Determinants of Regional Economic Growth and Spatial Spillover Effects in Morocco: Evidence from Spatial Panel Models

Abstract

The objective of this paper is to investigate the drivers of regional GDP growth in Morocco while quantifying their spatial spillovers. Previous empirical research on the Moroccan economy has largely focused on regional growth determinants in isolation, without accounting for spatial dependencies. Consequently, how a region’s economic features impact the growth trajectory of adjacent regions remains unexplored. Based on a panel dataset covering Morocco's twelve regions over the period 2017–2022, this study evaluates four key drivers of regional growth: the activity rate, higher-education enrollment (serving as a proxy for human capital), local authority expenditure, and population density. Methodologically, global Moran’s I and local Getis-Ord Gi* statistics are employed to detect spatial patterns, followed by a Spatial Durbin Model with two-way fixed effects (region and time) to isolate the direct and indirect (spillover) effects of each determinant. The exploratory spatial data analysis reveals persistent geographical clustering for higher-education enrollment, territorial expenditure, and population density. Additionally, spatial clustering of GDP growth and activity rates was observed in the southern regions during the 2020 economic shock. The econometric results show that the activity rate raises growth both in the region concerned and in neighboring regions, with a total effect of about two percentage points; this result is confirmed by a restricted specification in which only the activity rate is spatially lagged. Conversely, local public expenditure yields purely local growth benefits, whereas human capital and population density have no statistically significant effect. This study contributes to the literature by offering a spatial decomposition of regional growth determinants for Morocco over a recent period and by identifying labor-force participation as the primary transmission mechanism for interregional spillovers. These results support labor-market and investment policies coordinated among neighboring regions.