A Dynamic Equilibrium Relationship between Foreign Direct Investment, Electrical Power Consumption, and Gross Domestic Product in Jordan

Abstract

This study’s aim is to investigate the empirical relationship between the foreign direct investment (FDI), per capita electrical power consumption, economic growth (proxies by GDP per capita in constant prices), and consumer price index (CPI) in Jordan over the 1976-2011 period. Annual time series data were employed using the Autoregressive distributed lag (ARDL) model to estimate the relationship among the variables. This study is important for different parties like policy makers, domestic and foreign investors, corporations and government. The results suggest the existence of a long-term equilibrium relationship between electric power consumption and the economic growth.