Morocco enjoys macroeconomic stability with low inflation, a large reserve of foreign exchange and a diminishing foreign debt. However, although the country has performed well in economic terms over the past few years, it still faces structural problems, including a heavy reliance on agriculture. Morocco is highly accommodating to both foreign and domestic investment, and the US Department of State 2011 reports that the government has sought to discuss with foreign investors how to improve the investment climate. Public procurement amounts to 15% of the country's GDP and is allegedly stained by corrupt practices with harmful consequences for both the cost and quality of public services, despite the fact that government tender processes have been reformed to enhance transparency. A new public procurement code has been in place since 2007, stating conditions and rules for the management and control of state procurement. The new code aimed to address the shortcomings of the 1998 procurement code in terms of competition and transparency in the procurement process. According to the World Bank & IFC Enterprise Surveys 2007, companies do not consider corruption a significant problem in public procurement as only 6.4% expect to give gifts in order to secure a public contract.

Nevertheless, the private sector in Morocco is far from free of corruption. In fact, corruption and red tape have been identified by both domestic and foreign companies as being major impediments to business operations. For instance, in the World Economic Forum Global Competitiveness Report 2010-2011, the surveyed companies cite corruption to be among the most problematic factors for conducting business in the Morocco. According to the report, public funds are sometimes diverted to companies, individuals or groups due to corruption and that government officials tend to show favouritism when deciding upon policies and contracts. In addition, companies behave unethically in interactions with public officials, politicians and other companies to the point that their behaviour constitutes a competitive disadvantage for the country. Of the companies surveyed in the World Bank & IFC Enterprise Surveys 2007, slightly more than 27% state that corruption is a major constraint to doing business in Morocco, while more than 13% expect to pay bribes to public officials to 'get things done'. Investors are strongly recommended to develop, implement and strengthen integrity systems and to conduct extensive due diligence before committing funds and when already doing business in Morocco.

Economic reforms have failed to materialise fully into increased investments, as many Moroccan investors lack confidence in the business environment. The Carnegie Endowment 2008 report on Morocco states that a majority of local entrepreneurs consider corruption to be the main obstacle to investment and economic development, and an understanding of the need to combat corruption is emerging within the private sector in Morocco. The General Confederation of Moroccan Entrepreneurs (CGEM) has taken several initiatives to raise awareness about corruption and the necessity of fighting it, for example, an anti-corruption committee has been set up and, in 2008, the CGEM has in a joint initiative with public authorities adopted the Moroccan Code of Good Practice for Corporate Governance.

In line with its positive stance towards investment, Morocco has made tremendous efforts to improve its regulatory environment. To facilitate foreign investment, the government has created a number of Regional Investment Centres (in French) in 2002 in cooperation with USAID, to provide one-stop shops to minimise and accelerate cumbersome bureaucratic procedures. Several economic reforms have been implemented; modern laws have been passed to regulate the stock market and the banking industry, and the tax system has been somewhat simplified. Furthermore, bookkeeping and auditing procedures have been aligned to Western European standards. There is no formal screening or government selection process for foreign companies wishing to invest in Morocco, nor are there performance requirements. The government welcomes foreign participation in its privatisation programme, and the Investment Code from 1995 applies equally to foreign and local investors, although foreign investors are favoured in many areas, such as in foreign exchange provisions. Nevertheless, according to the World Bank & IFC Doing Business in Morocco 2011, the country's excessive bureaucratic red tape continues to be a major constraint on the competitiveness of the economy and deters investors. 

Also the US Department of State 2011 pinpoints that the government's efforts to increase transparency in the regulatory system have not yet been fruitful, as the Moroccan administration remains opaque and difficult to navigate, and obtaining routine permits can be difficult. On the other hand, business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 give complying with administrative requirements (permits, regulations, reporting) issued by the government a score of 3.4 on a 7-point scale (1 'extremely burdensome' and 7 'not burdensome at all'). The same report indicates that the time and number of procedures required to start a company represent competitive business advantages for Morocco, thus painting a brighter picture of the regulatory environment. 

The legal framework concerning corruption, transparency and integrity seems to be in place, and the regulatory system itself is becoming increasingly transparent. However, allegations persist that regulatory agencies fail to discipline contravening companies owned by highly influential persons and that regulations shown to jeopardise the entrenched interests of the higher circles of political and economic power are disregarded. As an illustration of this point, the Bertelsmann Foundation 2008 reports that the government passed legislation in 2001 to improve and regulate competition practices, and members of a competition council were already appointed by 2002. However, according to the Bertelsmann Foundation 2010, the council only has a consultative role, with the Prime Minister having the ultimate authority to decide whether or not to implement the council's recommendations. Furthermore, the council is used as an instrument for the executive to pick out the anti-competition cases it wants to prosecute, and is not functioning as an impartial institution. The Bertelsmann Foundation 2008 points to the fact that the private sector is dominated by companies owned by the monarchy, which can easily evade regulations to their advantage and with impunity. According to a December 2010 article by Guardian, which cites a leaked US embassy report, the Omnium Nord African (ONA), a holding company owned by King Mohammed VI, has regularly 'coerced' development project workers to grant beneficial rights to it. The article has described the king's involvement in business as lacking transparency and integrity.

Morocco has signed the New York Convention of 1958 (with reservations) on the Recognition and Enforcement of Foreign Arbitration Awards, and the Washington Convention, which provides for the use of the International Centre for the Settlement of Investment Disputes (ICSID). While Morocco's commercial and appeals courts have generally improved the dispute settlement climate, Moroccan and foreign companies continue to complain about the inefficiency and the lack of transparency in the judicial system, according to the US Department of State 2011. The same source reports that other shortcomings include legal procedures being inefficient and the courts being slow and unable to enforce legal rulings. As a result, foreign companies often settle disputes through arbitration instead of using local courts. Given these shortcomings, companies are advised to include arbitration clauses in all their contracts. Access the Lexadin World Law Guide for a collection of legislation in Morocco.