The Determinants of Foreign Direct Investment: The Case of Morocco

The present investigation looks on Morocco's long-term balance of foreign direct investment, GDP, agriculture, manufacturing, GFCF, and trade. This relationship has been widely researched in the field of economics. The results vary; several theoretical and empirical studies have found no positive relationship between foreign direct investment (FDI) and economic growth. In contrast, other research has shown that FDI has a significant and positive influence on long-term economic growth. Also, the remarkable expansion of FDI and these variations in destination focus have sparked several issues, such as why there is an intense interest in FDI? Is Foreign Direct Investment beneficial to the host country’s economic growth? Following a review of literature of the different variables studied, an empirical analysis using time-series (1995-2021) was conducted by performing several tests namely Augmented Dickey Fuller and Phillips Perron tests for stationarity. Johansen cointegration analyses verify the long-term link between FDI and its causes in Morocco in terms of true income growth. Error correction model is employed to examine the non-stationary variables' long-run relationships. Third, Granger-causality is used under the VECM to study causal links among variables through historical data.