Public investment in infrastructure, capital inefficiency and economic performance in Morocco: insights from a dynamic CGE model

Abstract Since the early 2000s, Morocco has undertaken extensive socio-economic reforms and intensified its public investment efforts to modernize the economy and expand infrastructure. However, despite having one of the highest investment rates in the world, the outcomes in terms of growth and capital accumulation remain limited. This situation, marked by capital inefficiency and the predominance of public investment (nearly 70% of the total, compared with only 30% from the private sector), highlights the central issue of efficiency and resource reallocation. This study evaluates the impact of public infrastructure investment using a dynamic Computable General Equilibrium (CGE) model (PEP-1-t), calibrated with the 2023 Social Accounting Matrix (SAM). The results show that industrial and agricultural infrastructure generate the most significant gains, while construction infrastructure yields more modest returns. These findings call for a strategic reallocation of resources, improved investment efficiency, and greater private sector involvement to foster sustainable and inclusive growth. JEL Classification: C68, H54, O18, O47.