. The dependent variable is the level of exports (
・ Production level measured by GDP of partner countries that measures the size of the market influences positively trade flows;
・ The distance (D) is a proxy for transportation costs and has a negative impact on trade flows;
・ The surface (Superf) of countries participating in trade is an important indicator of domestic market which influences negatively international trade;
・ A dummy variable (contiguity), taking the value 1 or 0 depending on whether countries share border or not captures border effect;
・ Cultural factors are taken into account through dummy variables representing the existence of a common official language (Langcom);
・ Membership in the West African Economic and Monetary Union (WAEMU) which is measured by a dummy variable.
In addition, other variables that could facilitate (or hinder) trade are also taken into account such as:
・ Credit to private sector in percentage of GDP (credit);
・ Industrialization level (indus) measured by the share of industry in GDP;
・ The average per capita power consumption (kg of oil) (energ) reflecting the level of economic development;
・ Inflation which provides information on macroeconomic stability.
The study includes 14 countries of origin and 81 countries of destination from different regions of the world (
The model was estimated by the ordinary least squares method. With the application of the stepwise method3, some non-significant variables were not included in the analyses. The results of the gravity model are presented in
The results show that GDP of partner countries, cultural factors measured by the common language and common colonizer, the existence of border between countries, credit availability to the private sector, energy consumption in the country of origin have positive effect on trade flows. In contrast, the distance between partner countries, which reflects transportation costs, surface or size of domestic market of the importing country, macroeconomic instability captured by inflation rate have negative impact on bilateral trade flows.
The findings regarding the variables measuring industrialization and energy consumption in the importing country is somewhat counterintuitive to the extent they reveal that these variables affect negatively trade flows.
Countries of origin | Countries of destination | ||
---|---|---|---|
Benin | Morocco | United Kingdom | Syria |
Côte d’Ivoire | South Africa | Italy | Iran |
Cameroun | Nigeria | China | Russia |
Cape Verde | Ecuador | Tanzania | Benin |
Algeria | Portugal | Israel | Libya |
Gabon | Pakistan | Bangladesh | Soudan |
Ghana | Colombia | Suede | Ukraine |
Kenya | Algeria | Ghana | Comoros |
Morocco | Denmark | Egypt | Swaziland |
Namibia | Singapore | Canada | Greece |
Senegal | Mozambique | Indonesia | Philippines |
Togo | Czechoslovakia | Germany | Qatar |
Tunisia | Lebanon | Angola | Korea |
Tanzania | Viet Nam | The Gambia | Venezuela |
Japan | Congo | Brazil | |
Côte d’Ivoire | Saudi Arabia | Ireland | |
Turkey | Kuwait | Poland | |
United Arab Emirates | Spain | Uruguay | |
France | Cameroon | Argentine | |
Equatorial Guinea | Malaysia | Yemen | |
Gabon | Peru | Botswana | |
Togo | Senegal | Bosnia Herzegovina | |
Kenya | Zambia | Georgia | |
Thailand | Hungary | Chile | |
Sri Lanka | Mexico | Namibia | |
Netherlands | Cape Verde | Nepal | |
Tunisia | Finland | Bolivia |
Dependent Variable | logexport |
---|---|
Logdist | −1.663*** |
(0.119) | |
logpib_o | 0.959*** |
(0.0891) | |
logpib_d | 1.137*** |
(0.0750) | |
logsuperf_d | −0.207*** |
(0.0541) | |
contig | 0.992** |
(0.393) | |
langcom | 0.843*** |
(0.195) |
colcom | 0.674*** |
---|---|
(0.228) | |
credit_d | 0.00944*** |
(0.00219) | |
inflation_o | −0.0118* |
(0.00628) | |
logindus_o | −0.0236** |
(0.00984) | |
logenerg_o | 0.648** |
(0.266) | |
logenerg_d | −0.741*** |
(0.0969) | |
Uemoa | 1.279*** |
(0.481) | |
constante | 10.31*** |
(2.013) | |
Nombred’observations | 886 |
R2 | 0.491 |
***Significant at 1%; **Significant at 5%; *Significant at 10%.
Regarding the result of the variable reflecting industrialization, it can be explained by the fact that the exporting countries included in the study do not have a high level of industrialization, and the existing industrial activities have essentially outlets in the domestic market and are not very dynamic to export.
The coefficient of the variable WAEMU indicates that, ceteris paribus, trade flows with countries of the union are 3.6 times higher than trade with countries outside the zone. This result is quite close to those obtained by Rose [
The trade potential of Morocco is not sufficiently exploited vis-à-vis some Asian countries (Bangladesh, Singapore, and Japan) and Latin America (Ecuador).
The existence of a significant export potential of Morocco with respect to Northern African countries, with the exception of Libya and Egypt, is consistent with the results of Achy [
The export potential of Senegal is saturated with respect to West African countries except Nigeria. This result is consistent with recent trends in Senegal foreign trade characterized by increased trade with ECOWAS countries.
The potential of Senegal trade is very poorly exploited vis-à-vis Northern African countries such as Algeria and Libya and to a lesser extent Tunisia and Morocco.
The trade potential of Senegal is poorly exploited vis-à-vis some European countries (Germany, Denmark, and Russia), Asian countries (Pakistan, Saudi Arabia, Japan, Bangladesh, Malaysia, and South Korea), Latin American countries (Argentina, Brazil, and Mexico) and Canada.
The evolution of international trade from Senegal and Morocco during the last fifteen years is characterized by a
Exporting country | Importing country | Observed trade | Simulated trade | Adjusted trade | Trade potential | |
---|---|---|---|---|---|---|
1 | Morocco | Cameroon | 7.80 | 9.64 | 12.81 | 11.22 |
2 | Morocco | Italy | 587.90 | 475.84 | 635.00 | 555.42 |
3 | Morocco | South Africa | 7.61 | 8.43 | 11.21 | 9.82 |
4 | Morocco | Angola | 17.06 | 1.70 | 2.25 | 1.98 |
5 | Morocco | Algeria | 52.58 | 644.47 | 930.25 | 787.36 |
6 | Morocco | Saudi Arabia | 70.13 | 10.08 | 13.32 | 11.70 |
7 | Morocco | Benin | 19.29 | 4.42 | 5.87 | 5.15 |
8 | Morocco | Brazil | 267.12 | 20.51 | 26.60 | 23.55 |
9 | Morocco | Canada | 82.04 | 57.65 | 76.53 | 67.09 |
10 | Morocco | Kuwait | 6.82 | 3.87 | 5.14 | 4.51 |
11 | Morocco | Portugal | 204.30 | 499.77 | 696.09 | 597.93 |
12 | Morocco | Congo | 19.34 | 2.33 | 3.09 | 2.71 |
13 | Morocco | Japan | 107.11 | 168.93 | 227.05 | 197.99 |
14 | Morocco | The Netherlands | 311.74 | 190.29 | 251.26 | 220.77 |
15 | Morocco | Malaysia | 2.57 | 2.04 | 2.71 | 2.37 |
16 | Morocco | Tanzania | 0.45 | 0.44 | 0.58 | 0.51 |
17 | Morocco | Turkey | 104.09 | 30.76 | 40.60 | 35.68 |
18 | Morocco | France | 3465.80 | 1319.06 | 1393.54 | 1356.30 |
19 | Morocco | Argentina | 41.94 | 1.53 | 2.02 | 1.77 |
20 | Morocco | Singapore | 0.94 | 3.20 | 4.25 | 3.72 |
21 | Morocco | Pakistan | 115.13 | 5.04 | 6.62 | 5.83 |
22 | Morocco | Côte d’Ivoire | 29.22 | 10.59 | 14.05 | 12.32 |
23 | Morocco | Bangladesh | 1.59 | 5.31 | 7.06 | 6.18 |
24 | Morocco | Russia | 145.89 | 9.64 | 12.64 | 11.14 |
25 | Morocco | United Kingdom | 730.46 | 1066.45 | 1528.15 | 1297.30 |
26 | Morocco | Egypt | 31.62 | 24.61 | 32.70 | 28.65 |
27 | Morocco | Iran | 46.42 | 4.99 | 6.60 | 5.80 |
28 | Morocco | China | 91.64 | 53.28 | 70.62 | 61.95 |
29 | Morocco | Thailand | 28.54 | 4.24 | 5.62 | 4.93 |
30 | Morocco | Ghana | 17.81 | 2.10 | 2.78 | 2.44 |
31 | Morocco | Ukraine | 2.77 | 3.79 | 5.03 | 4.41 |
32 | Morocco | Nigeria | 22.50 | 11.22 | 14.89 | 13.05 |
33 | Morocco | Kenya | 6.10 | 1.01 | 1.33 | 1.17 |
34 | Morocco | Mexico | 49.29 | 10.05 | 13.31 | 11.68 |
35 | Morocco | Libya | 20.99 | 5.61 | 7.44 | 6.52 |
36 | Morocco | Qatar | 2.86 | 0.93 | 1.23 | 1.08 |
37 | Morocco | Mozambique | 0.04 | 0.18 | 0.24 | 0.21 |
38 | Morocco | Spain | 2422.73 | 1899.11 | 2555.72 | 2227.42 |
39 | Morocco | Denmark | 3.32 | 91.34 | 122.76 | 107.05 |
40 | Morocco | Cape Verde | 0.46 | 0.83 | 1.10 | 0.97 |
41 | Morocco | South Korea | 36.03 | 17.64 | 23.40 | 20.52 |
42 | Morocco | Ecuador | 0.03 | 0.92 | 1.23 | 1.08 |
43 | Morocco | Senegal | 50.89 | 16.40 | 21.72 | 19.06 |
44 | Morocco | Equatorial Guinea | 13.90 | 0.84 | 1.12 | 0.98 |
---|---|---|---|---|---|---|
45 | Morocco | Tunisia | 70.92 | 73.47 | 97.85 | 85.66 |
46 | Morocco | Indonesia | 24.20 | 3.64 | 4.83 | 4.24 |
47 | Morocco | Gabon | 14.52 | 1.67 | 2.22 | 1.95 |
48 | Morocco | Togo | 15.59 | 1.82 | 2.41 | 2.11 |
49 | Morocco | Germany | 351.06 | 592.44 | 823.66 | 708.05 |
50 | Morocco | The Gambia | 10.51 | 0.49 | 0.65 | 0.57 |
Exporting country | Importing country | Observed trade | Simulated trade | Adjusted trade | Trade potential | |
---|---|---|---|---|---|---|
1 | Senegal | South Africa | 0.67 | 1.29 | 5.00 | 3.14 |
2 | Senegal | Greece | 24.41 | 1.71 | 6.45 | 4.08 |
3 | Senegal | Japan | 11.26 | 14.93 | 60.26 | 37.59 |
4 | Senegal | China | 11.99 | 4.62 | 17.89 | 11.26 |
5 | Senegal | Equatorial Guinea | 2.69 | 0.14 | 0.53 | 0.33 |
6 | Senegal | Canada | 0.85 | 5.92 | 23.31 | 14.62 |
7 | Senegal | Tunisia | 1.41 | 2.27 | 8.79 | 5.53 |
8 | Senegal | Mexico | 0.71 | 1.26 | 4.88 | 3.07 |
9 | Senegal | Singapore | 0.40 | 0.32 | 1.22 | 0.77 |
10 | Senegal | Ghana | 3.78 | 0.52 | 2.00 | 1.26 |
11 | Senegal | Brazil | 0.13 | 4.67 | 18.29 | 11.48 |
12 | Senegal | Argentine | 0.01 | 0.29 | 1.12 | 0.71 |
13 | Senegal | Poland | 0.90 | 1.21 | 4.68 | 2.95 |
14 | Senegal | Cape Verde | 3.22 | 0.75 | 2.88 | 1.81 |
15 | Senegal | Togo | 15.20 | 1.41 | 5.37 | 3.39 |
16 | Senegal | France | 123.84 | 37.92 | 149.74 | 93.83 |
17 | Senegal | Israel | 0.15 | 0.92 | 3.57 | 2.25 |
18 | Senegal | Malaysia | 0.21 | 0.18 | 0.69 | 0.43 |
19 | Senegal | Bangladesh | 0.54 | 0.47 | 1.82 | 1.14 |
20 | Senegal | The Gambia | 78.34 | 11.33 | 42.06 | 26.69 |
21 | Senegal | Benin | 14.08 | 3.16 | 12.15 | 7.65 |
22 | Senegal | Egypt | 0.24 | 0.69 | 2.66 | 1.68 |
23 | Senegal | Germany | 3.50 | 23.02 | 96.78 | 59.90 |
24 | Senegal | Viet Nam | 0.70 | 0.32 | 1.24 | 0.78 |
25 | Senegal | Morocco | 18.46 | 9.66 | 37.91 | 23.78 |
26 | Senegal | The Netherlands | 16.75 | 7.08 | 27.57 | 17.33 |
27 | Senegal | Denmark | 0.50 | 4.05 | 15.84 | 9.95 |
28 | Senegal | Algeria | 0.20 | 4.16 | 16.28 | 10.22 |
29 | Senegal | Pakistan | 0.05 | 0.42 | 1.62 | 1.02 |
30 | Senegal | Spain | 75.15 | 27.71 | 110.43 | 69.07 |
31 | Senegal | Congo | 9.75 | 0.37 | 1.41 | 0.89 |
32 | Senegal | Namibia | 0.47 | 0.03 | 0.13 | 0.08 |
33 | Senegal | Nigeria | 4.31 | 1.86 | 7.17 | 4.52 |
34 | Senegal | Qatar | 0.00 | 0.03 | 0.12 | 0.08 |
35 | Senegal | Kenya | 0.75 | 0.11 | 0.44 | 0.28 |
---|---|---|---|---|---|---|
36 | Senegal | Côte d’Ivoire | 36.20 | 12.93 | 50.48 | 31.70 |
37 | Senegal | Gabon | 7.27 | 0.28 | 1.08 | 0.68 |
38 | Senegal | Angola | 2.03 | 0.28 | 1.09 | 0.69 |
39 | Senegal | Libya | 0.01 | 0.11 | 0.42 | 0.26 |
40 | Senegal | Iran | 0.17 | 0.37 | 1.41 | 0.89 |
41 | Senegal | Russia | 0.03 | 0.61 | 2.37 | 1.49 |
42 | Senegal | South Korea | 2.06 | 1.54 | 5.95 | 3.74 |
43 | Senegal | Cameroon | 9.64 | 1.38 | 5.29 | 3.34 |
44 | Senegal | Italy | 67.47 | 16.14 | 61.81 | 38.98 |
45 | Senegal | Indonesia | 0.98 | 0.37 | 1.43 | 0.90 |
46 | Senegal | Kuwait | 0.00 | 0.12 | 0.47 | 0.30 |
47 | Senegal | Saudi Arabia | 0.13 | 0.35 | 1.33 | 0.84 |
48 | Senegal | Thailand | 2.25 | 0.40 | 1.53 | 0.96 |
49 | Senegal | United Kingdom | 7.25 | 38.82 | 174.01 | 106.41 |
50 | Senegal | Portugal | 10.26 | 6.09 | 23.78 | 14.94 |
trend towards a reorientation of trade flows to African countries for Senegal and to emerging countries for Morocco. Trade between the two countries is characterized by an imbalance in favor of Morocco. The Senegal coverage rate of imports from Morocco by exports is very low and was, on average, during the first decade of the 2000s, below the 15% threshold.
While Morocco has demonstrated aggressive exports to Senegal more than its estimated potential, Senegal exports to Morocco are much lower than the estimated potential exports, the gap being about 22.4%.
Morocco has non-exploited export potential, which is significant with respect to neighboring countries (Algeria, and Tunisia), to several European countries, to some West African countries (Cape Verde), to Central African countries (Cameroon) and to Eastern African countries (Mozambique, and Tanzania) as well as to Asian countries (Singapore, Bangladesh, and Japan).
Morocco and Senegal would benefit from further exploitation of their export potential within the African continent and in other regions. Better support for exporting companies through specific actions to penetrate the markets of partner countries (setting export targets by the State and the private sector, targeted support to successful exporting companies through market surveys carried out by the State or export promotion institutions, easier access to bank credits, etc.) could improve the use of the export potential.
This study may be extended through a finer estimate of export potential which distinguishes the main exported products.
Birahim BounaNiang, (2016) Assessment of Trade Potential of Senegal and Morocco. Modern Economy,07,27-38. doi: 10.4236/me.2016.71004