Do Business Services matter for Innovation, Productivity, and Exports? Morocco’s Manufacturing Sector Story

Business services have been overlooked in explaining observed variability in firms’ productive performance and their propensity to innovate, and export. This paper contributes to the scarce empirical literature on the issue using Morocco’s manufacturing sector firm level data. Three conclusions emerge from the paper. First, less than one Moroccan manufacturing firm out of five has already benefited from business services. Those firms that never used business services either don’t perceive the benefits they can spark, or they see them but can’t afford the cost involved. Second, firms using business services tend to be more likely to engage in innovative activities. Third, demand on business services tend to be negatively associated with the likelihood to be involved in export activity. One would expect that the use of business services improves firms’ competitiveness. Many Morocco’s exporting firms, however, operate in the garment sector and their activities tend to be confined to subcontracting for foreign suppliers.