Abstract
This paper examined the causal links between inward foreign direct investments (FDI) and its determinants (i.e., gross domestic product, education, trade openness, infrastructure, and technological abilities) for Jordan over (the period 1980 – 2018). The paper used vector error correction model. The results of the study considered that gross domestic product, trade openness, education, infrastructure, and technological abilities are primary engine of inward FDI in (long term and short term). Thus, the results have vital role for the policy makers in Jordan to formulate domestic and foreign policies. This study relied on three essential parts. Firstly, FDI is a significant source of capital that promotes economic growth. Secondly, the question of what are the leading drivers of FDI remains inadequate in the literature. Finally, this research adds to the literature by using different econometrics techniques and long span of yearly time series data.
Highlights
There are many reasons behind the attraction of foreign capitals such as (1) low tax rates (2) macroeconomic stability (3) low levels of corruption and bureaucracy and (4) flexibility in the legislative system
The main purpose of this study is to examine co-integration and causal relationships between inward foreign direct investment (FDI) and its determinants in Jordan for
The determinants of inward FDI that have been used in this study are; gross domestic product (GDP), trade openness (TO), education (E), infrastructure (I), and technological capabilities (TC)
Summary
There are many reasons behind the attraction of foreign capitals such as (1) low tax rates (2) macroeconomic stability (3) low levels of corruption and bureaucracy and (4) flexibility in the legislative system. There should be inward foreign direct investment (FDI) because of their benefits in increasing economic development in the host country and creating new job opportunities. It has indirect effects, such as new management, technology transfer, and new production systems. This paper will discuss several aspects: Firstly, inward FDI in economies is widely reported in the literature because it is an important and stable source of capital that promotes economic development (Lien & Filatotcher, 2015; Iwasaki & Tokunaga, 2016; Beckmann & Czudaj, 2017; Kayalvizhi & Thenmozhi, 2018; Lee, Alba & Park, 2018; Li, Quan, Stonia & Azar, 2018; Cui & Xu, 2019; Dellis, Sondermann & Vansteenkiste, 2020; Hou, Li, Li & Ouyang, 2020; Sadeghi, Shahrestani, Kiani & Torabi, 2020). Summary and some policy implications are given
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