Jordan Travel Guide

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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. The country 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, the Arab 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 that enter the United States tariff and quota free, had been driving economic growth in the first years of strong economic growth achieved at the turn of the millenium. Jordan exported €5.6 million in goods to the U.S. in 1997, when two-way trade was €321 million; it exported €538 million in 2002 with two-way trade at €855 million. Similar growth in exports to the United States under the bilateral US-Jordan 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 and tourism sectors as other promising growth sectors. The low tax and low regulation Aqaba Special Economic Zone is considered a model of a government-provided framework for private sector-led economic growth.

Since King Abdullah II's accession to the throne in 1999, liberal economic policies have been introduced which has resulted in a boom lasting for a decade continuing even through 2009. Jordan is now one of the freest and most competitive economies in the Middle East scoring higher than the United Arab Emirates and Lebanon in the 2009 Heritage Foundation Index. Jordan's developed and modern banking sector is becoming the investment destination of choice due to its conservative bank policies that helped Jordan escape the worst of the global financial crisis of 2009. With instability across the region in Iraq and Lebanon, Jordan is emerging as the "business capital of the Levant" and the "the next Beirut". Jordan's economy has been growing at an annual rate of 7% for a decade. Jordan's economy is undergoing a major shift from an aid-dependent, rentier economy to one of the most robust, open and competitive economies in the region. In recent years, there has been shift to knowledge-intensive industries, i.e ICT, and a rapidly growing trade sector benefiting from regional instability.

Jordan has more free trade agreements than any other Arab country. Jordan has FTA's with the United States, Canada, Singapore, Malaysia, the European Union, Tunisia, Algeria, Libya, Iraq, and Syria. More FTA's are planned with the Palestinian Authority, the GCC, Lebanon, Turkey, and Pakistan. Jordan is a member of the Greater Arab Free Trade Agreement, the Euro-Mediterranean free trade agreement, and the Agadir Agreement. Increased investment and exports are the main sources of Jordan's growth. Continued close integration into the European Union and GCC markets will reap vast economic rewards for the Kingdom in the coming years.

The main obstacles to Jordan's economy is scarce water supplies, complete reliance on oil imports for energy, and regional instability.

Rapid privatization of previously state-controlled industries and liberalization of the economy is spurring unprecedented growth in Jordan's urban centers like Amman and especially Aqaba. Jordan has six special economic zones that attract significant amount of investment amounting in the billions: Aqaba, Mafraq, Ma'an, Ajloun, the Dead Sea, and Irbid. Jordan also has a plethora of industrial zones producing goods in the textile, aerospace, defense, ICT, pharmaceutical, and cosmetic sectors.

King Abdullah has repeatedly emphasised that Jordan has a bright future and that it compares favourably with much of the region on key social and economic indicators. According to JIB (Jordan Investment Board)officials, Jordan receives twice the level of per capita foreign investment than its larger neighbour Egypt does. Even though inflation pushed its way up to the 13% mark in the first half of 2008, the shocks to the system are far less than in Egypt where inflation crept up to around 23%. Jordan’s economy has come under some pressure in 2007 and perhaps more so in 2008, primarily from global increases in oil and food prices that have affected the government budget and the current account balance. While Jordan is facing enormous economic pressures, it is managing to sustain good levels of GDP growth and foreign investment.

There are a number of sectors that have performed well in 2007, including minerals, pharmaceuticals and tourism. Light industry has to face stronger competition and rising energy costs. For the construction materials sector, Chinese goods benefiting from low labour costs and Persian Gulf products capitalising on low energy costs could make life difficult for many local producers of light industrial goods. However, Jordan’s free trade agreements, investment incentives and low transport costs for shipping to major markets are still drawing producers to the country. Steel and cement producers are not expected to face the same challenges as light industry and cement production is due to rise, with two additional plants under construction and likely to provide further export income. The government is also pushing ahead with the establishment of economic zones to attract new industry and services to less developed areas of the country where problems of unemployment and poverty are particularly acute. Persian Gulf economic growth should ensure more job opportunities for Jordanians in the Persian Gulf and help to support living standards for many Jordanian families.

However, its domestic developments will be the key to improving conditions. The government will push ahead with major projects such as the housing initiative, the economic zones, and attracting knowledge-intensive investments that require high-skilled labour and vocational programmes in the hope of creating more jobs and helping to counteract the impact of higher living costs, while at the same time hoping that global developments do not make its job even harder.

The Free Trade Agreement 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.

Many Iraqi and Palestinian businesses maintain important offices in Jordan. Due to the instability in these two regions, many Iraqis and Palestinians work out of Jordan. With Jordan becoming known as the gateway to Iraq and the Palestinian territories and for its free trade policies, Amman and the Kingdom of Jordan as a whole has the potential to monopolize business and trade in the Levant.

In the 2000 Competitive Industrial Performance Index, Jordan ranked as the third most industrialized economy in the Middle East and North Africa, behind Turkey and Kuwait. Jordan was in the upper bracket of nations scored by the CIP index.

In the 2009 Global Trade Enabling Report, Jordan ranked 4th in the Arab World behind the UAE, Bahrain, and Qatar. The report analyzes the country's market access, the country's transport and communications infrastructure, border administration, and the business environment of the country Textile and clothing exports from Jordan to the United States shot up 2,000 percent from 2000 to 2005, following introduction of the FTA. According to the National Labor Committee, a U.S.-based NGO, Jordan has experienced sharp increases in sweatshop conditions in its export-oriented manufacturing sector.

The proportion of skilled workers in Jordan is among the highest in the region. The services sector dominates the Jordanian economy. Tourism is a rapidly growing industry in Jordan with revenues over one billion. Industries such as pharmaceuticals are emerging as very profitable products in Jordan. The Real Estate economy and construction sectors continue to flourish with mass amounts of investments pouring in from the Persian Gulf and Europe. Foreign Direct Investment is in the billions. The stock market capitalization of Jordan is worth nearly $40 billion.

Jordan is classified by the World Bank as a "lower middle income country." The per-capita GDP was approximately USD $5,100 for 2007 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 very 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. However, unemployment rates remain high, with the official figure standing at 12.5%, and the unofficial around 30%. 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.

By 2003 onwards following the invasion and occupation of Iraq, Jordan lost its vital oil grants provided by the regime of Saddam Hussein. This, combined with soaring world oil prices resulted in an acceleration of inflation and further pressures a gradual undermining of real income. So far the government of Jordan has not found means to reduce dependence on oil.

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 potential. On the positive side, however, there is huge potential in the solar energy falling on Jordan's deserts, not only for the generation of pollution-free electricity but also for such spin-offs as desalination of sea water.

Jordan is pinning its hopes on tourism, future uranium and oil shale exports, trade, and ICT for future economic growth.

Travel Quotes:

We travel, some of us forever, to seek other states, other lives, other souls. Anais Nin

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Jordan Travel Informations and Jordan Travel Guide
Jordan History: Modern Jordan
Jordan Geography - Jordan Climate - Jordan Administrative Divisions
Jordan Demographics - Jordan Ethnic Groups - Jordan Religion - Jordan Language - Jordan Immigration
Jordan Politics: Jordan Constitution - Jordan Legal System & Legislation
Kings Jordan & Political events
- Jordan Parliament: Term - Jordan Political Parties - Jordan Human Rights
Jordan Economy: Brain Drain and Brain Gain - Jordan Natural Resources: Natural gas - Oil shale - Phosphate - Uranium
Jordan Transportation - Jordan Currency & Exchange Rates - Jordan Tourism: Nature Reserves
Influence of the Southwest Asian conflict - Jordan Foreign Relations - Jordan Military: Army - Navy - Air Force
Peacekeeping Abroad - Jordan Defense Industry - Jordan Police - Jordan Culture - Jordan Health
Jordan Language - Jordan Quality of liife - Jordan Globalization
Jordan Education: Jordan School Education - Jordan Higher Education

Jordan Tourist Attractions: Amman - Agaba - Ajloun - Azrak Wetland Reserve - Baptism Site - Beida - Dana Nature Reserve
Dead Sea
- Desert Castle - Jerash - Kerak - Madaba - Ma'in - Al Mujib Nature Reserve - Mukawer - Mount Nebo - Pella
Petra - Shaumari Wildlife Reserve - Shobak - Um El Jimal - Um Qais - Um Rassas - Wadi Rum

Arab Cuisines, Arabic Names, Baghdad, Bahrain, Camels, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman
Palestine, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, Yemen

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