Abstract

The main objective of this study is to examine and analyze the effect of the economic and financial risks on foreign direct investment in Jordan during the period (1982–2012). We used Multivariate Data Analysis (MVA) to test the hypotheses of this study. The analysis has shown that there is significant effect between all independent variables which consists of economic risks model, financial risks model and foreign direct investment.

The economic risks model includes gross domestic Product (GDP) per head of population, the real annual growth rate of GDP, the annual inflation rate and current account balance as a percentage of GDP.

The financial risks model includes foreign debt as a percentage of GDP, foreign debt service as a percentage of export of goods and services (XGS), current account as a percentage of (XGS) and exchange rate stability.

Finally the researcher suggests several factors that would increase the Jordanian investments, the important factors are: giving investors some advantages such as tax exemptions, improving domestic infrastructure, adequate legislation, regulation and safeguard and acceleration the treatment of investors.

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