Measuring the Impact of External Funding on Economic Growth in Jordan an Econometric Study for the Period (1997-2011)

The developing countries suffer from low domestic savings rates, as a result of declining per capital incomes, limited capital sources and general poverty, in light of the growing chronic deficits in trade balances of most. Hence the importance of external funding the for developing countries in overcoming the limited local resources and financing for development; therefore, this study aims to analyze the capacity of external financing in loans and foreign direct investment on the economic growth of the Jordanian economy. The results confirm that the independent variable (the ratio of total loans Jordan external to GNP) has a morally negative impact on the economic growth, and that can be interpreted using these loans in non-productive projects, consumer non-productive purposes. The estimates also showed no significant independent variable (the ratio of foreign direct investment in Jordan to GDP) to affect economic growth, and this is consistent with the traditional point of view in this area. The study suggested several recommendations, including: the need to prepare a technical and economic feasibility studies for loans used in the process of overall economic development, attention to the available natural resources and exploitation in accordance with the law of comparative advantage to achieve the abundance in the productive process, get rid of the savings gap by stimulating savings behavior for individuals and institutions alike, addressing the public budget deficit by reducing unnecessary expenditure.