Jordan has faced several economic challenges throughout its
history, but has overcome them successfully. Jordan’s GDP per capita rose by
351 percent in the 1970s, declined 30 percent in the 1980s, and rose 36 percent
in the 1990s. The Jordanian economy embarked on a route of liberalization and
global integration, which attracted both foreign and domestic investment. It
grew at an annual rate of 8 percent between 1999 and 2008; as a result, there
was a spectacular increase of 47 percent in per capita GDP from 1990 to 2008.
Growth was mainly in manufacturing industries and technology-related
fields.
اضافة اعلان
Among the notable challenges Jordan, and many in the
region and the world, faced was the Arab Spring in 2011 and more recently the
COVID-19 pandemic. Jordan’s economy has weathered both better than many others,
and registered a modest real GDP growth of 2.1 percent in 2021.
Jordan has an emerging market economy with upper
middle income. By 2021, Jordan had a $45.2 billion GDP, ranking 89th worldwide.
Yet, poverty and unemployment remain persistently high, particularly among the
youth, while labor force participation is among the lowest regionally.
Situated at the center of a volatile region, Jordan
has been an anchor for regional stability. Its geographical location positioned
it as an emerging power in the Levant, one that enjoys ultra-modern
infrastructure, speedy industrialization, the development of green energies,
and free trade agreements with the world’s major economic players.
Going forward, rapid and resilient economic growth
will be driven by entrepreneurial diversification of new products that are
incrementally more complex and create an investment-driven model of
development. Therefore, Jordan needs to prioritize investment and reform of the
business environment, and give more incentives to the most productive
job-creating sectors.
Countries are more successful in diversifying when
they move into production that requires available, or similar, know how and
builds on existing capabilities.
To attract investors and revitalize the economy, Jordan needs to address the challenge of high production costs, represented by energy and water.
Jordan exported products worth $16.8 billion in
2019; these included textiles (15 percent), fertilizers (14 percent), services
(13 percent), agri-food and agrotechnology (6 percent), mining (7 percent), and
information technology, which dropped to
2.5 percent. The Kingdom’s imports totaled $25.3 billion in 2019, leaving it
with a trade deficit.
To attract investors and revitalize the economy,
Jordan needs to address the challenge of high production costs, represented by
energy and water. It needs to accelerate reforming the energy and water sectors,
to seize the opportunity of international recovery efforts and stop the
prominent role of NEPCO and its debt, which drains the Kingdom’s public
resources and hinders the move toward more sustainable, cheaper, and green
electricity sources through the systematic implementation of small-scale
renewable energy projects. Harnessing solar and hydropower, in conjunction with
dams, water pumping stations, and water treatment plants, could be one of the
best ways of addressing the water-energy nexus.
Finally, the Kingdom needs to undergo a structural
transformation, to reallocate the subsidization of energy, water, taxes, and
regulations to economic activities and to create more jobs through projects in
the mining, petrochemical, food-security, and logistics sectors.
The writer is board
member of a public-sector investment management company, general manager at
Edgo, and regular commentator on regional energy and industry matters.
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