Challenges in the Era of Globalization - iaabd

Proceedings of the 12th Annual Conference © 2011 IAABD
High industrial concentration (industrial parks, technological networks, …) 19 2.35
Cultural Characteristics (e.g. language, religion, food & drink) 20 2.24
Technologically advanced country (learning opportunities) 21 2.12
Less strict environmental laws 22 1.91
Conclusion
This paper presents the main host country location factors that MNCs consider when they want to
undertake FDI in Syria and Jordan. Using a relatively large sample size, this study is the first attempt to
identify, classify and rank the key host country-specific influences for FDI decision by MNCs in this
particular area. The findings of this study show that the choice of either Syria or Jordan as a location of
FDI emerges to be intrinsically influenced by the market attractiveness of the host country (its size and
potential growth), to what extent the investment environment is favourable for MNCs regarding
government policies, regulations, and laws, and the perceived potential risks in those countries. In other
words, the decision of MNCs to undertake FDI in such area is driven by market demand and at the same
time the ease and risk of doing business. Based on the above, developing countries in general, Syria, and
Jordan in particular can attract more FDI by doing two things. They need to improve their investment climate
and make it more favourable for MNCs in terms of regulations, policies, and laws, and at the same time, lower
the perceived potential investment risk through maintaining political stability.
Although empirical findings of studies regarding location factors may differ significantly from country to
country or from market to market, the findings of this study support the findings of similar studies undertaken
in other host country contexts. The findings of this study support Cleeve’s (2006) main findings with respect to
the importance of the following location factors: (1) potential growth in the host market, (2) large market size,
(3) good infrastructure, (4) availability of high skilled workforce in the host market, and (5) the openness of the
economy. This study also confirms the findings of Cleeve (2006) with respect to corruption as both studies
show it has no effect on FDI inflows. However, there is a contradiction with Cleeve’s (2006) findings with
respect to political stability in the host country as the findings of this study reveal that it was one of the most
significant location factors influencing MNCs decision to undertake FDI and affecting FDI inflows, whereas,
Cleeve (2006) found it to have no effect.
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