Attractiveness of foreign direct investment and economic growth: the case of Morocco

Abstract

The objective of this study is to assess the economic impact of the attractiveness of Foreign Direct Investment (FDI) on economic growth in Morocco, based on the endogenous growth model. Indeed, the importance of FDI lies in its capacity to generate positive externalities or "spillover" effects that affect all economic variables, namely human capital, domestic investment, exports, foreign trade, technology transfer, infrastructure, etc., which in turn affect economic growth.

The phenomenal growth of FDI and these shifts in focus of destinations have raised many questions, namely what explains the strong interest in FDI? Does FDI have a positive impact on the economic growth of the host country?

After conducting a literature review of the different concepts studied, we conducted an empirical study on time series collected from several sources, namely the World Bank, Bank Almaghrib, the Haut-Commissariat au Plan, the Ministry of Finance in Morocco, the Ministry of Higher Education, and the Office de Change, using an econometric model representing simultaneous equations and performing several econometric tests, namely the Augmented Dickey-Fuller test for stationarity analysis, the "Granger" test for causality analysis, the "Jarque-Bera" test for normality analysis, and finally, the "Breusch-Godfrey" test for residuals homocedasticity analysis Indeed. This empirical analysis carried out during the study period (1970-2019) shows that FDI and foreign trade are the main drivers of economic growth in Morocco. Moreover, we find that there are no direct links between FDI and the other determinants of economic growth, namely human capital, domestic investment, foreign trade and technology transfer.

JEL Classification: C23, F43, O47.

Type of paper: Applied research.