The role of FDI in structural transformation in Morocco (1995-2022)

Abstract

In the general context of Morocco's New Development Model (NDM), where the policy of territorial attractiveness requires all its credentials, and more specifically within the framework of the regional declination of the Industrial Acceleration Plan (IAP), the issue of the structural transformation (ST) of the Moroccan economy is highly topical and of great interest to the Kingdom. This article examines, under external constraints and international openness, ST through the relationship between Foreign Direct Investment (FDI) and the diversification and sophistication of Moroccan exports, over the period from 1995 to 2022. After outlining the theoretical foundations of such a relationship, curiously neglected in the literature, it was specified and estimated by two ARDL (Auto Regressive Distributed Lag) models. The latter, supported by the cointegration bounds test highlighted the existence of a long-term link between FDI and export diversification on the one hand, and export sophistication on the other. However, the results showed a negative influence of FDI on the diversification of Moroccan exports. This negative influence was more significant on export sophistication. Consequently, during the study period, FDI did not play the desired role in the Moroccan economy's ST. It did not contribute to the enhancement of its productive structure, particularly its export structure, which suffered from a chronic double handicap: a low degree of diversification coupled with a lack of sophistication. The Moroccan economy has not reached the level of development required to leverage export diversification and sophistication in its ST.