Determinants of Firm Growth: An Empirical Analysis from Morocco

This paper views the economic growth experience in Morocco from the perspective of private firms. Using models of optimal firm size as a theoretical framework, the paper analyzes empirically the factors affecting the growth process of Moroccan private firms. The analysis is based on a field survey of 370 firms carried out under the auspices of the World Bank in 1998. The sample includes firms of different sizes, from more than 100 workers to 5 workers or fewer. It also covers all major economic sectors: manufacturing, construction, services, and commerce. The principal factors promoting firm growth are business strategies that are focused on product diversification and market share expansion; location in large urban centers; legal status as a limited liability company; the presence of price competition; presence in markets with high demand; and certain government policies such as labor regulations, anti-trust and environmental policy. The principal factors impeding firm growth are lack of access to qualified workers and managers; location in smaller population centers; and certain other government policies such as regulation of foreign trade and policies that promote domestic price volatility