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

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. 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%). 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). 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. 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 www.scholink.org/ojs/index.php/jepf Journal of Economics and Public Finance Vol. 5, No. 2, 2019 148 Published by SCHOLINK INC. 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.


Introduction
The trade opening and financial liberalization adopted in recent years by many countries has enabled some emerging economies, thanks in particular to the availability of important production factors, to develop new sectors of activity by redeploying efforts to establish highly competitive automotive, electronics and aeronautics industries, thus enabling these countries to find their place in the new world industrial order.
Morocco is also part of this strategy of trade liberalization and investment research in new global business lines that could, among other things, reduce the trade deficit that has been growing steadily over the past ten years. The main initiative taken in this context is the Emergence plan, which is based on two complementary dimensions: management of the existing fabric and proactive targeting on growth drivers in the automotive, electronics, aeronautics and offshoring sectors, as well as the so-called traditional sectors, textiles and leather and agri-food.
The Moroccan automotive industry has risen to sustained levels of growth over the past ten years. Its performance is particularly remarkable in terms of exports and job creation, indicators for which the sector has achieved double-digit annual growth.
On an international scale, this sector is evolving in a context of increased competition between the main world poles. In addition, the effects of the economic crisis on the automotive industry (decline in sales in Europe and the United States) have contributed to the shift of part of European production to emerging countries and to focus on low-cost brands, thus adapting to the new situation on the world Published by SCHOLINK INC.
World automotive production has increased remarkably, with production rising to 97 million vehicles in 2017 from 56 million in 2001. This increase is largely explained by the rise in Chinese car manufacturing and the fact that European production has held up well despite the global economic crisis.
The European Union was the world's leading automotive production hub before giving way to China in 2010, which has recorded record volumes of automotive production in recent years. In 2017, the United States is in second place in terms of automotive production with a share of 11.5%. The main producing countries in the European Union are Germany (the world's largest exporter of vehicles), Spain and France. In 2017, world trade in automotive products represents 8.1% of world trade in goods, a figure that reflects the importance of this industry in the development of the world economy. 75.3% of sales are concentrated in 4 zones, namely China, the USA, Europe and Japan.
Exports from the European Union's automotive industry represent a significant weight in trade in goods.
The majority of exported products are of German origin, it being specified that this country is classified as the world's leading exporter of automotive products.
In terms of imports from the automotive industry, the United States is the world's largest importer of vehicles.

Literature Review
Because it has strongly structured our societies and economies, the automotive industry is often considered emblematic of the 20th century and our current way of life. Since the introduction of the Ford T in 1908 and the birth of Fordism, the automotive industry has symbolized the entry into mass production and consumption as well as the emergence of new modes of industrial production (Chanaron, Lung, 1995;Boyer, Freyssenet, 2000;Bardou et al., 1977).
By permanently modifying social relations, consumption patterns, the organization of spaces, the relationship to time and distance and the hierarchy between individuals, the automotive is often considered a "revolutionary" object that characterizes a large part of the evolution of Western civilization (Bardou et al., 1977;Boy, 1998). As a laboratory for productive organization and industrial design, the automotive industry is of interest to researchers in all disciplines. The specificities of the automotive product and the great diversity of the actors involved in the production processes make the car a real "system product" (Chanaron, Lung, 1995), with multiple ramifications and affecting a large part of the world economy.
Since its inception, the automotive industry has constantly adapted and innovated to remain profitable and keep pace with major changes in its history (Bardou et al., 1977;Pardi, 2011). Traditionally, historians have divided these developments into three main periods characterized by the succession of The emergence of these technologies and their massification in the world's major growth markets would contribute to changing the competitive environment for automotive firms and encourage the international clients, particularly in France (language, geographical and cultural proximity); a skilled and relatively available workforce; the constant development of freight and logistics infrastructure and the implementation of incentives to attract foreign investment (creation of free zones, reduction of corporate tax, exemption from VAT on imports and exports, financial assistance for installation and training).
The country is attracting more and more European investors thanks to the improvement of the business environment and the liberalisation of trade with the European Union. However, not all needs are covered locally.

Attractiveness of the Automotive Industry for Foreign Investment and Export Performance
Despite its concentration on traditional products, the analysis of the national exportable supply over the main competitors. In terms of average annual growth rate of automotive exports, Morocco has the highest rate (22.2%), followed by India, Vietnam, Romania, Indonesia and South Africa.

Figure 5. Structure of Exports by Main Sectors
Source: exchange office of Morocco.

The analysis of imports and exports of the automotive industry in Morocco over the period 2007-2017
shows a significant improvement in the value of exported cars compared to imported ones from 2013 onwards.

Imported and Exported
Source: exchange office of Morocco.
In addition, the export structure of the sector is undergoing a significant change.

Figure 7. Evolution of the Export Structure of All Automotive Segments
Source: exchange office of Morocco.
By taking into account the jobs generated by the automotive, it constitutes an essential pillar of the national economy. Cabling is the leading employer segment with nearly 69.5% in 2015, followed by seats and seat covers (9%) and automotive manufacturing (8.3%). The main imported products are: wires, cables and other insulated conductors for electricity; parts and accessories for industrial cars, piston engines...

Conclusion
The global automotive sector is undergoing a phase of redesign of its value chain with a shift in global demand and supply towards emerging countries. This new restructuring of the global value chain has led to a major redeployment of production capacities between major geographical areas. This situation could also lead to a disruption of the global automotive value chain due to two main factors. First, there are the technological changes that are driving changes in the established order and, second, the alliance strategies between automakers, equipment manufacturers and niche players. As a result of these changes, the business model within each manufacturer's strategy must be rethought to enable it to maintain technological leadership, know-how and brand image. Their strategies should therefore be geared towards reducing costs and consequently increasing outsourcing, particularly to emerging countries.
The Moroccan automotive industry has experienced a very remarkable growth in recent years, confirmed by the increase in foreign investment flows and the performance achieved in terms of exports, particularly for cabling and construction. cabling activity remains the strong determinant of the automotive industry with a turnover representing nearly 59% of total exports in the sector.
Automotive manufacturing activity should grow in the coming years in terms of productivity, taking into account the new industrial platforms created or planned under the emerging plan to be able to attract new investment and encourage, among other things, the arrival of other manufacturers in Morocco.