Determinants of direct foreign investment: Evidence from Jordan

In order to show the effect of direct foreign investment flows on the economy of Jordan, this studycomes to examine the economic and financial risks on FDI on the macro level over the period (1997-2007). This study applies a version of the model developed by Chan and Gemayel (2004) by usingMultiple Linear Regression Model. The analysis revealed that there exists significant and positiverelationship between foreign direct investment flows into the economy of Jordan and economic andfinancial variables. The study claims for further FDI promotion through incentives to attract newinvestments. These factors are: providing targeted fiscal incentives, such as tax concessions, cash grants,and specific subsidies; improving domestic infrastructure; promoting local skills development to meetinvestor needs and expectations; establishing broad-reaching FDI promotion agencies and improvingthe regulatory environment and decreasing red tape.