The Impact of Foreign Direct Investment FDI on Economic Growth of Jordan

Abstract

Foreign direct investment (FDI) has been one of the significant sources of economic growth in Jordan, and become an important channel for Jordan to enhance the economy and financial systems. The purpose of this paper is to identify the effect of FDI on economic growth of Jordan. The study covered the period from 1990 to 2012 using time series data from World Development Indicator and IMF International Financial Statistics tables, published by International Monetary Fund (IMF) to detect the correlation relationship between foreign direct investment FDI and the economic growth in Jordan.  An empirical analysis and ordinary least square (OLS) regression are conducted. Our findings indicate that Jordan’s economic performance is positively influenced by foreign investment and its gross domestic investment also has capitalized its economy. Additionally, the results shown that trade have a positive impact on the economic growth. While, the nation’s debt, inflation have found to have a negative impact on its GDP. In addition the inflow of foreign investment will not leave a significant impact on the unemployment level.

Keywords: FDI, GDP, Domestic Investment, Trade.