Determinants of Private Investment in Jordan : An ARDL Bounds Testing Approach = محددات الاستثمار الخاص في الأردن : باستخدام نموذج ARDL لتحليل السلاسل الزمنية

Abstract

This study investigates the determinants of private investment in Jordan for the period 1976-2012. The ARDL (Autoregressive Distributed Lag) approach to cointegration is employed to test the existence of a long run relationship, as well as to study the short run dynamics of private investment in Jordan. To that end, demand for private investment is estimated as a function of real Gross Domestic Product (real GDP), real interest rate, and real public investment. The original problem focuses on the assessment of factors that have either stimulated or dampened private sector investment in Jordan during the study period. The results of this study confirm some results found elsewhere in the empirical literature. Econometric evidence indicates that private investment is positively related to real GDP growth, and negatively related to real interest rates, and real public investment. The study concluded that improving the productive sectors in the national economy may enhance private investment in the long run, and the government capital expenditures have insignificant role in boosting private sector investment initiatives, implying that public investment projects should be reviewed, reassessed, and prioritized so that crowd in private investment.

The determinants of private investment: Evidence from South Africa

“…Studies that have used time series data include Ribeiro and Teixeira (2001), Karagöz (2010), Michael and Aikaeli (2014), Magableh andAjlouni (2016), andAwad et al (2021), among others. Ribeiro and Teixeira (2001) investigated the determinants of private investment in Brazil from 1956 to 1996.…”

“…Using the error correction model, Michael and Aikaeli (2014) found that the variables that influence private investment growth are public investment, GDP growth, and credit to the private sector in Tanzania. In Jordan, Magableh and Ajlouni (2016), using the ARDL approach, found that private investment is positively correlated to real GDP growth and is negatively associated with real interest rates and real public investment in both the long and short run. Also, Using the ARDL approach, Gondim et al (2018) examined the relationship between outward foreign direct investment and domestic investment in Brazil and China from 1975 to 2013.…”

The Impact of Business Incubator Facilities on Investment Promotion in Jordan: A Case of King Hussein Business Park

“…Jordan is keen to promote domestic and foreign investments to enhance economic growth (Arabyat, 2016). The importance to promote investment in Jordan is evident from the increased attention from the government (Magableh & Ajlouni, 2016). Jordan's government focuses on the factors that influence investment promotion.…”