Determinants of Foreign Direct Investment

Between 1995 and 2005, Jordan saw a 700% increase in Foreign Direct Investment (FDI) stock that was fueled by a surge in FDI inflows. Such a significant increase in a country with virtually no valuable natural resources prompts the question: what are the determinants of FDI in Jordan? In answering this question, this book provides an analysis of both "traditional" and "non-traditional" determinants of FDI in the specific context of Jordan. Non-traditional determinants- namely government policy, political stability and the privatization environment- were found to be particularly relevant in the Jordanian case, while traditional factors such as market size and factor production costs were not. This book also finds that the "Qualified Industrial Zones" agreement of 1998 between Jordan and the United States, which allows for tariff and quota- free trade to the US has been the main driver of FDI into the country; especially with textile and garment manufacturers from Asia. This book provides an insight into a relatively unknown country on the FDI map, and therefore useful for business students and academics, or anyone interested in FDI in the Middle East.