Impact of tax policy in sub-Saharan territories on Moroccan FDI: An econometric cointegrating panel modelling experiment

Abstract

Since the 2000s, inflows of FDI into sub-Saharan countries from Morocco have increased significantly in the context of south-south cooperation and the economic integration of Morocco in its African continent. However, the volume of Moroccan FDI flows to sub-Saharan territories differs from one country to another, and this is explained by the heterogeneity of the factors of localization of FDI, including the fiscal policy of these countries, which constitutive an important determinant of the attractiveness of FDI alongside socio-political-economic conditions. Therefore, This work raises the question on the contribution of the fiscal policy of the countries of sub-Saharan Africa on the attractiveness of Moroccan foreign direct investment (FDI) using the econometric methodology to study this impact and particularly the co-integration approach with dynamic panel data for the period 2004-2017. The result confirms the evidence of the co-integration of the panel between FDI and the variables of fiscal policy. As a result, we found that Moroccan inward FDI is influenced positively by the tax payment score and negatively by the tax rate on profits. However, the effects of the tax burden and the total tax rate are not identified.