1. Introduction Arab Spring BriefJordanian Economy Did the Arab Spring Benefit Economic Freedom in Jordan?Jordan & Rankings “Political reform is economic reform. For businesses to invest and expand with confidence, they need a predictable, level playing-field, transparency and accountability, the rule of law and a strong, stable foundation of Conclusions inclusive political life.” His Majesty King Abdullah II, World Economic Forum, October 2011 “Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it.” Amartya Sen Prepared By: Yusuf Mansur
2. Introduction Arab Spring Brief Brief Review of the Arab Spring in theJordanian Economy Arab WorldJordan & Rankings Conclusions
3. Introduction Tunisia • The events currently referred to as the “Arab Spring” were ignited when Mohammed Bouazizi self-immolated in dismay at the lack of economic freedom afforded him by the Arab Spring Brief bureaucracy. • Social networks such as Facebook and Twitter and satellite TV stations spreadJordanian Economy throughout the region the image of the man while burning; an image that ignited the fervor of Tunisians.Jordan & Rankings • Demonstrations against President Ben Ali erupted on December 18th, 2010 and lasted until he relinquished power on January 14th 2011. Conclusions
4. Introduction Egypt • The first demonstrations took place January 24th, 2011 beginning first with labor strikes Arab Spring Brief and acts of civil disobedience. • Egyptians expressed grievances about their lack of freedoms, tampered election results,Jordanian Economy police brutality, governmental corruption, and the lack of economic equity. • Under pressure from continued domestic unrest and international scrutiny, MubarakJordan & Rankings resigned as President on February 11 2011 and Egypt was to be governed by a military council until a legitimate government could be established. Conclusions • The call for democratic reform came with the election of President Mohammad Mursi in July, 2012, amidst controversy.
5. Introduction Libya • On February 16th, 2011, Libyan protestors clashed with police in Benghazi after a human rights activist was arrested. Libya plunged into a civil war . Arab Spring Brief • Gaddafi used his own extensive stockpile of weapons against the Libyan population leading to death tolls in the thousands.Jordanian Economy • By March 17th 2011, UN Security Council Resolution 1973 was passed creating a no-fly zone over Libya and 2 days later a coalition force of the French, UnitedJordan & Rankings Kingdom, and United States began a bombing campaign against pro-Gaddafi forces. Conclusions • By late August 2011, with international support, the rebel forces stormed Tripoli forcing Gadaffi to flee; however, rebel forces found him soon after, and on October 20th 2011, killed Gadaffi; Libya now has a new government.
6. Introduction Syria • Protests began on January 26th, 2011 when a police officer assaulted a man in old Arab Spring Brief Damascus. Massive resistance began March 6th 2011 when the Syrian security forces arrested 15 children for writing slogans against the Baathist regime.Jordanian Economy • Thousands of protestors took to the streets all over Syria and soon the regime began to wrest control over the protestors, arresting thousands of protestors. By July 31st, 2011, Syrian army tanks were being deployed against the armed Syrian opposition known asJordan & Rankings the Free Syrian Army (FSA). • Syria is in a civil war. It is believed that over 36,000 people have already been killed, Conclusions many more are injured, and hundreds of thousands are displaced or have become refugees—Jordan alone hosts close to 200,000 refugees. • The situation continues to look grave for Syrians as new developments take place daily.
7. Introduction Yemen • Ali Abdullah Saleh also faced a large scale popular uprising. As unrest was increasing in the Arab Spring Brief spring of 2011, the Gulf Cooperation Council drafted a plan for Saleh to cede power in exchange for immunity from any legal action.Jordanian Economy • On June 3rd 2011 Saleh was badly injured in an assassination attempt and shipped to Saudi Arabia for immediate medical attention while his vice president Abd al-Rab Mansur al-Hadi continued Saleh’s response against demonstrating Yemenis.Jordan & Rankings • After returning to Yemen in September 2011, Saleh signed the GCC initiative, due to international and domestic pressure (in November) which would transfer power to his vice- Conclusions president. • A presidential election was held on the February 21st, 2012, in which al-Hadi took 99.8% of the vote as the only running candidate. On February 27th 2012, Saleh officially transferred power to al-Hadi ending his 33 year reign over the country.
8. Introduction Bahrain • Bahrain was another country where the fervor of the Arab Spring made itself apparent among the populace. Protests began on February 14th, 2011 and were meant to achieve Arab Spring Brief greater political freedom while creating awareness about human rights violations. Protests were not originally intended to threaten the monarch until February 17th 2011 when a police raid killed four protestors. The next day army forces opened fire on protestors and theJordanian Economy demonstrators soon sought the end of the monarchy. • Saudi-led Gulf Cooperation Council (GCC) forces were sent to Bahrain to quell theJordan & Rankings protestors as numbers were reaching 100,000 at the Pearl Roundabout. By March 15th 2011 King Hamad bin Isa Al Khalifa issued a three month state of emergency and turned to the military to reassert control over the country. Conclusions • The state of emergency was lifted in June 2011; however, both protests and human rights violations continued. Although major demonstrations have ceased, the government refuses entry to international human rights groups or news organizations.
9. Oman Introduction • Peaceful demonstrations erupted on January 17th, 2011 in several Omani cities. They eventually stopped in May 2011. Government responded by changing a third of the cabinet, hiring 50,000 young unemployed Omanis, forming a constitutional committee, and Arab Spring Brief pledging to address unemployment and corruption. Saudi ArabiaJordanian Economy • Although several calls for protests were made, Saudi Arabia avoided mass protests mainly due to several government decisions made in response to regional and internal demands for reform. Swift royal decrees costing an estimated USD 130 billion were issued on FebruaryJordan & Rankings 18th, 2011 including: • Increase in pay in the public sector • A grant equaling two months salary for all civil, military and state employees Conclusions • Monthly salary disbursement for the unemployed • Two month salary bonus for all students in public education • Establishment of a minimum wage for the public sector • Increasing housing loans limit to US$ 130,000 • 500,000 new housing units across the country • 60,000 new positions created at the Ministry Of Interior
10. Introduction Kuwait • Although considered to be the most democratic out of the GCC countries, several protests in Kuwait called for an overthrow of the government and demanded the installation of a Arab Spring Brief constitutional monarchy. The government responded by disbursing a grant of US4 3,400 to every citizen as well as a food subsidy for all the families in Kuwait for one year. Despite theses efforts, the cabinet was forced to resign in November, 2011 and a new electionsJordanian Economy were held that led to a majority win for the opposition. QatarJordan & Rankings • Qatar is considered to have gained tremendously from the Arab Spring. Qatar became a regional political power in the last 2 years increasing its influence across the region through Conclusions the media and the country’s sovereign wealth . The Qatari Al-Jazeera news network was seen by many as the de facto network of the Arab Spring, taking the side of many revolutions occurring across the region. United Arab Emirates • The sole reforms demand came in a polite letter signed by 133 national figures, asking the President of the Union to expand the authorities of the appointed National Federal Council, which has moderate consultative attributions. The UAE benefited from the onset of the Arab Spring as the Emirates were viewed as safe havens for corporations and businessmen operating in the region. The Emirate of Dubai financial position improved tremendously after it was heavily affected by the International Financial Crisis of 2009.
11. Introduction Arab Spring Brief Jordan and the Arab SpringJordanian EconomyJordan & Rankings Conclusions
12. Introduction Timeline of Events Arab Spring BriefJordanian EconomyJordan & Rankings Conclusions
13. April 8th, 2012 Demonstrations by workers hit July 1st, 2012 a new record during the first In interview with Jordan TV, King Abdullah II highlighted the need for a “democratic culture that cherishes pluralism based Introduction quarter of this year amounting to 302 protests, which was a on diversity, dialogue and respect of others opinions”. He 28.5% increase over those reiterated that the reform process was very serious and recorded during the same irreversible, urging all political powers, including Islamists, to compete in the elections to render the effort a success. October 20h, period in 2011. Around 2012 Arab Spring Brief 180,000 Jordanian workers participated in these protests Sep 3rd, 2012 King In an interview Event June 15th, 2012 freezes the cabinet’s with Jordan TV’s which called for pay raises, Thousands of decision to raise “Sixty Minutes” changes to labor-related Jordanians rallied prices. 89 MPs program, Prime regulations, and new job against rising fuel Minister EnsourJordanian Economy opportunities. prices and delays in demand the ouster of Tarawneh’s states “top priority political reform. government. is to protect the June 1st, 2012 exchange rate of Friday protests across the local currency” various cities in Jordan were hinting at furtherJordan & Rankings caused by the increase in 95-octane gas and price increases. electricity prices. October Conclusions Government Action May 27th, 2012 April 26th, 2012 The government Awn Khasawneh unveils a “limited” submitted his electricity rate price resignation to increase as King Abdullah as compared to the he was heavily proposed 9% October criticized for the October 4th, increase across all 10th, 2012 slow pace of the 2012 sectors that had June 24th, 2012 Tarawneh government’s King been debated for June 13 , 2012 th In an interview cabinet work on reform The cabinet Abdullah the past two with Jordan TV’s resigns. legislations. announced an dissolves the months. “Sixty Minutes” Abdullah increase in the price parliament program, Prime Ensour April 29th, 2012 of 90-octane gasoline Minister Tarawneh appointed as Government implements a from JD 0.62 to JD stated that the prime 6% increase in public 0.70 per liter. government will minister of transit fares, which is a not tolerate any act Jordan result of higher fuel prices that would offend and improvements in the the King quality of transit service.
14. Introduction Arab Spring Brief The Jordanian EconomyJordanian EconomyJordan & Rankings Conclusions
15. Real GDP Introduction • Real GDP grew at an average annual rate of 6.65% between 2005 and 2011, reaching JD10.2 billion in 2011. Arab Spring Brief • The smallest growth rate occurred during 2010 in which the increase in GDP amounted to only 2.31%. The second smallest growth rate was 2.59%, recorded during 2011.Jordanian Economy • The GDP growth rates indicate, among other things the continued vulnerability of the economy to external shock and the inability of reforms in enhancing competitiveness.Jordan & Rankings Real GDP Growth Rate (%), 2005-2011 Conclusions The year 2010 and 2011 saw the lowest real GDP growth rates in the last 6 years; the growth however was higher with the onset of the Arab Spring than the previous year
16. Central Gov Debt • Increased by approximately JD 7.5 billion since 2005. Between 2005 and 2007, public Introduction debt rose slightly in absolute figures as government expanded spending. • During 2007-2008, a 55.7% increase in the gross domestic debt of the central Arab Spring Brief government, the figure constituted the greatest percentage increase throughout the time period. The debt increased by 23.15%, or approximately JD 1.3 billion, in 2009 to reach JD 7.086 billion; then further increased by 12.62%, JD 894 million, in 2010. TheJordanian Economy trend continued in 2011 as the debt rose by JD 2.016 billion (25.26%). Gross Domestic Debt of the Central Government (JD millions) and Growth Rate (%), 2005-2011Jordan & Rankings Conclusions The gross domestic debt has been growing before the Egyptian gas crisis and the Arab Spring. Total public debt now is JD15 billion
17. Budget Deficit Excluding Grants Introduction • During the 2005-2011 period, the Public Budget Deficit Without Grants more than doubled, increasing from JD978.1 millions to JD2602.9 million, or a total increase of JD 1624.8 Millions. Arab Spring Brief • Throughout the period, there has been a general increase in the Budget Deficit except during 2010, in which it decreased from JD1783.1 million to JD1446.9 million, or a decrease of JD372.2 million.Jordanian Economy Budget Deficit without Grants (JD million) and Growth Rate (%), 2005-2011Jordan & Rankings Conclusions The budget deficit has grown by 79.9% in 2011
18. Foreign Grants Introduction • During the years included in the 2005-2011 period, the value of foreign grants received by the government did not fall below JD 304.3 million. The average value of grants received annually for the same period was approximately JD545 million. Arab Spring Brief • The years with the highest values of received grants are 2008 and 2011, JD718.2 million and JD1215 million, respectivelyJordanian Economy • Foreign grants received in 2011 constitute 31.8% of the total value foreign grants during 2005-2011.Jordan & Rankings Foreign Grants, 2005-2011 Conclusions Between 2010-2011, the value of foreign grants more than tripled, as the value leapt from JD401.7 million in 2010 to JD1215 million in 2011
19. FDI Introduction • The net inflows of foreign direct investment (FDI) for the period of 2005-2011 amounted to a total of JD 12,290 million. The annual average of inflows of FDI equated to JD 1755.77 Arab Spring Brief million; though the average annual growth rate was -8.1%. • By 2010 FDI inflows had plummeted to JD 1,172 million, only to fall further in 2011 to JDJordanian Economy 1,043 million. It was during the 2009-2010 period that the lowest annual growth rate in FDI inflows was experienced, -31.59%, it was not to recover in 2011. • Interestingly, 2012 saw an increase in FDI, according to the Jordan Investment Board. TheJordan & Rankings increase may be due to the fact that Lebanon, Syria and Egypt, Jordan’s three primary competitors in the region for FDI inflows from the GCC countries have been subject to greater turmoil and instability. Conclusions FDI Inflows and Growth 2005-2011 In 2011, FDI reached their lowest level throughout the 2005-2011 period
20. • Jordan’s trade deficit was subject to fluctuations between 2005 and 2011, hovering Introduction between JD 3.556 and JD 5.895 billion. • The greatest rate of increase in the trade deficit, 48.48% occurred in 2005, while the trade Arab Spring Brief deficit reached its highest in value, JD 5.895 billion, in 2011. During the 2010-2011 period the trade deficit increased by over JD 1 billion, the only other period in which this increase was equaled or surpassed was during the 2004-2005 period.Jordanian Economy • Jordan continues to import far more than it exports, posing a significant problem to the nation’s economic reserves. Trade Balance, 2005-2011Jordan & Rankings Conclusions In 2011, Trade Deficit was at its biggest level throughout the 2005-2011 period
21. Introduction Foreign Reserves • Foreign reserves are currently at below US$7 billion; their lowest point since 2007. • The fall in the reserves was due to: Arab Spring Brief – The decrease in remittances of Jordanians working abroad (primarily in the Gulf) by 4.5% in the first nine months of 2011 relative to the same period of last year.Jordanian Economy Current remittances stand at JD 1.6 billion. In 2010, remittances reached JD 2.21 billion compared with JD 2.4 billion in 2009; – Income from tourism dropped in the first nine months of the year by 17.7% toJordan & Rankings reach JD 1.5 billion compared to JD 1.9 billion in the same period last year; – A drop in the inflow of FDI, which reached its lowest level in six years, to JD 561 million during the first half of the year compared to JD 656 million, a drop of 14.4% Conclusions 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Reserves (JD bn) 1.83 2.48 3.36 3.42 3.36 4.33 4.87 5.49 7.7 8.68 7.45 Coverage of Imports of 5.5 7.2 9.1 5.2 4.7 5.1 4.7 6.1 7.8 7.3 6.1 (months) The current size of reserves JD4.8 bn is not cause for alarm. The IMF had requested at the outset of its economic reform and restructuring programs that Jordan maintains reserves that are sufficient to cover 1.5 months of imports.
22. • The Consumer Price Index (CPI) increased by 38.84 from 94.125to 129.967 between Introduction 2005-2011. • The greatest increase occurred during 2007-2008. The second greatest increase occurred during the 2009-2010 period, this is followed by the increase experienced Arab Spring Brief during the 2010-2011 period. • The only period in which the consumer price index decreased was during 2008-2009.Jordanian Economy The decrease was due to a dramatic drop in oil prices that year. Consumer Price Index, 2005-2011Jordan & Rankings Conclusions In 2011, the CPI reached its biggest level throughout the 2005-2011 period
23. Remittances Introduction • 260,000 Jordanian expatriate workforce (10- 12% of the GDP). • Jordan experienced an overall increase in remittance receipts between 2005 and 2011. Arab Spring Brief Total value of remittances equalled JD 13836.1 million. • From 2008 forward, remittance receipts fluctuated with decreases in 2009 and 2011. Note that most recent figures regarding remittances show a rise in remittances by 1.9%.Jordanian Economy Remittance Receipts (JD Million), 2005-2011Jordan & Rankings Conclusions The greatest decrease in remittance receipts occurred in 2011, amounting to a decrease of JD 95.2 million, or 4.2%.
24. Poverty Introduction • The most recent studies on poverty in Jordan (2008), indicate that the poverty rate in Jordan reached 13.3%, and the absolute poverty line in Jordan (both food and non-food Arab Spring Brief poverty) was an annual income for an average family consisting of 5.7 members JD 3,876, or a monthly income of JD 323. The Abject Poverty Line for an average family was JD 138.7 per month.Jordanian Economy • There was a notable increase in Poverty Pockets, an area in which at least 25% residents live under the poverty line. The number of poverty pockets increased from 22 in 2006 to 32 in 2008. Between 2006-2008, 18 areas maintained the classification of being povertyJordan & Rankings pockets, while 4 were removed, and 14 new areas became classified as poverty pockets. Conclusions
25. Unemployment Introduction • Unemployment in Jordan may be described as chronic, hovering between a high of Arab Spring Brief 15.3% and a low of 12.3% over the last decade. • Jordan has severe case of Structural Unemployment, a disparity between the skills of workers seeking employment and the demand in the labor market, which is the mainJordanian Economy cause of Jordan’s persistently high unemployment rate. Unemployment Rate in Jordan (%), 2000-2012 Q2Jordan & Rankings Conclusions
26. Youth Unemployment Introduction • Suffer the highest unemployment rates • In 2008-2011, unemployment of the youth group aged 15-19 years hovered between a Arab Spring Brief low of 29.1% in Q3 2009 and a high of 37.9% in Q3 2010 and 2011. Unemployment rates of the youth group aged 20-24 years hovered between a high in Q3 2010 of 30% with the lowest rate of 23.2% occurring in Q2 2009.Jordanian Economy Quarterly Youth Unemployment Rate, Q1 2008 – Q3 2011Jordan & Rankings Conclusions The rates are considered extremely high by international standards and higher than the regional unemployment average for youth of 25%.
27. Introduction Arab Spring Brief Jordan In International RankingsJordanian EconomyJordan & Rankings Conclusions
28. • The Global Competitiveness Report (GCR) evaluates and reports the business operating Introduction environment and competitiveness in 142 countries, as of 2012. Rank Performance Arab Spring Brief Major Indicators 2009-2010 2010-2011 2011-2012 Difference 133 Countries 139 Countries 142 Countries Basic Requirement 46 57 61 -4 Institutions 25 41 45 -4Jordanian Economy Infrastructure 42 61 59 +2 Macroeconomic 105 103 97 +6 EnvironmentJordan & Rankings Health and Basic 57 65 72 -7 Education Efficiency Enhancers 66 73 78 -5 Higher Education 42 57 59 -2 Conclusions and Training Market Efficiency 43 46 54 -8 Labor Market 106 112 107 +5 Efficiency Financial Market 52 54 65 -11 Development Technological 61 62 59 +3 Readiness Market Size 82 84 88 -4 Innovation & Sophistication Factors 51 65 70 -5 Business Environment 49 66 68 -2 Development Innovation 59 68 77 -9 Jordan has experienced a drop of 6 places over the last year
29. Introduction • Regionally the GCR indicates that Jordan, Egypt, Algeria and Libya have each recorded significant drops in their rankings between 2009 and 2011. Arab Spring Brief • Qatar, Saudi Arabia, Oman, and Kuwait on the other hand have all risen in rank due to most of these nations being oil producing states.Jordanian Economy • Interestingly, when looking at the 2010 report compared to the 2011 report, countries like Egypt, Algeria, Libya, and Jordan, all countries confronting the Arab Spring, saw a drop in their ranking. Tunisia experienced a decrease in its 2009 to 2010 rank, howeverJordan & Rankings dropped in ranking between 2010 and 2011. Conclusions Global Competitiveness Rankings of Jordan and Regional Countries 2009-2012
30. • Ease of Doing Business: Jordan suffered a major drop in ranking in the Report, which Introduction examines various aspects of the business environment and its resulting affects on the performance of a firm. • In, Overall Ease of Doing Business, Jordan suffered a steady decline in ranking, from 73rd Arab Spring Brief place in 2005 to 111th in 2011. • Comparing the 2005 report to the 2011 report, Jordan has seen no change in the easeJordanian Economy of starting a business and has seen slight improvements in registering property and trading across borders. All other indicators however have showed a decline in ranking. The largest drop has been seen in the ability to enforce contracts.Jordan & Rankings Doing Business Report, 2005-2011 Conclusions Major Indicators 2005 2006 2007 2008 2009 2010 2011 Ease of Doing Business 73 74 78 80 101 100 111 Starting a Business 127 133 133 133 119 125 127 Dealing with Construction Permits 68 71 70 71 116 92 92 Employing Workers 30 45 30 45 48 51 N/A Registering Property 110 106 110 109 105 106 106 Getting Credit 76 80 83 84 125 127 128 Protecting Investors 114 105 118 107 114 119 120 Paying Taxes 16 19 18 19 22 26 29 Trading Across Borders 85 51 78 59 77 71 77 Enforcing Contracts 72 128 75 128 129 124 129 Closing a Business 79 84 84 87 96 96 98 Participating Countries 135 155 175 178 181 183 183
31. • In the Doing Business Report of 2011, Jordan is ranked 9th overall in a region of 14 Introduction countries. However, if you are to exclude all of the oil producing countries, Jordan is considered advanced in the region. Doing Business Report, 2011 Arab Spring Brief Countries Doing Business Ranks, 2011 Jordan 111 Oman 57Jordanian Economy Qatar 50 UAE 40 Bahrain 28Jordan & Rankings Saudi Arabia 11 Kuwait 74 Egypt 94 Conclusions Yemen 105 Syria 144 Lebanon 113 Iran 129 Algeria 136 Iraq 166
32. Introduction • Economic Freedom of the World Report: Jordan’s summary ranking has improved in 2010 from a severe drop in 2009 to reach 24. • Jordan’s size of government and regulation rankings have both continuously Arab Spring Brief improved since 2000. • Jordan’s legal system and property rights and sound money ranking saw the worst decline of all indicators.Jordanian Economy Economic Freedom of the World Report 2000-2010Jordan & Rankings 2000 2005 2009 2010 Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Conclusions Summary Rating (Rank) 7.40 (34) 7.61 (27) 7.14 (50) 7.61 (24) Area 1. Size of Government 6.08 (68) 6.85 (54) 4.90 (104) 7.56 (29) Area 2. Legal System and Property Rights 7.22 (38) 6.86 (42) 6.76 (41) 6.53 (49) Area 3. Sound Money 9.67 (7) 9.21 (37) 9.27 (36) 9.19 (44) Area 4. Freedom to Trade Internationally 7.22 (62) 7.76 (40) 7.66 (44) 7.61 (44) Area 5. Regulation 6.83 (44) 7.37 (26) 6.94 (54) 7.21 (37)
33. • Regionally Jordan ranked in the top 33% scoring 7th out of 21 countries. In regards to Introduction corruption rankings, Jordan ranked 50th globally and 5th out of 21 countries in the region. • In regards to overall freedom of the press, Jordan ranked 140th out of 196 countries and 5th out of 21 countries in the region. Arab Spring Brief • Finally, the index of most unstable countries Jordan received a score of 48.7 out of 100 (being the most unstable). Because many countries in the region are not scored Jordan is ranked 7th out of 14.Jordanian Economy Population, GDP per capita at PPP, Democracy, Corruption, Freedom of the Press Country Population Population GDP per capita, Democracy Corruption Freedom of Index of 100 = (Million) under 25 1000 at PPP the Press most unstableJordan & Rankings Algeria Bahrain 35.9 1.2 47.5% 43.9% 8.2 24 125 122 105 48 141 153 49.7 36.5 Djibouti 0.9 57.2% 2.3 126 91 159 NA Egypt 84.6 52.3% 5.9 138 98 130 65.7 Conclusions Iraq 31.4 60.6% 4 111 175 144 65.7 Jordan 6.4 54.3% 5.2 117 50 140 48.7 Kuwait 3.5 37.7% 40.6 114 54 115 21.7 Lebanon 4.3 42.7% 13.4 86 127 115 30.7 Libya 6.5 47.4% 18.7 158 146 192 71 Mauritania 3.4 59.3% 1.9 115 143 118 57.4 Morocco 32.4 47.7% 4.7 116 85 146 46.8 Oman 3.3 51.5% 23.3 143 41 153 58.4 Palestine 4.1 64.4% 2.9 93 NA 181 NA Qatar 1.7 33.8% 66.9 137 19 146 20.7 KSA 27.1 50.8% 22.9 160 50 178 52.5 Somalia 10.1 63.5% 0.6 NA 178 181 NA Sudan 43.2 59% 2.3 151 172 165 NA Syria 22.5 55.3% 4.7 152 127 178 67.3 Tunisia 10.4 42.1% 8.6 144 59 186 49.4 UAE 6.7 31% 27.2 148 28 153 24.3 Yemen 24.3 65.4% 2.9 146 146 173 86.6 Economist Intelligence Unit “Democracy Index”; Transparency International’s Corruption Perceptions Index; Freedom House’s Freedom of the Press; The Economist
34. Development Challenges Introduction 1. Size: Jordan’s development in hindered by both its geographical and population size. The total land area of Jordan is only 89,300 km, and has a population of just over 6 Arab Spring Brief million. This small population makes Jordan a relatively small market for local producers to operate in.Jordanian Economy 2. Location: Jordan’s geographical location has proved a hindrance to its development. There is only access to one port, Aqaba, and is situated in the center of an unstable region. There are currently a number of wars or recurring conflicts in a number ofJordan & Rankings countries sharing borders with Jordan, Iraq, the West Bank, and Syria. These conflicts have led to difficulties in exporting or importing to and from these countries. Conclusions 3. Resources: Jordan is not well suited for agriculture as it has an arid climate and only 7.8% of the total land area is arable, mostly concentrated in the Jordan Valley. Though the Government is looking into extracting shale oil and the harnessing of nuclear power, these sources of energy are far from completion. Jordan imports 97% of energy needs and 86% of all food. This reliance on imports for fuel and food has rendered Jordan susceptible to rising energy costs and commodity price fluctuations. This was especially harmful during the Global Financial Crisis as the US dollar plummeted, and the JD with it, forcing the purchasing power of the JD to fall and prices to rise considerably.
35. 4. Population Growth: Jordan’s high rate of population growth has two main sources: the Introduction influx of refugees, from Iraq and now Syria, and high birthrates. High birthrates has led to 69% of the total population to be aged 30 or less. With such a large portion of the population being aged 30 or younger, a great amount of strain has been put on the Arab Spring Brief education system and has placed pressure on the Kingdom to create more jobs.Jordanian Economy 5. Urbanization: As of 2008, Amman, Zarqa, and Irbid contained 71.4% of the total population of Jordan. This has put significant pressure on employment and housing, as well as over-burdening urban area and the systems contained within them such as theJordan & Rankings educational system, health system, and water and sanitary systems. Conclusions 6. Income Distribution: The Gini coefficient is usually used as a measure of the inequality of the distribution of income. A coefficient value of zero shows perfect equality where everyone in the population measured has an equal share of income and a value of one conveys maximum inequality, one person has all the income. Nations watch for the slightest change in the Gini, which usually indicate large or significant changes in equality. In 2002-2003, after the Government altered the income tax law and raised the sales tax rate twice and expanded its coverage, the Gini Coefficient became 38.8; in other words, income inequality increased. In 2007, income inequality rose again to 39.7. Note that the world’s best economy in terms of income equality is Sweden at 23.
36. Introduction 7. Geographical Disparity in Income: According to DOS, there is great disparity in average income among the governorates in Jordan. As of 2008, there was a 68% difference between the highest figures, Amman with an average annual income per person of JD Arab Spring Brief 1,682, and the lowest figure, Tafieleh with an average annual income per person of JD 1,078. The rates of average income per person explain the urbanization Jordan is experiencing, as Jordan, Irbid, and Zarqa are the heaviest populated governorates asJordanian Economy well as having the highest average annual income per person. 8. Corruption: In recent years, Jordan has taken significant strides in fighting corruption. InJordan & Rankings 2010, Jordan ranked 50th out 180 countries on Transparency International’s Corruption Index; an improvement from 53rd in 2007. The improvement is attributed to the Conclusions formation of the Anti-Corruption Committee in 2009. 9. Dependence on Foreign Grants and Aid: Since the 1950’s, Jordan has supported its budget and development programs through foreign aid. Most of the aid received by Jordan originated from Western countries as well as oil rich GCC members. Between 2003-2011, Jordan received approximately JD 5.6 billion in foreign aid. In 2011, Jordan received JD 1.215 billion in foreign grants, constituting approximately 6% of the GDP that year. Though foreign aid is high, the ineffective use of Aid Funds has limited effect they have had on the country. This is mainly due to a lack of coordination and not properly sharing the lessons learnt among other institutions.
37. Introduction 9. Taxes: Regressive taxes, such as a 16% sales tax, have greatly affected Jordan’s poor. The sales tax affects the most those who spend the largest portion of their income, this means that the tax is felt by those with lower salaries the most. Arab Spring Brief 10. Low Food Security: Only 30% of the arable land in Jordan is cultivated, meaning that food security is low, making Jordan especially vulnerable to fluctuations in commodityJordanian Economy prices.Jordan & Rankings 11. Water Limitations: Jordans water balance in 2010 was -692 MCM/year; the annual supply of 550 MCM does not meet the annual demand of 1,242 MCM. The demand gap is set to increase to -1,368 MCM by 2040. Jordan has 10 primary reservoirs holding 110 Conclusions million cubic meters of water (roughly one third full), but the country requires a minimum of 140 million cubic meters during the summer months. Jordan obtains most of its water from rainfall during the winter months. Rapid increases in population and industrial development have placed unprecedented demands on water resources.
38. Conclusions Introduction • Though the Jordanian economy was in poor shape prior to the Arab Spring, much due Arab Spring Brief to the effects of Global Financial Crisis and pro-cyclical policies, the negative effects of the Arab Spring on the economy are somewhat apparent. Yet they arose not from instability but more from an ad hoc approach to dealing with the spillover effects.Jordanian Economy • Consequently, many of the problems contributing to an already ailing economy were shown to have been exacerbated but not caused by the Arab Spring. The effects ofJordan & Rankings the Arab Spring on economic freedom in Jordan were relatively unsubstantial; as shown by the economic figures and international reports and rankings. Conclusions • The Kingdom maintained its emphasis on removing subsidies and decreased government spending. However, the decrease in spending affected more capital expenditures than current expenditures, which had grown to crowd-out spending on improving the economic infrastructure. • Increases in foreign grants after the Arab Spring will most likely ease the burden (budget deficit and public debt) of government in the short run. However, political reforms are warranted for dealing with structural deficits and its manifestations, high unemployment and poverty rates. Without decreasing the government workforce and bureaucracy, the economic malaise should persist into the medium and long run.