Jordan: Encyclopedia II - Jordan - Economy

Jordan - Economy

Jordan is a small country with limited natural resources. The country is currently exploring ways to expand its limited water supply and use its existing water resources more efficiently, including through regional cooperation. Jordan also depends on external sources for the majority of its energy requirements. During the 1990s, its crude petroleum needs were met through imports from Iraq and neighboring countries. Since early 2003, oil has been provided by some Gulf Cooperation Council member countries. In addition, a natural gas pipeline from Egypt to the southern port city of Aqaba was completed in 2003. The government plans to extend this pipeline north to the Amman area and beyond. Since 2000, exports of light manufactured products, principally textiles and garments manufactured in the Qualifying Industrial Zones (QIZ) that enter the United States tariff and quota free, have been driving economic growth. Jordan exported €5.6 million ($6.9 million) in goods to the U.S. in 1997, when two-way trade was €321 million ($395 million); it exported €538 million ($661 million) in 2002 with two-way trade at €855 million ($1.05 billion). Similar growth in exports to the United States under the bilateral Free Trade Agreement that went into effect in December 2001, to the European Union under the bilateral Association Agreement, and to countries in the region, holds considerable promise for diversifying Jordan's economy away from its traditional reliance on exports of phosphates and potash, overseas remittances, and foreign aid. The government has emphasized the information technology (IT) and tourism sectors as other promising growth sectors. The low tax and low regulation Aqaba Special Economic Zone (ASEZ) is considered a model of a government-provided framework for private sector-led economic growth.

The Free Trade Agreement (FTA) with the United States that went into effect in December 2001 will phase out duties on nearly all goods and services by 2010. The agreement also provides for more open markets in communications, construction, finance, health, transportation, and services, as well as strict application of international standards for the protection of intellectual property. In 1996, Jordan and the United States signed a civil aviation agreement that provides for "open skies" between the two countries, and a U.S.-Jordan treaty for the protection and encouragement of bilateral investment entered into force in 2003. Jordan has been a member of the World Trade Organization since 2000. More information on the FTA is available on [1].

Jordan is classified by the World Bank as a "lower middle income country." The per capita GDP was approximately $1,817 (€1,479) for 2003 and 14.5% of the economically active population, on average, was unemployed in 2003. Education and literacy rates and measures of social well-being are relatively high compared to other countries with similar incomes. Jordan's population growth rate is high, but has declined in recent years, to approximately 2.8% currently. One of the most important factors in the government’s efforts to improve the well-being of its citizens is the macroeconomic stability that has been achieved since the 1990s. Rates of price inflation are low, at 2.3% in 2003, and the currency has been stable with an exchange rate fixed to the U.S. dollar since 1995.

While pursuing economic reform and increased trade, Jordan's economy will continue to be vulnerable to external shocks and regional unrest. Without calm in the region, economic growth seems destined to stay below its potential.

Adapted from the Wikipedia article "Economy", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki