Does Religion Matter When Investing in Africa? An Empirical Analysis of Moroccan FDI Location Choice in 27 African Countries During the Period 2007-2021

ABSTRACT

In this study, we investigate the impact of four religious factors on Moroccan outward FDI in African countries: the religious freedom index, religious tension index, religious similarity, and religious diversity index. Using panel data from 27 African countries between 2007 and 2021, our findings show that religious factors significantly influence Moroccan FDI in Africa. A shared Islamic religion increases FDI likelihood, indicating cultural proximity facilitates multinational enterprise adaptation. Additionally, religious freedom and diversity positively affect FDI, supporting cultural adaptability. However, religious tension negatively impacts FDI. These findings highlight the importance of considering religious factors in FDI decision-making processes. Policy implications include promoting cultural understanding, encouraging religious freedom, fostering religious diversity, and reducing religious tensions to facilitate investment and enhance economic cooperation in African countries.

KEYWORDS:

• Religious similarity
• religious diversity
• religious freedom
• religious tension
• multinational enterprises
• foreign direct investments

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 https://www.oc.gov.ma/fr/etudes-et-statistiques/series-statistiques

2 https://govdata360.worldbank.org/indicators/hd6a18526?country=BRA&indicator=41930&viz=line_chart&years=1975,2019

3 https://www.idea.int/gsod-indices/dataset-resources/

4 https://www.gu.se/en/quality-government/qog-data/data-downloads/qog-expert-survey

5 https://www.pewforum.org/2014/04/04/religious-diversity-index-scores-by-country/

6 https://wits.worldbank.org/

7 https://data.worldbank.org/

8 Using institutional and economic distances to measure push factors, rather than solely relying on indicators specific to Morocco, is more appropriate when analyzing panel data on outward FDI in host countries. This approach allows for a more comprehensive understanding of the dynamic nature of FDI flows and considers factors beyond Morocco’s specific characteristics that may influence investment decisions. Incorporating distances enhances the empirical relevance of the study, providing a nuanced view of the determinants of Moroccan outward FDI in African countries.