What is Institutional Quality

This chapter analyzes the role played by Chinese investment within the Belt and Road Initiative (BRI) in promoting outward FDI from Morocco to African countries. The authors used panel data of 29 African countries from 2004 to 2021 and robust weighted least squares (RWLS) with m-estimation and Welsch function. The empirical results confirmed that inflows of Chinese FDI attract Moroccan FDI outflows in African countries because of the signal effect that these countries are “good locations” for investment. Secondly, the authors found that joining the BRI affects Moroccan FDI positively in African countries due to the commitment of these countries to improve their institutional quality related to the protection of property rights and enforcement of contracts. Finally, the findings suggest that Chinese FDI inflows and the BRI moderate positively the effect of infrastructure (transport, ITC, etc.) on the attraction of Moroccan FDI in African countries.