One thing that policy makers in Jordan need to ensure, through systems and
procedural mechanisms, is that people, and by extension the country, are able
to get out of the poverty trap.
اضافة اعلان
To become mobile
and get out of the poverty rut, several factors, including education and
financial inclusion, have to come into the solution mix.
Educational
mobility is considered a key component of economic, or income mobility, across
generations. Note that the persistence of income from one generation to the
next is often the result of inherited endowments and parental preference to
invest for the benefit of the children.
Through an
enabling educational system that equips trainees with the proper tools to
become employed, one can exit intergenerational poverty.
The education
system in Jordan is not only lacking in endowments, it also fails to encourage
mobility and fairness. Some of the private schools that offer top flight
education and skill sets (of which some are on par with top schools in the most
advanced economies), charge fees that are commensurate with those in the
wealthiest countries where the per capita income is 20 times higher than that
of Jordan.
On the other
hand, public schools resort to rote learning, suffer from overcrowding, are
staffed mainly by disgruntled teachers, operate inadequate facilities, and
receive little to no maintenance.
In order for the
government to close the gap, attempts have been made to further regulate the
private schools by placing caps on their fees. This is obviously the wrong
approach (denigrating the excellent to bring them closer to the inept and thus
lessen the gap); the proper and correct action should have been to improve
public schooling.
Jordan should
work on improving the entire school system, including public schools. Currently
the gap between the private and public schools is huge and growing, which means
that the poor will not exit the poverty trap inherited from their parents,
while the children of the wealthy will become wealthier.
The growing
dichotomy between the education standards of the children of the rich and of
the poor will bring about social, political, and economic ramifications that
would be adverse to the developmental path of Jordan.
But this
situation is not unique to Jordan. Developing countries worldwide have fallen
way behind the developed economies in terms of intergenerational educational
mobility (which also leads to intergenerational income mobility).
Developed
economies have understood that not all parents have advantageous endowments to
pass on to their children, and therefore have come in to fill the gap with
enabling education systems. Countries that do not heed this lesson and follow
this example face the dire outcome of being underdeveloped, poor states.
The growing dichotomy between the education standards of the children of the rich and of the poor will bring about social, political, and economic ramifications that would be adverse to the developmental path of Jordan.
Financial
inclusion is defined as enabling businesses to have convenient access and use
of affordable and suitable financial products and services that meet needs and
help improve livelihoods. It is well established in the literature that
increasing financial inclusion has the potential to improve living standards,
combat poverty and unemployment, promote equality, and enhance financial
stability and integrity.
The
distinguished French economist Thomas Piketty said: “If credit markets are
imperfect, then dynasties with little initial wealth face limited investment
opportunities, and they remain poor.”
According to the
“Financial Inclusion Diagnostic Study in Jordan 2017”, financial inclusion in
the country needs to be strengthened significantly. Sharing some of the figures
that were published in the study: only 33.1 percent of adults have an account
at a financial institution (32 percent at a bank), 9.3 percent saved money at a
financial institution in the past year, and 4.3 percent borrowed from a bank in
the past year.
Furthermore,
bank loans are given to those that have endowments and connections (which
typically result from legacies or important backers), and not for having
demonstrable skills or visions. What about trying to start a small business in
Jordan, and approaching a bank for a loan?
According to the
World Bank Enterprise Surveys of 2013/2014, only 12.5 percent of small
enterprises, 25 percent of medium enterprises, and 34.2 percent of large
enterprises had a bank loan.
If Jordan
desires, and I am sure it does, to exit the poverty trap, emphasis should be
placed on fixing the education and credit systems of the country. Although,
other factors, such as labor policies and vocational training, may come into
play, education and credit are the two most important elephants in the room.
Yusuf Mansur is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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