The Output Effect of Foreign Aid and Foreign Direct Investment in Jordan: ARDL Modeling Analysis

Ahmad Ibrahim Malawi

Abstract


This study aims to investigate the impact of foreign aid and foreign direct investment on real output in Jordan over the period (1976-2007). An autoregressive distributed lag (ARDL) model has been applied to annual data.
Some diagnostic tests have been utilized such unit root test for stationarity and the cointegration test. The results have shown that both foreign aid and foreign direct investment have a highly significant positive impact on real GDP in the long-run, but the results are inconclusive in the short-run. These results might be reasonable since the effect of investment on economic activity takes its time and appears with lags.

Keywords


Jordanian Economy, Foreign Aid, Foreign Direct Investment (FDI), Autoregressive Distributed Lag (ARDL) Model.

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