Impact of the divestment of Spanish FDI on economic growth of Morocco: an econometric analysis of 13 country-of-origin
| DOI | https://doi.org/10.1108/JCEFTS-04-2022-0024 |
| Published date | 30 December 2022 |
| Date | 30 December 2022 |
| Pages | 40-54 |
| Subject Matter | Economics,International economics |
| Author | Jihad Ait Soussane,Dalal Mansouri,Zahra Mansouri |
Impact of the divestment of
Spanish FDI on economic growth
of Morocco: an econometric
analysis of 13 country-of-origin
Jihad Ait Soussane,Dalal Mansouri and Zahra Mansouri
Faculty of Economics and Management, Laboratory of Economics and
Management of Organizations (LEMO), Ibn Tofail University, K
enitra, Morocco
Abstract
Purpose –This study aims to identifythe impact of foreign direct investment (FDI)on economic growth in
Morocco depending on each origin country,including Spain. This study uses a linear model to measure the
marginal impactof FDI on the growth of Morocco. This marginal effect allows to comparethe different effects
of FDI among countries of origin.Also, the marginal effect helps to measure the rate of substitution between
FDI in an easier waythan the other specifications of the model. The second step determinesthe substitute for
Spain in case he decidesto divest its FDI from Morocco to maintain the economic growth.
Design/methodology/approach –Using data of FDI from 13 countriesof origin from 1995 to 2020 and two
estimation methods (Dynamic Ordinary Least Squares and Autoregressive model), this study aims to measure the
marginal impact of the divestment of FDI from Spain on growth. Then this study estimates how much Morocco
should attract FDI from other countries when Spain divests. This study uses the differential calculus, assuming a
perfect substitution between FDI from different countries. This calculus implies an indifference curve between FDI
from Spain and FDI from another country where we deduct the substitution rates between FDI.
Findings –The results indicatethat the FDI from Spain and France are the only ones to impactpositively
Moroccan economic growth. The FDI coming from Germany, Holland, China and Turkey have a negative
impact, whereas those from the USA,Italy, UK, Switzerland and Gulf countries: Saudi Arabia, Kuwaitand
UAE have an insignificant effect.Second, using the differential calculus, the result indicates that when Spain
divests 1m dirhams of its investments from Morocco, France would have to increase its own by 0.1509m
dirhams so that Moroccocould maintain its economic growth.
Research limitations/implications –The research focuses only on economic growth, neglecting the
impact on other aggregates,such as total factor productivity, technology transferand employment. Also, this
researchmarginalized the sectorial analysis of FDI by the source to better understandthe divergent effects.
Originality/value –This paper fills a researchgap when analyzing the effect of FDI on the host economy
depending on country-of-origin. In addition,it contributes to the body of literature by constructingthe rate of
substitutionbetween the different sources of FDI to adapt to divestment policy.
Keywords Foreign direct investments, Multinational enterprises, Internationalization,
Economic growth, Morocco–Spain political relations, Divestment policy, Country-of-origin approach,
Econometric analysis
Paper type Research paper
1. Introduction
Like all developing countries, Morocco attaches great importance to the attractiveness of
foreign direct investment (FDI) on its territory. These investments come from different
JEL classification –F23, H77, C50
JCEFTS
16,1
40
Journalof Chinese Economic and
ForeignTrade Studies
Vol.16 No. 1, 2023
pp. 40-54
© Emerald Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-04-2022-0024
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