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Abstract
In order to show the effect of direct foreign investment flows on the economy of Jordan, this study
comes 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 using
Multiple Linear Regression Model. The analysis revealed that there exists significant and positive
relationship between foreign direct investment flows into the economy of Jordan and economic and
financial variables. The study claims for further FDI promotion through incentives to attract new
investments. These factors are: providing targeted fiscal incentives, such as tax concessions, cash grants,
and specific subsidies; improving domestic infrastructure; promoting local skills development to meet
investor needs and expectations; establishing broad-reaching FDI promotion agencies and improving
the regulatory environment and decreasing red tape.