Revitalising the contribution of international investment to sustainable development in Jordan is more imperative than ever. While the economy is recovering from a 1.6% GDP contraction in 2020, the COVID-19 crisis has amplified existing socio-economic vulnerabilities. Foreign direct investment (FDI) – an important source of external financing, with the FDI stock-to-GDP ratio exceeding 80% – can help unlock the country’s export potential and drive economic growth. However, the lack of a vibrant private sector, combined with global shocks and regional instability, have gradually eroded Jordan’s performance in attracting foreign investors. At the same time, FDI held up during the first year of the COVID-19 pandemic, with Jordan’s FDI inflows growing by 4% in 2020 compared to a drop of 18% across the Middle East and North Africa region – Jordan’s FDI inflows strongly fell in 2021. Furthermore, the proportion of foreign firms in Jordan that permanently closed their doors during 2020 was six times lower than for domestic firms.

This FDI Qualities Review of Jordan examines how foreign investment can help Jordan meet the Sustainable Development Goals (SDGs) in the areas of productivity and innovation, job quality and skills, gender equality and decarbonisation. FDI provides an important source of financing in Jordan but the reform momentum needs to be sustained and deepened so that the benefits of investment can be shared more widely across society. The review sheds light on the contribution of FDI to sustainable development and identifies policy options to increase its positive impacts. It provides an overview of Jordanian public institutions responsible for investment, taking a close look at arrangements to ensure policy co‑ordination, stakeholder consultation and evaluation of policy impacts. It also examines the mix of government policies that are currently in place to attract the investment that contributes to sustainable development, noting areas for priority policy reforms.

Jordan’s economy is on the road to steady recovery from a comparatively moderate GDP contraction of 1.6% in 2020, reflecting the timely policy response to the COVID‑19 crisis by the Jordanian authorities. Nonetheless, the pandemic has amplified existing structural challenges – at the forefront of these the dramatic number of unemployed youth and women, hastening the need to revitalise private investment for an inclusive and sustainable recovery. Already prior to the pandemic, stagnant productivity growth, labour market imbalances and reliance on a few industries have constrained sustainable development in Jordan. Furthermore, instability in neighbouring countries has cut off important trade corridors, leading to a significant drop in exports and a sharp increase in energy costs from imported fuels. These persistent domestic vulnerabilities, combined with global and regional shocks, have gradually eroded Jordan’s competitiveness and related foreign direct investment (FDI) performance over the last 15 years.

The first section of this chapter assesses sustainable investment in Jordan and derives overarching policy considerations. An analysis by areas of sustainable development (productivity and innovation, job quality and skills development, gender equality, and low-carbon transition) is provided in the second section.

This chapter assesses productivity trends and the potential of FDI to enhance productivity and innovation performance in Jordan. Building on the stocktaking of Jordan’s competitive edge, the chapter presents the governance framework and policy mix that supports investment impacts on productivity – focusing on institutional arrangements and policies at the intersection of investment, innovation and SME development. The chapter applies the forthcoming OECD FDI Qualities Policy Toolkit (cluster on productivity and innovation).

This chapter assesses labour market challenges in Jordan and the potential of FDI to enhance job quality and skills development. The chapter presents the governance framework and policy mix that supports the impact of investment on labour market outcomes – focusing on institutional arrangements and policies at the intersection of investment, employment and skills development. The chapter applies the forthcoming OECD FDI Qualities Policy Toolkit.

This chapter discusses the recent challenges faced by Jordan in terms of women’s economic inclusion and assesses the potential of FDI to close gender gaps in the labour market. It provides an analysis of the institutional and policy frameworks that support the positive impacts of FDI on gender equality and women’s empowerment, focusing on institutional arrangements and policies at the intersection of gender mainstreaming, labour market, entrepreneurship and investment policies. The chapter is based on the forthcoming OECD FDI Qualities Policy Toolkit (gender equality cluster).

This chapter discusses Jordan’s key challenges related to energy security and resulting implications for carbon emissions and private investment. It assesses the current contribution of FDI to diversifying energy sources, reducing carbon emissions and supporting the low-carbon transition, including through potential spillovers to domestic firms. It then considers the institutional and policy frameworks that influence the impact of FDI on carbon emissions, and identifies policy opportunities for improving these impacts. The chapter applies the forthcoming OECD FDI Qualities Policy Toolkit.