Jordan has been praised as one of the best reformers among middle-income countries. Renewed growth during recent years has raised expectations that the reforms are finally bearing fruit. This article argues that growth in Jordan is not based on structural transformation and is not sustainable in the absence of firm-level upgrading. Growth has been driven by the expansion of non-tradable activities, while the country has not been able to modify its production structure or achieve noticeable productivity improvements under neoliberal policies. Higher value added and technology-intensive production has not evolved concomitantly with the development of social capabilities, impeding the emergence of a virtuous cycle leading towards economy-wide upgrading. Uneven development of social capabilities has also constrained the upgrading potential. The macroeconomic context has not been conducive to generating incentives for investment aiming at enhancing firm-level capabilities and promoting economic diversification. Upgrading will not take place spontaneously by the free functioning of market forces alone, and in its absence Jordan will not be able to confront the middle-income trap. This requires a more active state intervention, beyond building a business friendly environment, which in turn demands the development of institutional capabilities The Jordanian experience offers important insights for other small countries that have embraced the neoliberal recipe for development.
This is a preview of subscription content, log in to check access.
Buy single article
Instant unlimited access to the full article PDF.
Price includes VAT for USA
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
This is the net price. Taxes to be calculated in checkout.
Central Bank of Jordan, Annual Reports, various issues.
In the case of services, value added per unit of compensation to employees was used as proxy for labor productivity as there is no available employment data at the four-digit level of disaggregation. This indicator does not allow comparing productivity levels across sectors, but is a good proxy to assess evolution of productivity within a sector.
Trends in International and Science Study (TIMSS); nces.ed.gov/timss/countries.asp
OECD, PISA 2009 Database. www.oecd.org/statisticsdata/0,3381,en_2649_35845621_1_119656_1_1_100.html
There are seven small business incubators in Jordan, with very little activity. Most of them are funded by foreign donors.
Alissa S. Rethinking economic reform in Jordan: confronting socioeconomic realities, Carnegie Papers No 4, Carnegie Endowment for International Peace, Washington DC, July; 2007.
Al-Khaldi K. Educational Attainment of Jordan’s Population and Labor Force. J Soc Sci. 2006;2(1):1–6.
Amara J. Military Industrialization and economic development: Jordan’s defense industry. Rev Financ Econ. 2008;17:130–45.
Bani-Hani A, Shamia A. The Jordanian industrial sector: output and productivity (1967–1986)—an econometric analysis. Abhath Al-Yarmouk: Hum Soc Sci. 1989;5(2):52–78.
Barakat N, Saif I. Exit–entry dynamics: case of manufacturing sector in Jordan. In: Sekkat K, editor. Market dynamics and productivity in developing countries: economic reforms in the Middle East and North Africa. Ottawa: Springer; 2010. p. 13–45.
Baylouny AM. Militarizing welfare: neoliberalism and Jordanian policy. Middle East J. 2008;62(2):277–303.
Beblawi H. The rentier state in the Arab world. In: Giacomo L, editor. The Arab state. Berkeley, CA: University of California Press; 1990. p. 85–98.
Ben Jelili R. Learning and productivity performance in Arab manufacturing industries. J Dev Econ Policies (Kuwait). 2010;12(1):7–26.
Bhattacharya R. Exchange Rate Regime Considerations for Jordan and Lebanon IMF Working Paper No 03/137, June 2003.
DOS. Jordan in Figures. Jordan: Department of Statistics; 2009. September.
El-Sakka M. Migrant Workers’ Remittances and Macroeconomic Policy in Jordan. Department of Economics, Kuwait University (mimeo); 2006.
Feder A, Poddar T. Assessment of export competitiveness and export prospects in Jordan: selected issues and statistical appendix. IMF Country Report No 04/121, 146–215; 2004.
GTZ. Study on the National Innovation System in Jordan. Final Report, Berlin, December 2009.
Harriman J, El-Said H, Wang C. The IMF and the World Bank in Jordan: A Case of Over Optimism and Elusive Growth (mimeo); 2006.
Hassan F, Al-Saci D. Jordan Supporting Stable Development in a Challenging Region: A Joint World Bank–Islamic Development Bank Evaluation. The World Bank Operations Evaluation department, Washington DC, Islamic Development Bank Operations Evaluation Office, Jeddah, Saudi Arabia; 2004.
IMF. IMF Country Report No.09/159, May 2009.
IMF. Jordan: Selected Issues and Statistical Appendix, IMF Country Report No 04/121, May 2004.
IMF. Jordan: Selected Issues, IMF Country Report No 08/291; 2008.
Kannan T. Higher education in Jordan: access and equity in financing. Jordan Center for Policy Research and Dialogue (JCPP), March 2009.
Kardoosh M, Khouri R. Qualifying Industrial Zones and Sustainable Development in Jordan. Amman: Jordan Centre for Public Policy and Dialogue; 2004.
Khatib F. Foreign aid and economic development in Jordan: An empirical investigation. In: Wilson R, editor. Politic and the Economy in Jordan, Volume 1990. Center for Near and Middle Eastern Studies, SOAS. London: Routledge; 1991. p. 60–79.
Knowles W. Jordan since 1984: a study of political economy. London: JB Tauris; 2006.
Kurbusi A. Arab Trade: Data, Models and Issues. Study submitted to the United Nations Conference on Trade and Development (UNCTAD), mimeo, December 2009.
Lau SHP, Sin C. Public infrastructure and economic growth: time series, properties and evidence. Econ Rec. 1997;73(121):125–35.
MOPIC. Main Economic Indicators, available at the web page of the Ministry of Planning and International Cooperation. 2009. www.mop.gov.jo.
Mansur A. Social aspects of the adjustment program: strengthening the social safety net. In Maciejewski E, Mansur A, editors. Jordan’s strategy for adjustment and growth. Occasional Paper No 136, IMF, Washington DC; 1996.
McMillan M, Rodrik D. Globalization, Structural Change and Productivity Growth. NBER Working Paper 17143; 2011
ANIMA. Mediterranean Intelligence Innovation, Technology Centers and Investment Attraction in the Mediterranean ANIMA Papers and Documents No 9, November 2005.
Ministry of Labor. Jordan Labor market Figures in 2009. Amman, Jordan: Policies and Strategic Planning Unit; 2009.
Moss T, Roodman D and Standley S. The Global War on Terror and US Development Assistance: USAID Allocations by Country Center for Global Development, Working Paper 62, July 2005, Washington. Available at http://ssrn.com/abstract=1114154
Ocampo JA, Vos R, editors. Uneven economic development. New York: Zed Books and Third World Network; 2008.
Omet G, Saif I. Foreign direct investment in the MENA region and Jordan: regional experience and causality analysis. In: Zukrowska K, editor. Euro-Mediterranean partnership. Warsaw: Warsaw School of Economics; 2009. p. 199–209.
Oxford Analytica Daily Brief. Jordan Economic Predicament; September 7 1999.
Rocha R, Farazi S, Khouri R and Perace D. The Status of Bank Lending to SMEs in the Middle East and North African Region: Results of a Joint Survey of the Union of Arab Banks and the World Bank. World Bank Policy Research Working Paper 5607; 2011.
Rodrik D. Industrial development: some stylized facts and policy directions. In: O’Connor D, Kjollerstrom M, editors. Industrial development for the 21th century. New York: Zed Books and the United Nations; 2008. p. 7–29.
Saadi-Sedik T, Petri M. To Smooth or Not to Smooth –The Impact of Grants and Remittances on the Equilibrium Real Exchange Rate in Jordan. IMF Working paper WP/06/257; 2006.
Saif I. Trade Policies, Wage Level and Profitability in the Manufacturing sector in Jordan (1976–98). Economic Research Forum (ERF), Working Paper 233; 2003.
Saif I. Understanding the economic reform process in a semi-rentier state: the case of Jordan, 1990–2005. J Middle Eastern Geopol. 2007;2(8):32–49.
Saif I, Barakat N. Competition, Competition Policy and Economic Efficiency in the MENA Region: Jordan’s Country Report. Final Report submitted to IDRC; 2005.
Samha M. The impact of migratory flows on population changes in Jordan: A Middle East case study. Int Migr. 1990;28(2):216–32.
Sanchez-Robles B. Infrastructure investment and growth: some empirical evidence. Contemp Econ Pol. 1998;16(1):98–108.
Seccombe IJ. Labor emigration policies and economic development in Jordan: from unemployment to labor shortage. In: Khader B, Badran A, editors. The economic development of Jordan. London: Croon Helm; 1987. p. 118–32.
Sekkat K, editor. Market dynamics and productivity in developing countries: economic reforms in the Middle East and North Africa. Ottawa: Springer; 2010a.
Sekkat K. Economic policies, firm’s entry and exit and economic performance: a cross country analysis. In: Sekkat K, editor. Market dynamics and productivity in developing countries: economic reforms in the Middle East and North Africa. Ottawa: Springer; 2010b. p. 145–67.
Siftung B. BTI 2008—Jordan country report. Guetersloh, Germany: Verlag Bertelsmann Stiftung; 2008.
Stevenson L. Private sector and enterprise development: fostering growth in the Middle East and North Africa. Cheltenham, UK: Edward Elgar and International Research Development Centre (IDRC); 2010.
Sutherland D, Araujo S, Egert B, Zuzluk T. Infrastructure Investment: Links to Growth and the Role of Public Policies. OECD Economic Department Working paper, No 686, March 2008.
Wade R. How can middle-income countries escape ‘gravity’ and catch-up with high income countries? The case for open economy industrial policy. Halduskultuur. 2008;9:12–29.
World Bank. Unlocking the employment potential in the Middle East and North Africa: towards a new social contract. MENA Development Report. Washington, DC: World Bank; 2004a.
World Bank. Jordan economic development in the 1990s and World Bank assistance. Ramashandran S. Washington, DC: World Bank; 2004b.
World Bank. Jordan country assistance strategy 2006–2010. Report 35665-JO. Washington, DC: World Bank; 2006.
World Bank. The road not travelled: education reform in the Middle East and North Africa. Washington, DC: The World Bank; 2008.
World Bank. Investment Climate Survey Online. 2006b. http://iresearch.worldbank.org/Investmentclimate/
World Bank. Jordan development policy review: a reforming state in a volatile region, social and economic development unit. Middle East and North Africa Region, World Bank Report No 24425-JO, November 5, Washington DC; 2002.
World Bank. Jordan public expenditure review. Country Operations Division, Country Department III, Europe Middle East and North Africa Region, Washington DC; 1991.
World Bank. Jordan: consolidating economic adjustment and establishing the base for sustainable growth, Volume I. Main Report, Report No 12645-JO, August. Washington DC; 1994.
I would like to thank my colleges in the project for their constructive comments on earlier versions of the paper.
About this article
Cite this article
Abugattas-Majluf, L. Jordan: Model Reformer Without Upgrading?. St Comp Int Dev 47, 231–253 (2012). https://doi.org/10.1007/s12116-012-9112-9
- Capabilities-based approach
- Structural transformation
- Social capabilities