Morocco: Level of Foreign Direct Investment - Research Paper Example

The paper "Morocco: Level of Foreign Direct Investment" is a great example of a research paper on finance and accounting. It is interesting to note that Morocco is being targeted as a foreign direct investment recipient among member countries of MENA (the Middle East and North African), considering the fact that member states of MENA are not “popular” FDI targets (Bouoiyour 2). The World Bank reported that Morocco’s FDI level now rises from 1,240, 626,688 in 2010 to 2,521,364,645 in 2011 US dollars (“Foreign Direct Investment” par. 2). It can also be noted that it had almost 3 billion US dollars of FDI in 2007 while continued to decline until 2010, and now rises in 2011 (World Bank, “Foreign Direct Investment” par. 2). This is largely due to the global recessions that hit the US 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, a complete opposite to the struggles of its neighboring North African countries, particularly in juggling the “debt crisis.” The Moroccan banking system continues to project a positive outlook in its conduct of business in 2012. 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 sound financial system while financial authorities and rating agencies gave the country a high score in its dealings with 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 Bank, “World Trade Indicators” 1). Since 1996, Morocco’s trade policies eliminated most of its “quantitative import restrictions,” but restrictions on its agricultural sector are still higher (World Bank, “World Trade Indicators” 1).

The country employed free trade agreements in 2009, which were responsible for the creation of a free trade zone in the country (World Bank, “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; among these were textiles, automotive parts, and the shoe industry (World Bank, “World Trade Indicators” 1).

Unfortunately, Morocco’s trade growth in real continued to decrease from 2005 until 2009 due to slow growth of both imports and exports (World Bank, “World Trade Indicators” 2). Using US dollars, however, trade growth was fairly maintained in 2007 and 2008. Both exports and imports also grew in 2008, and its exported product phosphate is responsible for the growth (World Bank, “World Trade Indicators” 2). In 2009 until the present year, unfortunately, phosphate export rate declined by 34.

4 percent due to the low demand for Moroccan exports in the midst of the global recession (World Bank, “World Trade Indicators” 2).