Investment Promotion ( Jordan ) Case Study Example | Topics and Well Written Essays - 500 words

Investment Promotion ( Jordan ) - Case Study Example Multinational corporations are often motivated to invest in foreign countries because these locations have lower regulations which reduce compliance costs. Another reason to invest in a foreign country is to take advantage of lower materials costs. Often companies choose to establish a physical presence in a foreign country to take advantage of the demand for their product in the domestic marketplace. For instance if a country has a high demand for electronics, but the local producers are not satisfying the demand it makes sense for an electronics company to establish a physical presence in that country to exploit the business opportunity. Another reason companies penetrate certain international locations is due to governmental incentives and tax shelters. The presence of free trade agreements with the United States persuades many manufactures to operate in countries that offer these types of benefits. One of the most attractive features that Middle East countries provide to companies looking to invest in this region is a high availability of cheap labor. Due to the high employment rate in the region a company that establishes itself in the Middle East would not have any problem recruiting workers since thousands of people would apply for jobs. Jordan in particular offers several advantages to companies. Jordan offers preferential tax treatment to companies that invest in certain industries. If a company invests in rural or remote areas of Jordan the government offers a 75% tax exemption for a ten year period. Companies that invest in the Amman region are eligible for a 25% tax exemption for a ten year period. The Jordan government offers new investors a duty free privilege on imported equipment. Jordan is a particularly attractive location for U.S. investors. The Jordan-U.S. Free Trade Agreement eliminated tariffs on some Jordanian goods exported to the United States. In order fo r this benefit to