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This paper has looked at the economy of Morocco. It has pointed out the various sectors that contribute to the economic growth of the North African nation. Such sectors include tourism, manufacturing, mining as well as the construction sector. This paper has also provided some of the advantages and disadvantages that investment by American firms can bring to the economy of the nation. After that, a conclusion has been provided.
The economy of Morocco is considered to be a comparatively liberal economy. It should be noted that the economy of Morocco has grown to become one of the main players as far as economic affairs of African is concerned. By GDP, it is the fifth African economy. Morocco was placed as one of the highly competitive economies within North Africa by The World Economic Forum.
The strongest economic sector for Morocco is agriculture. This includes growing of olives, vegetables, wheat, citrus fruit, and barley and also the rearing of fish, and livestock. Other important sectors include mining of copper, lead, manganese, silver and phosphates. The energy, manufacturing, construction and tourism sectors also play very big roles in Moroccan economy.
It should be noted that Morocco is a very close ally with America. Indeed it is a very attractive country for investments by the American companies. There are a number of factors that may attract Americans companies to invest in the country. These include the excellent location of the country; its huge consumer class as well as its effective economic growth (Asiedu, 2002).
The rapid economic growth of Morocco has largely been brought about by privatization which began two decades ago. The energy sector was the first business to be privatized. Since then, a number of public enterprises have been privatized.
The benefits of an American company doing business in Morocco
There are a number of benefits that investments by American companies in Morocco may bring to the economy of the nation. First, the skills of the local manpower will be raised through training of the local workforce. The productivity of the local workforce will hence be enhanced. This is of great advantages to the Moroccan economy.
Investments by the American companies are of great benefits to the Moroccan economy as it will also result into an improvement in technology. Foreign companies usually invest more in research as well as development. Similarly, they usually have better-quality technology as compared to the local firms. Improvement in technology is indeed a very great benefit to any economy.
Enhanced efficiency is also brought about by the investment of American companies in Morocco. When the companies invest in the country, there will be competition between the local firms and the foreign firms. This will force the local companies to allocate and also to efficiently use resources.
When American firms invest in Morocco, they create employment opportunities to the locals. This is a huge benefit to the Moroccan economy. Indeed it generates income to the economy. Investment by American firms also supplements domestic savings.
It should be noted that the saving rates of Morocco is very low. This makes it very difficult for investment projects that may spur development to be financed.
Investment by the American firms integrated Moroccan economy into a global economy. This is because it improved international trade hence integrating the Moroccan economy into the global economy (Morrisset, 2000).
Disadvantages of American Companies investing in Morocco
Despite the numerous advantages that are brought about by the investments by the American firms, there are a number of disadvantages that are also brought about by the same. Although investments by the American companies may result into an improvement of the aggregate demand within the Moroccan economy within the short run through productivity improvements as well as technological transfers, concerns should be raised over the effectiveness of alleged benefits being brought about by direct investments.
It should be noted that the balance of payment position is usually endangered in the long run when the American companies recover their original outlay. When the original investment begins to be profitable, it is expected that returns from capital will only benefit the country from which it originated (Aaron, 1999).
As pointed out in the paper, Morocco is one of the leading economies is Africa as a whole. The economy has really grown in the past two decades. There are numerous benefits that have been brought about by investments by American companies in the nation. Such include provision of employment, improvement of technology, infrastructural developments as well as enhanced efficiency. All these are pointed out in the paper.
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Aaron, C. (1999). The contribution of FDI to poverty alleviation. Washington, DC: Foreign Investment Advisory Service.
Asiedu, E. (2002). On the determinants of foreign direct investment to developing Countries: is Africa different? World Development 30, 107-19.
Morrisset, P. (2000). Foreign direct investment to Africa: policies also matter. Transnational Corporation 9, 107-25.