Determinants of Investment in the Jordanian Productive Sectors

This paper aims to find out the main factors that are important in determining the size of investment in the Jordanian productive sectors. For this purpose, the study used panel data for four Jordanian productive sectors over the period 2000?2017. Also, fixed-effects modeling was carried out to identify the relationship between investment and its potential determinants. Empirical investigations of the four productive sectors reveal the following results: The real value of sector?s production and the real value of credit facilities have a positive and significant impact on investment, while the real interest rate has a negative effect on investment in the Jordanian productive sectors. Also, at the sector level, agriculture was more responsive to changes in the real value of credit facilities, while other sectors were more responsive to changes in the real value of sector?s production. According to these results, it seems that some policy actions should be taken to enhance the size and the role of investment in the economy. For example, policymakers should adopt a mixed policy and expand the provision of credit facilities, especially to the agricultural sector, to enhance agricultural activity in a manner that ensures the improvement of infrastructure and land reclamation.