Analysis Of Nexus Between Foreign Direct Investment, Aids And Economic Growth In Jordan

Nazatul Faizah, Haron and Ali Ibrahim Saleem, Abueid (2018) Analysis Of Nexus Between Foreign Direct Investment, Aids And Economic Growth In Jordan. International Journal For Research In Business, Management And Accounting, 4 (6). pp. 24-32. ISSN 2455-6114

Text FH02-FPP-19-29791.pdf Restricted to Registered users only Download (345kB)

Abstract

The part played by foreign aid differs from one country to another. Jordan has depended on the foreign aid to sustain its growing programs since independence and the aid continue to be the highest proportion in the foreign capital inflows to Jordan. In the past decade, the fundamental problems associated with the real gross domestic product (GDP) in Jordan are apparent since the foreign aid is highly influenced by macroeconomic shocks that have severely affected the GDP through changes in macroeconomic factors. However, this relationship has not been adequately addressed. The main objectives of this paper is to investigate the influence of foreign direct investment and aids on economic growth in Jordan by employing time series data from 1976 to 2015. The Autoregressive Distributed Lag (ARDL) model was employed to examine the relationship between the variables empirically. The findings revealed the existence of a long-run relationship among the variables. Foreign direct investment (FDI) is positive and significantly influencing the economic growth in both short run and long run. Moreover, aid is significant and negatively influencing the economic growth in the short run, while insignificant in the long run. The interaction term of foreign direct investment aids has a negative and significant influence on economic growth in both short run and long run. The results recommended that higher foreign investment may decrease the ability of aids to increase the economic growth. Therefore, policy makers should balance between investment friendly policies such as foreign direct investment that will be attracted into the country for sustainable economic growth.

Actions (login required)

View Item