Improvements in the general business environment should also help to drive further improvements in productivity and innovation, by encouraging the importation of new technologies, systems and processes. Furthermore, a study of international benchmarks shows that public sector productivity is ighly correlated and responsive to private sector productivity, indicating that an improvement in the overall functioning of the government and more efficient service delivery would have a significant impact on improving private productivity levels. 1.3.3 Access to Capital Despite the growing instability and insecurity in the region, Jordan has exp of direct and indirect foreign investment in many economic sectors. This strengthened the Central Bank’s ability to develop a financially resilient and sophisticated banking system in accordance with international standards and practices, in comparison with regional and Arab banking institutions. This is shown by the indicators of financial strength of the banking system, particularly those related to rates of liquidity, profitability and capital adequacy, which has had the greatest impact in significantly increasing the investment attractiveness of banking institutions. 50% of equity in licensed banks in Jordan is held by non-Jordanians, which is considered one of the most important and strategic investments, due to their stability and growth. On the other hand, the negative repercussions of the global economic crisis in recent years and the increased uncertainty in the region have led banks to adopt tougher lending policies. The growing financing needs of the government and the trend towards the local market to fulfill a large part of these needs have reinforced banks’ conservative lending behavior, which in turn created a safe and competitive investment opportunity for lending to the private sector. Similarly, total deposits in local banks increased by 10.5% at the end of 2013, while non-resident deposits have seen a steady growth of 19.2%, which is an indicator of increased confidence in the Jordanian economy and banking system. ‘The Central Bank acknowledges that funding for Micro, Small and Medium-sized Enterprises has been modest (10% of total facilities granted), which highlights the need to strengthen the sector’s ability to access required finance with favorable lending conditions, since it is one of the vitally important sectors to drive economic activity. In light of this reality, the Central Bank strengthened its role in supporting local high value added economic sectors in order to stimulate economic growth, The Bank has given more attention to SMEs, providing funding programs directed towards local industry, tourism, renewable energy and agriculture, for terms appropriate to clients’ financing needs (five years for industry, tourism and agriculture and ten years for renewable energy), and with a ceiling of 5% of loan portfolio of operating banks. In addition, the Central Bank has sought to provide credit lines for ‘SME through the banks operating in the Kingdom. Jordan has managed to secure $70 million soft loan from the World Bank and a credit line of $50 million with similar conditions from the Arab Fund for Economic and Social Development. This was later followed by another credit line of $150 million from the same fund due to the success of the banking sector in utilizing these amounts in the development of SME in Jordan. Almost the full amount of the World Bank loan was used in developing more than four thousand micro, small and medium enterprises, 60% of which were established outside the capital city. Work is underway to complete final terms of reference for a special loan from the European Bank for Reconstruction and Development (EBRD) worth $150 million for the same purpose. The Central Bank has provided the needed facilities and support to enable banks to benefit from this loan at appropriate costs and maturities. Accordingly, the funds that have been, or will be, provided to the sector amount to $420 million. According to a study conducted by the World Bank, 49% of large enterprises were able to access needed bank credit, compared to 35% for medium enterprises, 26% for small enterprises and 15% for micro enterprises. It is worth noting that several non-bank financial institutions provide finance for micro, small and medium enterprises. Hopefully, the activities of these institutions will significantly grow in thanks to the central bank's determination to organize and monitor the work of these institutions. The Bank has set up a system to monitor and supervise microfinance institutions in order to strengthen their role in financing micro and small enterprises, which play a vital role in the fighting poverty and unemployment and promoting financial depth and economic growth. This system has recently been approved by the Council of Ministers. In addition to domestic capital, foreign capital- especially foreign direct investment (FDI)-is critical to the economic growth, productivity increase and technology transfer. Available data indicate that Jordan has managed to increase foreign direct investment (FDI stock amounts to 80% of GDP, second only to Lebanon in the region). Much of the FDI inflow was from the GCC, Iraq and the Jordanian working abroad. A large part of FDI inflow has gone into the real estate sector. sta WAN