The rise of the geopolitical tensions and its impact on FDI flow in Morocco

Abstract

Morocco has attempted to attract FDI (Foreign Direct Investment). However, geopolitical tensions are contributing to changes in the economy worldwide. These flows start to shrink globally, and Morocco is marked lately by fluctuations in FDI and changes in their country of origin. Moreover, the resilience capabilities are important in attenuating these risks and taking advantage of the fragmentation of FDI. From this perspective, Morocco attempts to attract more FDI from different regions to invest in new sectors. The country has several advantages. Nevertheless, some inadequacies, such as geopolitical tensions and vulnerabilities, threaten its efforts. In this study, we examine the extent to which geopolitical risks are reshaping FDI in Morocco in the backdrop of the recent rising geopolitical tensions. We also analyze the role of vulnerability factors and resilience capabilities of Morocco in FDI fragmentation. To address these issues, we use a correlation test between geopolitical tensions and FDI, and we use the multidimensional index of vulnerability to determine the structural aspects that threaten FDI in Morocco and the manifestations of FDI fragmentation. Our results confirm that Morocco is not immune to the impact of geopolitical tensions on FDI. This requires policy adjustment to attenuate these risks and take advantage of the actual situation.