Morocco: Finance Project - Research Paper Example

Morocco Level of Foreign Direct Investment (FDI) It is interesting to that Morocco is being targeted as a FDI recipient among member countries of MENA (Middle East and North African), as shown in figure 1 (“Foreign Direct Investment” par. 2). Figure 1: MENA region: FDI (2007-2011) This is an achievement for Morocco considering that MENA countries are “not popular” FDI targets (Bouoiyour 2). Figure 2 below shows the FDI level of Morocco for the past 5 years based on the World Bank data (“Foreign Direct Investment” par. 2). Figure 2: Morocco FDI flows (2007-2011) The figure illustrates that Morocco’s FDI flows for 2008 until 2010 are declining; this is largely due to global recessions that hit the U.S. economy. Historically speaking, the influx of foreign investors in the country can be traced to the positive contribution of the Structural Adjustment Program the government adopted in 1983 through the monitoring of the IMF and the World Bank (Bouoiyour 4). The SAP opened the Moroccan economy to foreign trade allowing foreign investors the “full ownership” of companies most especially in the manufacturing sector (Bouoiyour 4). Under SAP, foreign investors are protected against the negative impacts of “nationalization” and “expropriation,” which are formalized under the country’s code of investments that opened more opportunities for foreign commerce to flourish (Bouoiyour 4). State of Public Finances and Banking System Oxford Business Group (qtd. in “Moroccan Banking Sector” par. 1) states that Morocco has displayed its strength in its banking system, which is a complete opposite to the struggles of its neighboring North African countries, particularly in juggling the “debt crisis.” In 2010, Morocco’s financial sector has recorded a significant growth in its financial assets, as shown in figure 3 (“The Financial Development Report” 196). The figure indicates that Morocco’s financial policies and reforms are effective and well implemented. Figure 3: Morocco: Financial Assets by Major Type, 2010 Source: “The Financial Development Report” 196 Furthermore, as of July 2011, the Moroccan banking sector accomplished a 120% of growth domestic product (“Moroccan Banking Sector” par. 4). Even in 2008 and 2009, times when neighboring countries’ financial systems shut down, Morocco had a sound financial system while financial authorities and rating agencies gave the country a high score in dealing with its finances (Oxford Business Group 50). Trade Policies, Tariffs, Favored Industries and Exports and Imports Morocco implemented various trade reforms that aimed to eliminate trade restrictions and allow the liberalization of the country’s services (“World Trade Indicators” 1). Since 1996, Morocco’s trade policies eliminated most of its “quantitative import restrictions,” but restrictions in its agricultural sector are still higher (“World Trade Indicators” 1). The country employed free trade agreements in 2009, which were responsible in the creation of a free trade zone in the country (“World Trade Indicators” 1). Among the manifestations of its trade liberalization was the reduction of tariffs of its import product wheat from 130 to 2.5 percent. Moreover, the government supported three of its industries in the midst of the global economic crisis in 2008 and 2009 including textiles, automotive parts, and the shoe industry (“World Trade Indicators” 1). However, the crisis has reduced Morocco’s real trade growth rate, as shown in figure 4 (“Morocco: Trade-at-a-Glance” 2). Figure 4: Morocco’s Real Trade Growth Rate Source: “Morocco: Trade-at-a-Glance” 2 However, Morocco has fairly maintained its export-import value for the last 3 years (see figure 5). This performance is largely attributed to the country’s service sector (55,0%), industry sector (29,7%), and agricultural sector (15,4%) (“Morocco: Main Economic Indicators” 1). Figure 5: Morocco’s Import & Export Values (2009-2011) Source: “Morocco: Main Economic Indicators” 1 Works Cited Bouoiyour, Jamal. “Foreign Direct Investment in Mexico.” Munich Personal RePEc Archive. Munich Personal RePEc Archive, 12 Jun. 2011. Web. 13 Nov. 2012. . “Foreign Direct Investment, Net Inflows (BoP, Current US$).” The World Bank. The World Bank Group, 2012. Web. 13 Nov. 2012. . “Moroccan Banking Sector Continues to Post Healthy Growth in a Stark Contrast to the Struggles of its Northern Neighbors, Think-tank.” Morocco World News.com. Morocco World News, 24 Oct. 2011. Web. 13 Nov. 2012. . “Morocco: Main Economic Indicators.” European Commission. European Commission, 21 Mar. 2012. . “Morocco: Trade-at-a-Glance Table.” The World Bank. The World Bank Group, n.d. Web. 18 Nov. 2012. . Oxford Business Group. The Report: Morocco 2011. Oxford: Oxford Business Group, 2011. Print. “The Financial Development Report 2012: Morocco.” World Economic Forum. World Economic Forum, n.d. Web. 18 Nov. 2012. . “World Trade Indicators 2009/10: Morocco Trade Brief.” The World Bank. The World Bank Group, 2010. Web. 13 Nov. 2012. . Read More