Economic diplomacy of developed countries and its impact on FDI flows to Morocco[La diplomatie économique des pays développés et son impact sur les flux des IDE au Maroc]

Since 2007, the majority of FDI flows to Morocco, an average of 74%, have come from developed countries. This reality of FDI in Morocco leads to questions about the determinants of its attractiveness. In fact, the location of multinational firms could emanate either from a rational choice based on the advantages of Morocco, or from a systemic choice linked to the economic policy of the countries and their economic diplomacy. In our paper, we have tried to answer the question: What is the relationship between the economic diplomacy of developed countries and FDI flows to Morocco? In order to provide theoretical insight on our main question, and in the face of this relative reality on the determinants of FDI flows, we have opted for scientific realism as an epistemological position, and the hypothetico-deductive approach as a research approach. A review of the literature has allowed us to explain the flow of FDI to Morocco by the components of economic diplomacy, like the need for fiscal adjustment in developed countries and the military power of the latter on an international scale. To study our research hypotheses, we constructed a sample of panel data from 2007 to 2020 (T=14) covering 6 original developed countries (France, Netherlands, Germany, Italy, Canada and Sweden). As data sources, we used statistics from the University of Sherbrooke, data from Organisation for Economic Cooperation and Development, and data from Moroccan Exchange Office. With the existence of longitudinal data that are represented by a double dimension: individual and temporal, we are obliged to pass by an empirical analysis of the data by using panel data econometrics. The procedure followed to achieve this technique is composed of three steps. The first step is to determine the panel structure using a sequential testing procedure. Then in the second step, calculate the VIF (variance inflation factor) to avoid multicollinearity, and in the third step, use the estimation method related to the result of the procedure. The study conducted an empirical examination to test the relationship between the need for fiscal adjustment in developed countries, their military power and FDI flows to Morocco. The sequential testing procedure led us to a fixed effect econometric model. The results of the study show that the power of developed countries and their need for fiscal adjustment cause FDI flows to Morocco. This means that the economic diplomacy of developed countries causes FDI flows to Morocco. The results of our research are not in line with the conclusions of previous studies on the determinants of FDI in Morocco. Their views of FDI ignores the existence of a real world in which capital movements are only achieved through a coalitional game between unequally strong carrier states. This research suggests that Morocco should invest more in military spending to exceed the military strength of the countries that represent the origin of the substitute FDI. It also suggests that Morocco should take advantage of its current military strength to create new and sustainable localisation and internalisation opportunities for Moroccan-based multinational firms, and to reduce the country's eventual fiscal adjustment needs.