Does FDI Crowd Out/in Domestic Investment in Jordan

Ahmad Hussein alnawaserh, Ahmad Ibrahim Malawi

Abstract


Abstract

This paper investigates whether foreign direct investment (FDI) crowds-out/in domestic investment in Jordan. We analyze the effect on the aggregate economy using data from 1980 to 2017. The Autoregressive Distributed Lag (ARDL) model was used for short and long term relationships. The analysis shows that FDI crowds out domestic investment in Jordan. The channels of this crowding-out effect may be manifold. If FDI is directed to existing projects through privatization and does not create new investment, crowding out may occur. FDI may also crowd out domestic investment when MNCs enter sectors previously dominated by state-owned firms.


Keywords


Foreign Direct Investment; crowding out; crowding in; Real Gross Domestic Product; Autoregressive Distributed Lag

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DOI: http://dx.doi.org/10.35682/1847

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