FDI, Information and Communication Technology, and Economic Growth: Empirical Evidence from Morocco

Abstract

Abstract The document analyzes the relationship between FDI (Foreign Direct Investment), ICT (Information and Communication Technology), and economic growth in Morocco for the period from 1990 to 2021 using the ARDL model. Three models have been evaluated, with economic growth, FDI, and ICT as dependent variables in each respective model. In model (1), the results indicate that in the short term, economic growth is not positively related to FDI and ICT. However, in the long term, FDI positively contributes to economic growth, while ICT negatively affects it. A controlled inflation rate has a positive short-term effect, and the level of education shows a positive relationship in both the short and long term. In Model (2), economic growth and government spending have a significant short-term effect on FDI, while ICT has no effect. In the long term, economic performance and inflation remain important for FDI. Model (3) confirms a significant short-term relationship between FDI and ICT, with a negative impact. However, ICT is positively influenced by the inflation rate and the level of education. In the long term, FDI, demographic changes, and education have favorable and significant effects, while economic growth has a negative impact. Regarding the Granger causality test by Toda-Yamamoto, the cause-and-effect relationship between ICT and economic growth is strong and unidirectional, while economic growth influences the level of ICT development. On the other hand, the causality between FDI and ICT concerning economic growth is indirect and depends on factors such as population growth, education level, and inflation rate. JEL classification numbers: C190, F21, F30, L96, O55. Keywords: Economic growth, FDI, Information and Communication technology, ARDL model, Toda-Yamamoto causality.