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American Journal of  Applied 
Statistics and Economics (AJASE)

FDI, Technology Transfer and Economic Growth, What’s the connection? The case of  
Morocco

Dabnichi Youness1*, Ferroud Abderrahim1

Volume 3 Issue 1, Year 2024
ISSN: 2992-927X (Online)

DOI: https://doi.org/10.54536/ajase.v3i1.2276
https://journals.e-palli.com/home/index.php/ajase

Article Information ABSTRACT

Received: November 30, 2023

Accepted: December 27, 2023

Published: December 31, 2023

Foreign direct investment (FDI) has grown significantly in developing countries over recent 
decades, and governments in these countries now regard FDI as a key component of  their 
development strategy. The potential benefits of  FDI include the provision of  financial 
resources, job creation, increased economic growth and spillover effects on local businesses. 
In addition, the development effectiveness of  FDI depends on the ability of  host countries 
to absorb technology and innovation from foreign companies. Technology transfer (TT) is 
therefore a major issue in the context of  FDI. Political institutions and economic players need 
to work together to encourage effective and sustainable technology transfer. Technology 
transfer is therefore an essential process in enabling companies to remain competitive and 
innovate in a constantly changing economic environment. Technology transfer centers 
play a crucial role in this process, facilitating the exchange of  knowledge and technology 
between the various players in the innovation ecosystem. After examining the two variables, 
Foreign Direct Investment (FDI) and TT on economic growth, the results indicate that both 
variables have a positive impact on economic growth

Keywords

Foreign Direct Investment, 
Economic Growth, Technology 
Transfer, Morocco

1 Faculty of  Economics and Management, Settat, Morocco
* Corresponding author’s e-mail: y.dabnichi@uhp.ac.ma

INTRODUCTION 
Over the past few decades, we have witnessed a gradual 
evolution in the policies of  governments in Developing 
Countries (DCs) regarding Foreign Direct Investments 
(FDI). In the 1950s and 1960s, DCs were wary of  
multinational corporations (MNCs) and feared heir 
presence could harm their sovereignty and economic 
development. However, starting in the 1970s, there was 
a growing realization of  the potential role of  FDI as a 
development catalyst, especially due to the experiences 
of  some countries that successfully attracted FDI and 
reaped economic benefits from it.
In the 1980s and 1990s, DCs progressively adopted more 
FDI-friendly policies by liberalizing investment conditions 
and offering tax and regulatory incentives to MNCs. 
However, the liberalization of  investment policies also 
came with risks and challenges for DCs, such as loss of  
control over natural resources and increased dependence 
on foreign investors. Therefore, the governments of  DCs 
need to design investment policies that take into account 
the potential benefits and risks of  FDI while seeking to 
maximize economic and social returns for their country.
Foreign Direct Investment (FDI) can have a significant 
impact on the economic growth of  host countries 
by improving total factor productivity, which is the 
efficiency with which resources are used to produce 
goods and services. The mechanisms contributing to 
this improvement include the links between FDI flows 
and international trade, beneficial externalities for local 
businesses, and direct effects on the structural factors of  
the host economy.
Beneficial externalities for local businesses are also 
an important factor. The presence of  a multinational 

corporation can lead to improved infrastructure quality, 
increased training and expertise of  local workers, as 
well as greater diffusion of  technologies and innovative 
business practices. Indeed, technology transfer is a 
complex and dynamic process involving multiple actors, 
such as technology holders, stakeholders, end-users, 
regulators, governments, etc. The success of  technology 
transfer depends on several factors, including the quality 
of  the technology, the company’s ability to transfer it 
effectively, the skills and capacity of  the recipients to 
absorb and apply it, existing regulations, government 
policies, environmental and socio-economic constraints, 
and more.
Throughout this paper, we provide a summary of  the 
literature dedicated to the relationship between incoming 
FDI flows and the spillover effects they may generate in 
Developing Countries (DCs). 
We aim to shed light on the key current controversies 
in the field. We particularly emphasize the concepts of  
“absorptive capacity” and “innovation” that could explain 
the mixed results regarding the presence of  positive 
spillover effects in DCs.
Through this modest study, our aim is to address the 
following question: “How can we emphasize the role of  
FDI in the technology transfer process as a catalyst for 
economic growth?” With this research question in mind, 
we can formulate the following sub-questions, which will 
serve as the guiding framework for our article:
The present paper comprises three main axes that will 
guide our study effectively:

Question 1: What is technology transfer through FDI?
Question 2: How can we improve the Moroccan 

environment to attract FDI for effective technology 



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transfer?
Question 3: Can FDI impact economic growth through 

technological progress rather than capital accumulation?
This document is organised into three main parts, which 
will help us to carry out our study effectively.
The first point will focus on the theoretical foundations 
of  the key concepts of  our subject.

LITERATURE REVIEW
FDI, Technology Transfer, and Economic Growth: In this 
section, we will review existing literature that explores the 
relationship between Foreign Direct Investment (FDI), 
technology transfer, and economic growth.
The second point will focus about the link between the 
key concepts of  our subject.

Interaction between FDI, Technology Transfer, and 
Economic Growth
Here, we will delve into the dynamics and interactions 
between FDI, the transfer of  technology, and their 
impact on economic growth.
The tird point will be the subject of  an econometric 
study, which will be used to investigate the empirical 
link between the variables studied, after emphasising the 
methodology to be adopted  in this study.

Econometric Analysis of  the Relationship between 
the Studied Variables
This section will involve an econometric analysis to 
examine the quantitative relationship between the variables 
under study, providing empirical insights into the topic.

Literature Review: FDI, Technology Transfer, and 
Economic Growth
This section will be dedicated to presenting Foreign Direct 
Investment (FDI) from various perspectives, including its 
definition, forms, consequences, and determinants.

Foreign Direct Investment
Definition
FDI has been defined in various ways, and some notable 
definitions include:

According to the definition provided by the IMF, 
“Foreign Direct Investment is made with the intention 
of  acquiring a lasting interest in an enterprise operating 
in an economy other than that of  the investor, with the 
objective of  having a significant degree of  influence on 
the management.”
According to the OECD, FDI is “an activity in which 
an investor resident in one country obtains a significant 
interest and influence in the management of  an entity 
in another country. This operation may involve creating 
an entirely new enterprise (Greenfield investment) or, 
more commonly, changing the ownership status of  
existing businesses (through mergers and acquisitions). 
Other financial transactions between related enterprises, 
including reinvestment of  profits from the enterprise 
receiving the FDI or other capital transfers, are also 
defined as foreign direct investment3.”
According to the IMF and OECD definitions, direct 
investment reflects the aim of  obtaining a lasting interest 
by a resident entity of  one economy (direct investor) in 
an enterprise that is resident in another economy (the 
direct investment enterprise). The “lasting interest” 
implies the existence of  a long-term relationship between 
the direct investor and the direct investment enterprise 
and a significant degree of  influence on the management 
of  the latter. Direct investment involves both the initial 
transaction establishing the relationship between the 
investor and the enterprise and all subsequent capital 
transactions between them and among affiliated 
enterprises4, both incorporated and unincorporated5.

Forms of  FDI
Various forms of  FDI offer advantages and disadvantages, 
depending on the objectives, needs, and    capabilities of  
the involved companies, as well as the economic, political, 
and regulatory conditions of  host countries. They also 
require a careful assessment of  the risks, costs, and 
benefits associated with each option.
The literature on Foreign Direct Investment (FDI) offers 
a multitude of  typologies based on different theoretical 
frameworks and research objectives. For the purposes of  
this study, we will focus on three major axes: (1) greenfield 

Table 1: Different Forms of  FDI
Form Significance
Greenfield 
investments

Greenfield investments occur when foreign companies make significant investments in establishing 
new production capacities or expanding existing ones in the host country. Host nations highly 
value these investments, especially when aimed at addressing high unemployment rates. Greenfield 
investments become a central focus of  a host nation’s promotional efforts because they bring about 
new production capabilities, job opportunities, technology transfer, and global market connections. 
From a human capital perspective, greenfield foreign direct investment (FDI) typically creates new 
employment opportunities and enhances productivity.
Despite the positive reception of  greenfield investments in host countries, it is essential to 
acknowledge that they may potentially displace local businesses and certain industries, especially 
those heavily reliant on technology. While profits from local companies circulate within the domestic 
market, the same may not always be true for foreign companies engaged in greenfield investments. 
In the context of  Kosovo, where high unemployment is a prevailing concern, this type of  FDI, along 
with similar sub-types, is warmly embraced.



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investments, symbolising the establishment ex nihilo of  
a foreign entity, (2) mergers and acquisitions (M&A), 
representing the transfer of  ownership of  existing assets, 
and (3) joint ventures, illustrating the collaboration 
between local and foreign investors.

Technology Transfer
Definition
Technology transfer is the introduction and adoption of  
new (typically more advanced) methods of  production 
and equipment that are already in use in other regions. 
This transfer can be intellectual (methods, concepts) or 
geographical (physical equipment).
Technology transfer is the process by which technology, 
knowledge, or expertise (including hardware, software, 
organizational methods, etc.) developed by one party in a 
project or agreement is conveyed to another.
Technology transfer (TT) is a process in which an 
industrial actor acquires technology from a public entity 
or another private company, usually with the intention of  
commercializing it.

Types of  Technology Transfer
Technology transfer refers to the process by which 
technology, knowledge, or skills are transmitted from one 
company or country to another.
Here are five different types of  technology transfer:

Horizontal Technology Transfer
This involves the transfer of  technology between 
companies or organizations engaged in similar activities. 
For example, a mobile phone manufacturer may transfer 
production technology to another mobile phone 
manufacturer.

Vertical Technology Transfer
This involves technology transfer between companies 
or organizations that engage in different activities but 
are linked by a value chain. For example, an electronic 
components supplier can transfer technology to a mobile 
phone manufacturer.

Technology Transfer through Research and 
Development
This is the transfer of  technology resulting from research 
and development of  new technology. Companies 
can transfer internally developed technology to other 
companies that can use it in their own products or 
services.

Technology Transfer through Licensing
This is the transfer of  technology in which a company 
holding patents or intellectual property rights grants 
another company, the right to use the technology in 
exchange for royalties or licensing fees.

Technology Transfer through Strategic Alliances
This is the transfer of  technology resulting from 
strategic alliances between companies that collaborate to 
develop new technology or improve existing technology. 
Companies can share knowledge and skills to jointly 
develop new technology.

Economic Growth
Definition
Economic growth refers to the positive change in the 
production of  goods and services in an economy over 
a given period, typically a long one. It is a concept used 
to measure economic activity through indicators such as 

Mergers and 
acquisitions

Mergers and acquisitions (M&A) are typically carried out when existing assets are transferred from a 
local company to a foreign company.
In other words, the assets and operations of  companies in different countries are combined to create 
a new legal entity.
Countries with lower levels of  development are likely to have fewer opportunities for M&A actions.
According to the IPAK (2012) Annual Survey on FDI Perceptions, compared to greenfield 
investments, M&A “requires a “There is no long-term benefit to the economy.” “The money from 
the sale never reaches the local economy” (p.9). The most noted benefit of  this type of  he FDI is 
increased labor productivity, but we find less evidence regarding employment growth.
Empirical studies in this direction are inconclusive and contradictory.

Joint 
ventures

Joint ventures can involve a local company, government or a foreign company operating in the host 
country. Cross-border joint venture is one in which economic entities from at least two countries 
are involved. One positive spillover in terms of  human capital is technical spillover especially when 
there is a combination of  foreign and local company. According to Dunning and Lundan (2008), one 
of  the main factors “influencing the viability and success of  cross-border joint ventures concerns 
the choice of  partner and reciprocal trust between partners” (p.273). Rather than profit gain, there 
are different factors and motives behind joint ventures. According to the model of  Casson (2000), 
formation of  joint ventures has nine factors such as: economies of  scale, market size, economies of  
scope, technological uncertainty, technological change, cultural difference, interest rates, protection of  
autonomy and missing patent rights (Casson, 2000). The significance of  human capital development 
in joint ventures varies in developed countries compared to transition and undevelopment countries.

Source: Prepared by the authors



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Gross Domestic Product (GDP) growth and an increase 
in per capita income.
According to François Perroux, growth is “the sustained 
increase over one or more long periods of  a dimension 
indicator: for a nation, the overall net product in real 
terms .” He also noted that “no observed growth is 
homothetic; growth occurs within and through structural 
changes.”
Theories of  economic growth are economic models 
that seek to explain the origin and causes of  economic 
growth. They have evolved over time, transitioning 
from exogenous growth models to endogenous growth 
models. A theory of  economic growth helps understand 
the determinants of  a country’s growth and why some 
countries experience stronger economic growth than 
others.

Theories of  Economic Growth
Various theories of  economic growth have emerged over 
time. Among them are mercantilist, classical, neoclassical, 
spontaneous order, and monetarist theories. Each theory 
seeks to understand the economy and proposes models 
to maximize economic growth.
The theories of  economic growth study the sources 
and mechanisms of  sustained and lasting increases in 
production in an economy over an extended period. 
These theories aim to explain the factors contributing 
to economic growth and understand the causes of  this 
growth. Here is an overview of  the different theories of  
economic growth:

Exogenous Growth Models
These models explain economic growth by focusing on 
factors external to the economy itself. Among these factors 
are population growth and technological progress. In these 
models, growth is considered to be exogenous, meaning it 
does not depend on internal economic variables.

New Growth Theories
These theories draw inspiration from older schools 
of  economic thought, such as classical, Keynesian, 
and neoclassical economics. They focus on whether 
sustainable economic growth is possible and under 
what conditions it can be achieved. The work of  two 
economists, Nicholas Kaldor and Joseph Schumpeter, 
has had a significant influence on these new theories.

Endogenous Growth
This theory emphasizes factors within the economy that 
contribute to economic growth. It highlights the role of  
investment, research, human capital, and infrastructure. 
According to this theory, economic growth can be 
sustained through capital accumulation and productivity 
improvement. The work of  researchers such as Paul 
Romer, Robert Lucas, and Robert Barro has contributed 
to the development of  this theory.

Interaction between FDI, Technology Transfer, and 
Economic Growth
FDIs are now recognized as a privileged channel for 
technology transfer, knowledge accumulation, and know-
how. Technology is seen as a powerful driver in shaping 
the productive landscape of  a host country.
Positive externalities or “spillovers,” as noted by 
Blomstrom (1986), occur through the mobility of  skilled 
personnel, subcontracting relationships, or the reduction 
of  productive inefficiencies through competition. The 
presence of  these spillovers is supported by the positive 
correlation between FDIs and productivity indicators, 
established through cross-sectional studies (Caves, 1974), 
(Globerman, 1979), assuming that the presence of  MNCs 
promotes the efficiency improvement of  domestic firms.
The first objective of  this study is to understand whether 
technology transfer has taken place in a country like 
Morocco. In macroeconomic studies, it is very difficult, 

Figure 1: The Role of  FDI in Developing Host Country Industry and Workers
Source: JBIC 2002

if  not impossible, to observe technology transfer directly. 
This is why previous studies have tended to use an indirect 
measure of  technology transfer. One of  the best measures 
of  the presence of  technology transfer is economic 

growth. The argument is that economic growth is due 
to technological improvements. Economic growth has 
fascinated economists and philosophers for hundreds of  
years, and previous research or discussion on the subject 



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can be divided into three categories: classical, neoclassical 
and modern. The researcher offers an analysis of  each of  
the three types of  research on economic growth in the 
context of  FDI.
MNCs are likely to disseminate advanced technologies to the 
local industrial fabric for several reasons. In general, MNCs 
can transfer these advanced technologies to their foreign 
subsidiaries, including those in developing countries, to 
enhance their competitiveness in the global market.
Furthermore, MNCs can transfer their organizational 
and managerial know-how to foreign subsidiaries. This 
may include skills in supply chain management, human 
resource management, product development, and 
marketing. These skills can be crucial for local businesses 
seeking to enhance their efficiency and competitiveness 
in the global market.
Finally, MNCs can also disseminate advanced technologies 
to the local industrial fabric through interactions with local 
companies. MNCs often have the ability to form strategic 
alliances with local companies to share knowledge and 
skills or to develop new and improved technologies.
Overall, MNCs play a crucial role in the diffusion of  
advanced technologies to the local industrial fabric. Their 
presence and their ability to transfer organizational and 
managerial know-how, as well as R&D skills, can help local 
businesses improve their efficiency and competitiveness 
in the global market.
Furthermore, FDI represents a common means of  intra-
firm technology transfer. Nowadays, most international 
licensing for manufacturing takes place between parent 
companies and their foreign subsidiaries. Additionally, on 
a global scale, the majority of  private R&D activities are 
conducted by MNCs.

Technology Transfer as a Source of  Convergence
Technology transfer is a crucial mechanism for the 
economic development of  developing countries. Foreign 
Direct Investment (FDI) flows are one of  the primary 
channels for transferring foreign technology. Economists 
generally recognize an overall positive effect of  FDI on the 
economic growth of  developing countries, but there are 
important nuances and a variety of  situations. Multinational 
Corporations (MNCs) play a key role in transmitting foreign 
technology to host economies. The spillover effects of  FDI 
occur when local companies benefit from the technological 
knowledge, management skills, or markets that MNCs 
possess. This can happen without local companies having 
to bear the costs of  developing or acquiring these skills 
and knowledge (Kokko, 1994). Technology transfer 
through FDI is an important mechanism for the economic 
development of  developing countries.

Absorptive Capacity as a Prerequisite for Technology 
Transfer
Narula and Marin (2003) have emphasized that absorptive 
capacity also involves the ability to internalize knowledge 
created by others and adapt it to one’s own uses and 
processes. This requires the ability to identify technology 
transfer opportunities, establish partnerships and 
collaborations with other actors, and effectively manage the 
transfer process. Abramovitz (1991) defines two variables 
that determine to what extent technologically lagging firms 
in a country will catch up. Absorptive capacity is an essential 
concept in the context of  technology transfer. It represents 
the ability of  a company or a country to assimilate and 
effectively use external technological knowledge to enhance 
its own technological and productive capabilities.

Figure 2: The national environment for innovation and technological diffusion
Source: Developed by the authors

Absorptive Capacity and Spillovers
The absorptive capacity among domestic firms appears 
to be a necessary condition for benefiting from the 

positive spillover effects of  FDI. In this regard, Kumar 
and Pradhan (2002) emphasize that a more favorable 
effect of  FDI on a host economy is closely related to 



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the diffusion of  externalities or spillovers to local firms 
by multinational corporations. According to UNCTAD, 
“To achieve sustainable economic development, it is not 
enough to open the door and wait for new techniques 
to arrive. National companies must constantly strive to 
improve their technological level, and public authorities 
must support them.”

Human Capital: A Vital Component of  Absorptive 
Capacity
Absorptive capacity is the ability of  a company, sector, 
or country to assimilate and effectively use technological 
knowledge from external sources. It depends on 
several factors, including the quality of  technological 
infrastructure, corporate culture, regulatory environment, 
and adaptability. Studies have shown that absorptive 
capacity is largely dependent on the level of  human 
capital in the host country. Companies and workers with 
higher levels of  education and skills are better prepared 
to assimilate new technological knowledge and apply 
it in their daily work. Kindrick (1981) recognized that 
the adoption and adaptation of  foreign technology 
may require a country to engage in R&D to develop its 
absorptive capacity.

Trade Openness as a Support for Technology Transfer
A country’s trade openness can be a key factor in 
technology transfer and the productivity of  its companies. 
Authors Grossman and Helpman (1991)point out that 
trade openness can enhance a country’s ability to absorb 

knowledge and apply it, especially by allowing imitation 
and learning from abroad. Authors Bouoiyour and Toufik 
(2007)23 conducted a study on the impact of  Foreign 
Direct Investment (FDI) on the productivity of  Moroccan 
companies. They found that the presence of  FDI in 
Morocco’s manufacturing industries had a positive effect 
on the productivity of  local companies, especially in low-
tech sectors. However, the effect was less pronounced in 
high-tech sectors. Trade openness can be a key factor in 
technology transfer and the improvement of  local business 
productivity, but it depends on the level of  development of  
the host country’s human capital and its ability to absorb 
and effectively apply foreign knowledge.

FDI, Technology Transfer, and Economic Growth
Economic policies aimed at attracting FDI are based 
on the idea of  capturing technological externalities, but 
empirical studies show that the effect is not always positive 
and must be subject to discussion. The trade-off  between 
funds and efforts spent on attracting FDI, on one hand, 
and the benefits generated, on the other hand, is far from 
settled. Thus, other studies will show that in reality, FDI 
and trade have a negative effect or at least no significant 
effect on economic growth. Technology transfer has 
become a priority in the overall strategy of  developing 
countries, which lack sufficient capabilities for autonomous 
development and face significant technological lag. In this 
perspective, Foreign Direct Investment (FDI) appears to be 
one of  the means for these countries to stimulate growth 
and benefit from “technology and know-how transfer.”

Figure 3: Links between FDI and Economic Growth
Source: Makin and Chai 2018

Econometric Analysis of  the Relationship between 
the Studied Variables and Interpretation of  Results
Empirical Literature on FDI and Economic Growth
Before moving on to present the methodology adopted 

in this study, it is considered necessary to briefly present 
the empirical studies that have dealt with the relationship 
between the variables studied in our study.



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Table 2: Empirical literature on FDI and economic 
Studies that have found a positive 
relationship

Studies that did not find a relationship  Studies that have found a 
négative relationship

De MeIlo 1999). Nair-Reichert &
Weinhold (2001). Campos &
Kinoshita (2002). AIfaro et al. 
(2004), Basu et al. (2001).
lensink & Morrissey (2006).
ljunwaI & Ii ( 2007). AlguaciI et 
al.(201 I). 
Anwar& cooray (2012).
Roy & MandaI (2012), Gursoy & 
Kalyoncu (2012)

Ericsson & Irandoust (2001),Carkovic & 
Levine (2002,2005),Zhang(2001),Hermes 
& Lensink (2003)

Saltz(1992). Bende- Nabende  
et al. (2000), Alfaro (2003),
Mencinger (2003). Darrat et al.
(2005). Ang 20O9). Alfaro
et al (2010). Wang & Wong 
(2011)

Source: https://ebrary.net/100486/business_finance/finance_technology

Methodology of  Studie
The methodology employed in this article titled 
“Technology Transfer and Economic Growth: What’s the 
Connection? The Case of  Morocco” is quantitative and 
based on a hypothetico-deductive approach. We defined 
and examined our variables in advance in the first part of  
our paper to establish the various potential links between 
them before proceeding to validate these relationships 
through econometric analysis.
Data Collection: We collected our data from reliable 
sources such as the World Bank and the High Commission 
for Planning (HCP) of  Morocco. This data includes 
information on Foreign Direct Investment (FDI), 
technology transfer indicators (TT), and the economic 
growth of  Morocco.
Econometric Analysis: Subsequently, we conducted an 
econometric analysis using an appropriate statistical 
model. Our analysis is based on a set of  variables studied 

to assess the impact of  FDI and TT on economic growth. 
This analysis is at the core of  our article and will be 
detailed.
Interpretation and Discussion of  Results: After 
completing our econometric analysis, we interpreted and 
discussed the results obtained. This step is essential to 
validate the relationship between the various variables 
studied for the case of  Morocco. We examined the 
direction and strength of  the relationships, as well as the 
magnitude of  the impact of  FDI and TT on Moroccan 
economic growth.

Econometric Analysis of  the Relationship between 
the Studied Variables
Résultats of  Stady
Stationarity tests can reduce the risk of  spurious regressions. 
In this regard, we consider the proposed tests of  Augmented 
Dickey-Fuller (ADF) and Phillips-Perron (PP).

Table 3: ADF and PP Stationarity Test Results
ADF (% 5) Phillips-Perron (% 5)

Variable Niveau (Intercept) 1ère. Différence  
(Intercept)

Niveau (Intercept) 1ère. Différence 
(Intercept)

Niveau

LCR -0.955675 -4.044859 -0.540275 -6.370140 I (1)
-3.673616 -3.690814 -3.673616  (-3.690814

L FDI -7.269069 -3.791931 -6.867604 -25.06467 I (0)
-3.673616 -3.710482 -3.673616 -3.690814

LTT -2.028799 -4.509680 -2.077308 -7.753299 I (1)
-3.673616 -3.690814 -3.673616 -3.690814

Source: Developed by the authors based on the outputs of  Eviews 10 software

According to the results presented in the previous table, 
we find that the coefficient of  determination (R2) exceeds 
90%, which means that the chosen explanatory variables 
do indeed have an impact on the dependent variable.
Furthermore, in terms of  the statistical tests that help 
diagnose and analyze the estimated ARDL model, namely 
the Breusch-Godfrey serial correlation test (LM) and the 
Durbin-Watson (DW) test, they confirm the presence 
of  serial correlation if  the probability associated with 
the F-LM statistic is greater than 0.05. However, in our 

case, this is not true, as the probability associated with the 
F-LM statistic is equal to 0.23, indicating an absence of  
autocorrelation.
Similarly, for the ARCH heteroskedasticity detection test, 
the probability is equal to 0.53, indicating an absence of  
heteroskedasticity.
According to this figure presenting the 20 estimated 
models selected by the AIC selection criterion, we can 
observe that the optimal model in our case is the ARDL 
(2,3,3) model.



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Figure 4: Akaike Test

Figure 5: CUSUM Stability Test

CUSUM Stability Tests
The two figures above, CUSUM and CUSUM square, are 
used to analyze the stability of  the dependent variable 
over time, especially during the evaluated study period. 
We can observe that the variable being explained is stable 
during the study period because its evolution remains 
within the confidence interval marked in red.

According to Table 4 of  the Pesaran et al. cointegration 
test, we can observe that the calculated F-statistic, which 
is equal to 8.543578, exceeds the upper bounds of  the 
various critical thresholds. This indicates that there is 
cointegration among the variables under study, meaning 
there are both short-term and long-term equilibrium 
relationships.

Figure 6: CUSUM SQUARE Stability Test



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Table 4: Results of  Pesaran et al.'s Cointegration Test 
Calculated F-statistic 8.543578
Critical Threshold LB26 UB27

10% 2.63 3.35
5% 3.1 3.87
2.5% 3.55 4.38
1% 4.13 5

Source: Compiled by the authors, based on the cointegration test by Pesaran et al

Table 5: Short-Term Dynamic 
Variable Coefficient Std. Error t-Statistic Prob.
D(LOG FDI (-1)) -0.067366 0.032516 -2.071785 0.0837
D(LOGTT) 0.632801 0.092858 6.814751 0.0005
CointEq(-1)* -0.996210 0.139141 -7.159711 0.0004

Source: Developed using Eviews 10 by the authors

Table 6: Long-Term Dynamics”
Variable Coefficient Std. Error t-Statistic Prob.
LOG FDI 0.044299 0.079572 0.556712 0.5979
LOGTT 1.273179 0.183652 6.932580 0.0004
C 2.783909 0.370346 7.517046 0.0003

Source: Developed using Eviews 10 by the authors

Based on the results obtained, we find that the variable 
logide is significant at the 10% level, while the variable 
logtt is significant at the 1% level.
In statistical terms, the cointegration coefficient is equal 
to (-0.996), and this result is negative and statistically 
significant, indicating the presence of  a long-term 
relationship.
The elasticity of  logide is (-0.067), which means that a 1% 
increase in this explanatory variable will lead to a 0.067% 
decrease in the dependent variable studied, indicating a 
negative effect.
As for the variable tt, it is positive, reflecting that a 1% 
increase in this variable will result in a successive increase 
of  0.63% in the variable under investigation, which is 
economic growth.

DISCUSSION
In the long term, we observe in our model that the 
variable TT is significant at the 1% level with a probability 
of  0.0004, while the variable FDI is not significant at the 
10% level.
There is a positive impact of  both variables studied on 
economic growth. The first variable, FDI (Foreign Direct 
Investment), increases growth by 0.044299, while the 
variable TT (Technology and Knowledge Transfer) is 
estimated at 1.273179, indicating a positive influence.
After examining the two variables, Foreign Direct 
Investment (FDI) and TT on economic growth, the 
results indicate that both variables have a positive impact 
on economic growth. More specifically, FDI increases 
growth by 0.044299 (meaning that each increase of  

one unit of  FDI leads to an increase of  0.044299 units 
of  economic growth), while TT has a positive effect 
estimated at 1.273179 (implying that each increase of  
one unit of  TT leads to an increase of  1.273179 units of  
economic growth).
These results suggest that Foreign Direct Investment and 
TT are important factors in stimulating economic growth. 
However, it is important to keep in mind that the results 
of  statistical analysis are not always conclusive, and other 
factors may influence economic growth.
Foreign Direct Investment (FDI) and TT (Technology 
and Knowledge Transfer) are two important variables 
that affect economic growth. FDI is an investment made 
by a foreign company in a local business or physical 
asset, while TT refers to the transfer of  technical and 
technological knowledge from one company or country 
to another.
FDI can have a positive effect on economic growth 
by bringing foreign capital, technology, and skills. It 
can also contribute to job creation and infrastructure 
development in the host country. However, FDI can also 
have negative effects, such as economic dependency on 
foreign investors, reduced local competition, and profit 
outflows.
Similarly, TT can also have a positive impact on economic 
growth by improving productivity, stimulating innovation, 
and enhancing the competitiveness of  businesses. 
However, TT can also have negative effects, such as 
reduced demand for low-skilled labor and the creation of  
economic inequalities between technology-owning and 
non-owning countries.



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Ultimately, the impact of  FDI and TT on economic 
growth depends on many factors, such as the economic 
policies of  the country, local technological capabilities, 
and international trade relations. A proper combination 
of  these two variables can lead to sustainable and 
balanced economic growth.”
 
CONCLUSION
This study focuses on the relationship existing between 
foreign direct investments, Technology Transfer and 
economic growth for Morocco. The positive effects of  
Foreign Direct Investment (FDI) on the local economy 
are not automatic and depend on several factors. 
Public policies play a crucial role in creating a favorable 
environment for the absorption and diffusion of  modern 
technologies. Investments in education, innovation, and 
training can improve internal absorption capabilities, 
while policies that encourage cooperation between 
multinational corporations (MNCs) and local actors can 
facilitate the diffusion of  modern technologies to the 
local economy.
Furthermore, policies aimed at improving transportation 
and communication infrastructure, combating 
corruption, and strengthening institutions can help create 
a political and macroeconomic environment conducive to 
the positive spillover effects of  FDI.
FDI and technology transfer can play a significant role in 
Morocco’s economic growth. Indeed, FDI can contribute 
to the influx of  capital, technology, and skills needed for the 
country’s economic development. Technology transfer, 
on the other hand, can enable Moroccan companies to 
benefit from recent technological advancements and 
thus improve their productivity and competitiveness in 
international markets.
Morocco has adopted an economic openness policy 
since the 1990s, aiming to attract foreign investment and 
promote technology transfer. This policy has led to a 
significant increase in FDI in Morocco, especially in the 
automotive, aerospace, agri-food, and textile industries.
However, despite this economic openness and the 
increase in FDI, Morocco still faces significant challenges 
in terms of  technology transfer. Moreover, the low 
level of  technical skills among Moroccan workers can 
make it difficult for local companies to assimilate new 
technologies.
To address these challenges, Morocco has implemented 
policies aimed at encouraging technology transfer, 
including tax incentives and training programs for workers. 
The government has also encouraged partnerships 
between local and foreign companies to promote the 
transfer of  knowledge and skills.
In conclusion, it can be said and confirmed that FDI 
and technology transfer can play an important role in 
Morocco’s economic growth. However, to maximize 
the benefits of  these factors, it is essential to implement 
effective policies aimed at promoting technology transfer 
and developing the technical skills of  local workers.

Perspectives 
Based on the conclusion of  our article, here are some 
recommendations for future researchs:

Policy Implications
Evaluate the existing economic policies related to foreign 
direct investment and technology transfer. Consider 
whether adjustments or new policies are needed to 
maximize the positive impacts and mitigate potential 
negative consequences.

Regulatory Framework
Assess the regulatory framework governing foreign direct 
investment and technology transfer. Consider whether 
there is a need for more stringent regulations or incentives 
to ensure responsible and sustainable practices.

Technology Capacity Building
Investigate strategies for enhancing the local technological 
capabilities to better absorb and adapt foreign 
technologies. This could involve investment in education, 
research and development, and fostering an environment 
conducive to innovation.

Labor Market Considerations
Examine the effects of  foreign direct investment and 
technology transfer on the labor market. Explore policies 
that can address potential disparities, such as training 
programs for displaced workers or initiatives to promote 
skill development.

Sustainable Development Goals (SDGs)
Align the analysis with the Sustainable Development 
Goals, considering how foreign direct investment and 
technology transfer can contribute to achieving specific 
SDGs, such as decent work, economic growth, and 
innovation.

Comparative Studies
Conduct comparative studies across countries with 
different economic structures and policies to identify best 
practices and lessons learned. This can provide valuable 
insights for policymakers seeking to optimize the benefits 
of  foreign direct investment and technology transfer.

Long-Term Impact Assessment
Investigate the long-term impact of  foreign direct 
investment and technology transfer on economic growth. 
Assess whether the initial positive effects are sustained 
over time and identify any emerging challenges.

Public-Private Partnerships
Explore the role of  public-private partnerships in 
facilitating responsible foreign direct investment and 
technology transfer. Assess how collaboration between 
governments and private entities can lead to mutually 
beneficial outcomes.



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Risk Management Strategies
Develop risk management strategies to address potential 
downsides of  foreign direct investment, such as economic 
dependency and profit outflows. Consider mechanisms to 
balance the interests of  foreign investors and the host 
country.

Global Trade Relations
Examine the influence of  global trade relations on the 
effectiveness of  foreign direct investment and technology 
transfer. Analyze how changes in international trade 
dynamics may impact the success of  these economic 
strategies.
These recommendations can serve as a starting point for 
further research and policy considerations, helping to 
refine and optimize the role of  foreign direct investment 
and technology transfer in fostering sustainable and 
balanced economic growth.

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