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Determining the causality relationships among FDI determinants: evidence from Jordan

Author

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  • Hussain Ali Bekhet
  • Raed Walid Al-Smadi

Abstract

Economic theory suggests that FDI reinforced economic growth leading to economic development. The present paper analyses four macroeconomic factors that are affecting FDI inflows in Jordan. However, it examines the long-run and short-run causality relationships among inflation rate (INF), gross domestic product (GDP), broad money supply (M2), exchange rate (EX) and FDI inflows for the (1980-2011) period. It also uses augmented Dickey-Fuller (ADF) and Phillips-Perron (P-P) for testing stationarity; Johansen and Juselious for testing the cointegrating relationships among variables and Engel and Granger for testing the short-run causality relationships among variables. The results suggest that the variables are cointegrated and it shows various causality directions among them. These findings are important for Jordanian policy makers to determine the main macroeconomic factors that may increase FDI inflows to Jordan and reinforce the Jordanian economic growth and development.

Suggested Citation

  • Hussain Ali Bekhet & Raed Walid Al-Smadi, 2014. "Determining the causality relationships among FDI determinants: evidence from Jordan," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 6(3), pages 261-274.
    • Handle: RePEc:ids:ijsuse:v:6:y:2014:i:3:p:261-274
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    Citations

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    Cited by:

    1. Farah Siddiqui & Danish Ahmed Siddiqui, 2019. "Causality between Tourism and Foreign Direct Investment: An Empirical Evidence from Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 7(1), pages 27-44, March.
    2. Ali Matar & Hussain Ali Bekhet, 2015. "Causal Interaction among Electricity Consumption, Financial Development, Exports and Economic Growth in Jordan: Dynamic Simultaneous Equation Models," International Journal of Energy Economics and Policy, Econjournals, vol. 5(4), pages 955-967.
    3. Raed Walid Al-Smadi & Muthana Mohammad Omoush, 2019. "The long-Run and Short-Run Analysis between Stock Market Index and Macroeconomic Variables in Jordan: Bounds Tests Approach," International Business Research, Canadian Center of Science and Education, vol. 12(4), pages 50-60, April.
    4. Muthana Mohammad Omoush, 2018. "Time Series Analysis among Tourism, Financial Development, FDI and Economic Growth in Jordan," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 150-150, December.
    5. Hussain Ali Bekhet & Raed Walid Al-Smadi, 2016. "The dynamic causality between FDI inflow and its determinants in Jordan," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(1), pages 26-47.
    6. Lee Lian Ivy-Yap & Hussain Ali Bekhet, 2015. "Examining the Feedback Response of Residential Electricity Consumption towards Changes in its Determinants: Evidence from Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 5(3), pages 772-781.
    7. Hussain Ali Bekhet & Nor Salwati Othman & Tahira Yasmin, 2020. "Interaction Between Environmental Kuznet Curve and Urban Environment Transition Hypotheses in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 384-402.

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