European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.6, No.39, 2014 121 The Impact of Foreign Direct Investment FDI on Economic Growth of Jordan Hadeel Yaseen Financial and Banking Sciences Department, Private Applied Science University Po Box 166, Postal code 11931, Jordan Email:h_yassin@asu.edu.jo The research is financed by Private Applied Science University. No. DRGS-2014-2015-26 Abstract Foreign direct investment (FDI) has been one of the significant sources of economic growth in Jordan, and become an important channel for Jordan to enhance the economy and financial systems. The purpose of this paper is to identify the effect of FDI on economic growth of Jordan. The study covered the period from 1990 to 2012 using time series data from World Development Indicator and IMF International Financial Statistics tables, published by International Monetary Fund (IMF) to detect the correlation relationship between foreign direct investment FDI and the economic growth in Jordan. An empirical analysis and ordinary least square (OLS) regression are conducted. Our findings indicate that Jordan’s economic performance is positively influenced by foreign investment and its gross domestic investment also has capitalized its economy. Additionally, the results shown that trade have a positive impact on the economic growth. While, the nation’s debt, inflation have found to have a negative impact on its GDP. In addition the inflow of foreign investment will not leave a significant impact on the unemployment level. Keywords: FDI, GDP, Domestic Investment, Trade. 1. Introduction Most developing economies have decided to enhance the role of the private sector through the implantation of dynamic plans of privatization and adopting policies that encouraging the transfer of external resources and attracting foreign investments. The transfer of external resources is one of the most important instruments that give support to an economy which increase the investment level of the country, as well as implies adjustment in the structure of economy. In addition, an exceptional opportunity has globalizations offer particularly for developing countries which help its economies to achieve more rapidly growth throughout trade and investment. Several researches have been focused on the relationship between economic growth and FDI for developed economies, both theoretically and empirically. After 1990's and after a substantial increase in FDI flow, the interest of the subject in developing countries also increase which led up to a wave of researches concerning on its determinants. And similarly in Jordan as foreign direct investment (FDI) is considering a significant factor that influences the growth of Jordan's economy. In fact, there are various opinions by investigators regarding the contributions and influencing of FDI in enhancing the economic development. Some see that FDI play an important role in improving the performances of economy especially in developing countries, while other researchers observed that the influence of FDI is not as marked as most public believe. In general there has been no consensus opinion regarding the role of FDI and its impact on the growth of economies. It is vary from country to country. This paper attempts to show the participation of foreign direct investment to economic growth of Jordan. To achieve this, a scholarly opinion and suggestions will be examined and empirical analysis will be accomplished. The empirical model that used depends in using such macroeconomic variables including domestic investment, debt, poverty level and inflation labor employment. The study attempts to answer the following questions; is