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Study stresses importance of capital investment in economic growth

By JT - Jun 14,2017 - Last updated at Jun 14,2017

AMMAN — Jordan should focus more on the role of capital investment in order to reach the expected and intended economic growth, a recent study by the Jordan Strategy Forum (JSF) said on Monday.

Titled "Real Economic Growth in Jordan: The Role of Investment at the Macro and Micro Levels", the study focused on the role of investment and its impact on GDP growth. 

The study outlined the results of a detailed study conducted by JSF on the effect of gross fixed capital formation on actual economic growth during the period 1993-2016. 

The study also discussed the impact of investment in fixed assets of private companies, including the impact of industrial companies' investments on their performance during the period 2001-2016.

"It is well known that the Jordanian economy is facing many social and economic challenges, which include the challenges of instability in the actual growth rate of GDP, high unemployment rates, rapid growth in the labor force and existing poverty levels," the study said.

JSF pointed out that the national economy did not witness steady growth during the period 1993-2016, which was volatile.

On a public sector level, results of the study showed that gross fixed capital formation must be increased, in order to reach the desired economic growth, which is done by increasing spending on capital projects.

On a private sector level, results showed the importance of companies investing in fixed assets, which has a positive impact on their financial performance and thus on economic growth. 

 

Highlighting the various challenges the Jordanian economy is facing, the study noted that one of the most important ways to increase capital projects and to avoid further budget deficit is to accelerate and intensify capital investment projects using public private partnerships.

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