Title: Exploring the long-run and short-run elasticities between FDI inflow and its determinants in Jordan

Authors: Hussain Ali Bekhet; Raed Walid Al-Smadi

Addresses: Graduate Business School, Universiti Tenaga Nasional, 43000 Kajang-Selangor, Malaysia ' Graduate Business School, Universiti Tenaga Nasional, 43000 Kajang-Selangor, Malaysia

Abstract: This paper investigates the long-run and short-run elasticities among Greenfield investment inflows, gross domestic product, energy consumption, economic openness, gross fixed capital formation, labour and financial development in Jordan. Annual time series data for the 1979-2012 periods and the ARDL bounding test are used. The results identify long-run and short-run elasticities in foreign direct investment (FDI) and its determinants. In general, Jordanian policy makers concentrate their efforts to attract more FDI by enhancing economic indicators and liberalising the financial market. This is because more FDI in the Jordanian economy is expected to lead to a decrease in economic obstacles (e.g., lower unemployment rate, increased level of technological and managerial skills and increased size of capital).

Keywords: greenfield investment; economic growth; energy consumption; financial development; long-run elasticities; short-run elasticities; FDI inflow; foreign direct investment; Jordan; gross domestic product; GDP; economic openness; gross fixed capital formation; labour development; economic indicators; liberalisation; financial markets.

DOI: 10.1504/IJBG.2017.083210

International Journal of Business and Globalisation, 2017 Vol.18 No.3, pp.337 - 362

Received: 30 Sep 2015
Accepted: 04 Nov 2015

Published online: 22 Mar 2017 *

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