Fiscal Incentives and Technological FDI in Morocco: Short-run dynamics and territorial competitiveness in the Age of AI

Foreign direct investment (FDI) in technology is a key way for emerging countries to improve their production systems, spread new ideas, and accelerate their digital transformation. Morocco uses tax breaks and exemptions to draw investments in high-tech and AI-driven industries. This is because global competition in the digital world is getting tougher. Still, there isn't much real-world evidence on how well these rewards work. This research examines how tax breaks affect the amount and location of technology-related foreign direct investment, accounting for factors such as digital growth, AI readiness, and competitive advantages. An autoregressive distributed lag (ARDL) model is used to distinguish between short- and long-run effects, using annual time-series data from 2005 to 2023. The results show that fiscal benefits lead to only small, short-term increases in technological FDI, with almost no long-term effect. Short-term changes are mainly driven by trade openness and the overall state of the economy. Long-term investment choices are based on the quality of digital infrastructure, the readiness of AI, and the capacity of transportation. These results show that competition based on incentives alone is not sufficient. They show how important it is to have stable fiscal frameworks supported by strong digital ecosystems and effective local government.