Committee: Economic and Financial

Topic: Protection of Foreign Markets through Sustainable Foreign Investment

Country: Morocco
School: Oakridge International School, Einstein Campus
Foreign direct investment (FDI) can be defined as a direct investment into production or business
in a country by an individual or company in another country. The rapid growth of the world
population has only occurred in developing countries, where an increase in FDI may be
associated with improved economic growth due to the incursion of capital and increased tax
revenues for the host country. Morocco believes that it too can become a developed country by
protecting its foreign markets through sustainable foreign investment.
Succeeding the historic events which swept through the Middle East and North Africa region in
early 2011, Morocco has experienced a political and social evolution over the past two years.
The countrys king, Mohammed VI has responded to popular uprisings for democracy, protests
against corruption and high food prices by proposing amendments to the countrys Constitution.
The new constitution establishes a more democratic and decentralized system of governance, an
independent judiciary, and lays the foundations for a new social contract with laws guaranteeing
both civic engagement and access to information therefore, making the country a constitutional
monarchy.
After the reformation of the Constitution, Morocco has proposed an Emergence Plan to help
industrialize, develop, and stimulate growth in its economy. The Emergence Plan is a sectorbased 10-year industrial strategy designed to achieve an additional GDP of MAD 91 billion and
create up to 440,000 jobs. It was expected to reduce the trade deficit by 50% and contribute by
an annual growth rate of 1.6%. While Moroccos main industries include textiles and agriculture,
this plan also focuses on the development of new industries such as off shoring, car and
aeronautic industries, electronics, seafood processing, and handicraft. Through the Emergence
Plan, Morocco was expected to promote, inter alia, increase the effectiveness of its capacity for
relocating foreign companies, develop and modernize the new sectors and sub-sectors, and target
competition through the optimal growth of trade.
As an emerging economy, Morocco became an attractive source for foreign direct investment.
The Moroccan market is dominated by FDI by France and Spain with investments of $1.86
billion and $783 million respectively. Along with Europe, Arab countries from the Persian Gulf
are heavily investing in the African countries tourism and real estate industries. These
investments reflect the strong diplomatic relations between Morocco and the regimes in the
Persian Gulf countries, which are attracted to the liberalized economy and the economic reforms
in Morocco. However, the major Arab country that has been involved in the development of
Morocco is the United Arab Emirates. Early investments were primarily in construction and
tourism, although, recent investments have been directed at newer areas such as information
technology, agriculture, transportation, telecommunications, automobile and aviation
development. According to sectors, tourism has the majority with $1.55 billion, (33% of the total
FDIs), followed by the real estate sector and the industrial sector, with respectively $930million
and $374million.

In order to protect its market through sustainable foreign investment, Morocco must continue
welcome foreign investment but must maintain sector restrictions in areas where the state holds a
monopoly. In order to protect the interests of the local companies and farmers, Morocco should
restrict foreign companies to utilizing the local resources of the country for production of their
desired product. This will be a win-win situation for both Morocco and the foreign countries,
because it will increase sales of Moroccan goods and churn out profit for the foreign investing
countries. Another possible solution is to set only a certain amount of equity rate for foreign
countries. A foreign country must only have equity of up to 50%. 50% ownership of shares does
not mean 50% ownership of a company therefore the foreign countries will not have the right to
use a company's building, equipment, materials, or other property. Also, in order to promote
sustainable foreign investment, Stockholders' equity cannot be withdrawn from the company in a
way that is intended to be detrimental to the company's creditors. Foreign investors must wait for
a period of thirty days after purchasing equity in order to sell or transfer it. Morocco believes that
it should take these following measures in order to protect its market through sustainable foreign
investment.
As an emerging market, Morocco believes that it should limit the amount of foreign investment
in certain situations, in order to stabilize its own market.

Sources :
http://www.worldbank.org/en/country/morocco/overview
http://www.kpmg.com/Africa/en/KPMG-in-Africa/Documents/Morocco.pdf
http://en.wikipedia.org/wiki/Economy_of_morocco
http://en.wikipedia.org/wiki/Investment_in_Morocco
http://www.jstor.org/discover/10.2307/25830953?uid=3738256&uid=2&uid=4&sid=21102662642691
http://www.state.gov/e/eb/rls/othr/ics/2013/204699.htm
http://www.moroccobusinessnews.com/Sectors/Emergence_Plan.asp
http://www.heritage.org/index/country/morocco