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- W222971799 abstract "[Abstract] This paper aims to identify the determinants of foreign direct investments (FDI) in Jordan during the past decade. The sample focuses on Arab countries only during the years 1996-2007. Also the paper tries to verify whether the Greater Arab Free Trade Area Agreement (GAFTA) had an effect on FDI or not. This paper, unlike the previous papers on FDI in Jordan, uses a standard gravity model to explain the inflow of FDI between Jordan and Arab countries during the period 1996-2007. The model is used to determine the factors that affect FDI and in particular the effect of GAFTA. The model assumes that FDI depends on variables such as GDP, per capita GDP, distance, integration agreements, border countries and immigration (Jordanians working abroad). The estimation is for a panel data over the same countries and time period. The paper concludes that country size in terms of GDP and per capita are the major determinants of FDI. Distance, common borders and the presence of Jordanian workers in the respective countries plays no significant role in determining FDI. Also, the paper showed that the GAFTA factor was insignificant in influencing FDI. [Keywords] Foreign direct investment; Jordan; Arab countries; gravity model; FDI Introduction Foreign direct investment plays an important role in economic growth, increasing trade, advancing a country's technological level, enhancing institutional development, improving managerial skills, and elevating the education and financial systems to face the new challenges brought by globalization (Borenzstein, De Gregorio, & Lee, 1998; Klein, Aaron, & Hadjimichael, 2003). In recent years, the developing countries realized the potential value of foreign direct investment and liberalized their investment strategies to attract foreign direct investment in order to increase economic growth and to improve living standards (Rutihinda, 2007; Dupasquier & Osakwe, 2005). Jordan succeeded in attracting foreign direct investment (FDI) as a result of several factors, such as inward and outward political stability, incentives, and investment encouragement legislations, privatization schemes, advancement of the private sector, joining the World Trade Organization (WTO), and engaging in various multilateral and unilateral trade agreements. In addition, foreign capital was well attracted by the just legal system, the well developed infrastructure and the availability of relatively cheap and skilled labor. Also, a very important factor in attracting FDI was the availability of feasible projects to be undertaken. In 1992, FDI amounted to 44.1 million U.S. dollars, increased to 618.7 million in 2000, and exceeded 6 billion in 2007 (Investment Encouragement Corporation, Amman, Jordan). FDI in Jordan was attracted mainly by the industrial sector and in particular by the Industrial Free Zones and Cities and the privatized enterprises, followed by the agricultural, tourism, communications, services, transport, health and building sectors. For example, numerous textile enterprises were established in the Free Zones. Other enterprises include electrical appliances, cement, cables, steel and iron, communication and technology, Bolivard Al Abdali hotel and apartments, hotels, and hospitals. However, the progress of FDI may not continue to assume the same path in the coming years. Privatization schemes are no longer an open option and the industrial sector needs to open new viable investment opportunities other than those provided by the free zones. Similarly, the building sector is almost saturated and is facing a recessionary trend along with the financial sector. In light of the recent developments, it is imperative to understand the trend of FDI and to identify its determinants in order to outline a viable course of action to stimulate this important part of investment to the economy of Jordan. FDI across countries and over the years vary significantly. …" @default.
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- W222971799 title "Determinants of Foreign Direct Investment in Jordan" @default.
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