Shifting the focus to agents of
change and enabling the private sector to more significant responses could
allow Jordan to reap better benefits. And to generate new growth processes,
private sector decision-makers must take unknown risks to invest and operate
within Jordan — primarily to serve markets beyond it.
اضافة اعلان
Given that youth unemployment
is a symptom of the undiversified and vulnerable economy rather than a cause,
there is limited potential for what active labor market policies can do to
stimulate growth and sustainable job creation. Instead, Jordan needs to develop
a more diversified economy that creates more high-paying jobs.
Over the last few years, the
government has developed and implemented an ambitious reform agenda that aims
to enable more robust, sustainable, and inclusive growth. The government led
this effort with solid support from the World Bank and the donor community.
This is why Jordan needs economic transformation to accelerate the pace of growth. And reducing business costs, improving regulatory quality, and increasing competition to maximize the space for private sector investment to grow is the way to go.
In fact, in June 2022, Jordan
released the Economic Modernization Vision 2022–2033, aiming to invigorate the
economy over the coming decade. The total investment projection is JD41.4
billion ($57.6 billion). More than two-thirds must come from non-government
sources, including a significant increase in foreign direct investment to
create more than one million jobs for Jordanians in the next decade.
However, past shocks have
skewed Jordan's competitiveness toward services as opposed to manufacturing —
given water scarcity, electricity prices, and disruptions. This is why Jordan
needs economic transformation to accelerate the pace of growth. And reducing
business costs, improving regulatory quality, and increasing competition to
maximize the space for private sector investment to grow is the way to go.
A greater focus needs to be on
building know-how clusters, growing trade relationships, and pushing
private-sector innovation. These efforts require a renewed focus on attracting
global companies to operate in Jordan, alongside to encouraging
entrepreneurship activities. Doing this can happen in various ways, mainly
through targeted investment promotion and support through new donor programs
and foreign engagement.
These tradable industry
opportunities include business, creative, IT, education, health, transport,
construction, tourism, agriculture, and food services sectors, capitalizing on
Jordan's intensive economic and extensive margins.
There are also hidden gem
opportunities for existing firms in Jordan to expand their exports of
high-complexity products. For example, the integrated end-to-end mining value
chain is complex, but it is also a fundamental shift to unlocking an untapped
source of value. Mining companies must develop a comprehensive mine-to-market
perspective to survive down cycles in the short term and strengthen and expand
their market position in the longer term.
Jordan can also more
strategically utilize government procurement as demand for innovation,
especially digital platforms. In doing so, while also incentivizing private
sector innovation around those problems in Jordan that may become a driver of
global innovation in the future.
The Kingdom could also position itself to jumpstart new engines of growth by capitalizing on its high potential for climate-resilient economic growth and the existing policy environment.
The Kingdom could also position
itself to jumpstart new engines of growth by capitalizing on its high potential
for climate-resilient economic growth and the existing policy environment.
While Jordan has been a regional leader in climate change policies,
capitalizing on green growth pathways will require more government innovation
to crowd in more private sector innovation to attract low-cost climate finance.
Over time, Jordan's renewable
energy potential could crowd in energy-intensive industries both because of
low-cost renewable access in Jordan and the added market value of producing
goods with a low carbon footprint. Turning brown to green enables Jordan to
create opportunities to host high-value production by supplying dedicated
access to renewable energy.
Capitalizing on critical opportunities like those described
requires a paradigm shift in a growth strategy to create conditions for the
growth of the private sector to support an economic transformation that breaks
free from past constraints. However, achieving this goal relies not only on
government actions but also on the entry and expansion of businesses that take
risks and fundamentally alter the productive capabilities of the Jordanian
economy..
Hamzeh S. Al-Alayani is a board member of a Jordanian
public-sector government investments management company and a regular regional
energy and industrial commentator. He holds an MBA from the University of
Aberdeen, UK, and a BSc in Mechanical Engineering.
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