Determinants and Potential of Moroccan Outward FDI in African Countries: A Gravity Model Analysis

This paper examines the determinants and potential of Morocco’s outward foreign direct investment (FDI) stocks in 25 African countries over 2010–2022. Using an augmented gravity framework estimated with two‑step system Generalized Method of Moments (GMM), the analysis assesses how standard gravity factors and selected macroeconomic, institutional and relational variables shape Morocco’s outward investment in Africa. The results depart from conventional gravity predictions: neither Morocco’s GDP nor host‑country GDP is statistically significant, while geographical distance is positively associated with Moroccan outward FDI. High‑level visits, political stability and a shared language emerge as key drivers, underscoring the importance of economic diplomacy and institutional credibility in South–South investment patterns. Predicted FDI stocks are then used to compute an observed‑to‑predicted benchmark, which reveals a subset of destinations where Morocco’s investment presence remains below model-implied benchmarks. Preprint — under journal review.