Attractiveness of Foreign Direct Investment and Export Performance in Morocco: The Case of the Automotive Industry

Abstract

<p><em>Thanks to its geopolitical position and its know-how, Morocco has established itself as a leader in the automotive sector on the continent. The Moroccan automotive industry has experienced remarkable growth in recent years. A dazzling progression that is not about to stop. Thus, Morocco has become the 28th largest car exporter in the world, first in North Africa and second on the African continent.</em></p><p><em>Its performance is particularly remarkable in terms of exports and job creation, for which the sector is growing at a double-digit rate with more than 80.000 people in 2016 compared to 39.131 in 2008. Cabling is the leading employer segment with nearly 69.5% in 2016, followed by seats and seat covers (9%) and automotive manufacturing (8.3%).</em></p><p><em>And with MAD58.8 billion in export sales in 2017, compared with MAD12.7 billion in 2007, the automotive sector is the leading export sector. This performance contributed to the overall evolution of Moroccan exports by nearly 36.7%. In 2017, the automotive sector became the country’s leading export sector for the fourth consecutive year. Its share rose to 23.6% in 2017 (5.5% of GDP) from 10.1% in 2007 (2.1% of GDP).</em></p><p><em>An analysis of Moroccan export markets by destination shows that France and Spain are Morocco’s main customers. Thus, cabling remains the main export segment to Spain. On the other hand, for France, Germany, Italy, Turkey and the United Kingdom, automotive manufacturing is the predominant branch in exports. Outside European countries, exports of vehicles produced in Morocco doubled to Algeria between 2016 and 2017, and have increased in recent years to Asian countries, mainly China.</em></p><p><em>Foreign direct investment income from the automotive industry rose sharply to MAD3.3 billion in 2017, up from MAD0.7 billion in 2010. France remains the leading direct investor in the automotive sector (82% in 2017), followed by the USA (8%) and the United Arab Emirates (UAE). Production and exports should continue to rise thanks to a MAD6 billion investment by PSA Peugeot Citroën, which will set up a plant in Morocco in the municipality of Ameur Seflia, in the Gharb Chrarda-Beni Hssen region, on the edge of the Atlantic Free Zone integrated industrial platform.</em></p>