The determinants of foreign direct investment localization: An empirical analysis of the moroccan automotive industry

Abstract

This study investigates the determinants of foreign direct investment (FDI) localization in the context of the Moroccan automotive industry. Drawing on a comprehensive review of the literature, we formulate and test several hypotheses related to the influence of socioeconomic, institutional, and policy factors on FDI localization. Our empirical analysis utilizes data from a diverse sample of MCNs operating in the Moroccan automotive industry and employs robust methods to examine the relationship between various determinants and the localization of FDI. The results offer valuable insights into the factors driving FDI localization and provide implications for policymakers and practitioners seeking to attract foreign investment. The findings suggest that while certain factors, such as the quality of institutions and market size, positively influence FDI localization, others, including stable and favorable economic and financial environments and public incentives for investment, exhibit mixed or negative effects. Additionally, the study highlights the importance of infrastructure development and the availability of qualified labor in attracting FDI localization. Overall, this research contributes to the literature by offering a nuanced understanding of the complex dynamics shaping FDI localization in developing countries. The insights gleaned from this study can inform policymakers' efforts to formulate effective strategies for promoting FDI localization and fostering economic growth and development.