Introduction

Arab Spring Brief

Jordanian Economy

Jordan & Rankings

Conclusions

Did the Arab Spring Benefit Economic Freedom in Jordan?

“Political reform is economic reform. For businesses to invest and expandwith confidence, they need a predictable, level playing-field, transparencyand accountability, the rule of law and a strong, stable foundation ofinclusive political life.”

His Majesty King Abdullah II, World Economic Forum, October 2011

Prepared By: Yusuf Mansur

“Human development, as an approach, is concerned with what I take to bethe basic development idea: namely, advancing the richness of human life,rather than the richness of the economy in which human beings live, whichis only a part of it.”

Amartya Sen

Introduction

Arab Spring Brief

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Conclusions

Brief Review of the Arab Spring in the Arab World

Introduction

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Conclusions

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 thebureaucracy.

• Social networks such as Facebook and Twitter and satellite TV stations spreadthroughout the region the image of the man while burning; an image that ignited thefervor of Tunisians.

• Demonstrations against President Ben Ali erupted on December 18th, 2010 and lasteduntil he relinquished power on January 14th 2011.

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Egypt

• The first demonstrations took place January 24th, 2011 beginning first with labor strikesand acts of civil disobedience.

• Egyptians expressed grievances about their lack of freedoms, tampered election results,police brutality, governmental corruption, and the lack of economic equity.

• Under pressure from continued domestic unrest and international scrutiny, Mubarakresigned as President on February 11 2011 and Egypt was to be governed by a militarycouncil until a legitimate government could be established.

• The call for democratic reform came with the election of President Mohammad Mursi inJuly, 2012, amidst controversy.

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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 .

• Gaddafi used his own extensive stockpile of weapons against the Libyan population leading to death tolls in the thousands.

• 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, United Kingdom, and United States began a bombing campaign against pro-Gaddafi forces.

• 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.

Introduction

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Conclusions

Syria

• Protests began on January 26th, 2011 when a police officer assaulted a man in old Damascus. Massive resistance began March 6th 2011 when the Syrian security forces arrested 15 children for writing slogans against the Baathist regime.

• 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 as the Free Syrian Army (FSA).

• Syria is in a civil war. It is believed that over 36,000 people have already been killed, 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.

Introduction

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Conclusions

Yemen

• Ali Abdullah Saleh also faced a large scale popular uprising. As unrest was increasing in the spring of 2011, the Gulf Cooperation Council drafted a plan for Saleh to cede power in exchange for immunity from any legal action.

• 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-Hadicontinued Saleh’s response against demonstrating Yemenis.

• 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-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.

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Conclusions

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 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 the demonstrators soon sought the end of the monarchy.

• Saudi-led Gulf Cooperation Council (GCC) forces were sent to Bahrain to quell the 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.

• 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.

Introduction

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Conclusions

Oman• 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, andpledging to address unemployment and corruption.

Saudi Arabia• 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 February 18th, 2011 including:

• Increase in pay in the public sector• A grant equaling two months salary for all civil, military and state employees• 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

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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 aconstitutional monarchy. The government responded by disbursing a grant of US4 3,400 toevery citizen as well as a food subsidy for all the families in Kuwait for one year. Despitetheses efforts, the cabinet was forced to resign in November, 2011 and a new elections wereheld that led to a majority win for the opposition.

Qatar• 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 throughthe media and the country’s sovereign wealth . The Qatari Al-Jazeera news network wasseen by many as the de facto network of the Arab Spring, taking the side of manyrevolutions 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 theArab Spring as the Emirates were viewed as safe havens for corporations and businessmenoperating in the region. The Emirate of Dubai financial position improved tremendously afterit was heavily affected by the International Financial Crisis of 2009.

Introduction

Arab Spring Brief

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Conclusions

Jordan and the Arab Spring

Introduction

Arab Spring Brief

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Conclusions

Timeline of Events

Introduction

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October 20h, 2012In an interview with Jordan TV’s “Sixty Minutes” program, Prime Minister Ensourstates “top priority is to protect the exchange rate of the local currency” hinting at further price increases.

Even

tG

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April 8th, 2012Demonstrations by workers hit a new record during the first quarter of this year amounting to 302 protests, which was a 28.5% increase over those recorded during the same period in 2011. Around 180,000 Jordanian workers participated in these protests which called for pay raises, changes to labor-related regulations, and new job opportunities.

April 26th, 2012Awn Khasawneh submitted his resignation to King Abdullah as he was heavily criticized for the slow pace of the government’s work on reform legislations.

April 29th, 2012Government implements a 6% increase in public transit fares, which is a result of higher fuel prices and improvements in the quality of transit service.

May 27th, 2012The government unveils a “limited” electricity rate price increase as compared to the proposed 9% increase across all sectors that had been debated for the past two months.

June 1st, 2012Friday protests across various cities in Jordan were caused by the increase in 95-octane gas and electricity prices.

June 13th, 2012The cabinet announced an increase in the price of 90-octane gasoline from JD 0.62 to JD 0.70 per liter.

June 15th, 2012Thousands of Jordanians rallied against rising fuel prices and delays in political reform.

June 24th, 2012In an interview with Jordan TV’s “Sixty Minutes” program, Prime Minister Tarawnehstated that the government will not tolerate any act that would offend the King

October

July 1st, 2012In interview with Jordan TV, King Abdullah II highlighted the need for a “democratic culture that cherishes pluralism based on diversity, dialogue and respect of others opinions”. He reiterated that the reform process was very serious and irreversible, urging all political powers, including Islamists, to compete in the elections to render the effort a success.

October 10th, 2012Tarawnehcabinet resigns. Abdullah Ensourappointed as prime minister of Jordan

Sep 3rd, 2012 King freezes the cabinet’s decision to raise prices. 89 MPs demand the ouster of Tarawneh’sgovernment.

October 4th, 2012King Abdullah dissolves the parliament

Introduction

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Conclusions

The Jordanian Economy

Introduction

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Conclusions

Real GDP

• Real GDP grew at an average annual rate of 6.65% between 2005 and 2011, reachingJD10.2 billion in 2011.

• The smallest growth rate occurred during 2010 in which the increase in GDP amounted toonly 2.31%. The second smallest growth rate was 2.59%, recorded during 2011.

• The GDP growth rates indicate, among other things the continued vulnerability of theeconomy to external shock and the inability of reforms in enhancing competitiveness.

Real GDP Growth Rate (%), 2005-2011

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

Introduction

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Conclusions

Central Gov Debt

• Increased by approximately JD 7.5 billion since 2005. Between 2005 and 2007, publicdebt rose slightly in absolute figures as government expanded spending.

• During 2007-2008, a 55.7% increase in the gross domestic debt of the centralgovernment, the figure constituted the greatest percentage increase throughout thetime period. The debt increased by 23.15%, or approximately JD 1.3 billion, in 2009 toreach JD 7.086 billion; then further increased by 12.62%, JD 894 million, in 2010. Thetrend 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 (%), 2005-2011

The gross domestic debt has been growing before the Egyptian gas crisis and the Arab

Spring. Total public debt now is JD15 billion

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Budget Deficit Excluding Grants

• During the 2005-2011 period, the Public Budget Deficit Without Grants more thandoubled, increasing from JD978.1 millions to JD2602.9 million, or a total increase of JD1624.8 Millions.

• Throughout the period, there has been a general increase in the Budget Deficit exceptduring 2010, in which it decreased from JD1783.1 million to JD1446.9 million, or adecrease of JD372.2 million.

Budget Deficit without Grants (JD million) and Growth Rate (%), 2005-2011

The budget deficit has grown by 79.9% in 2011

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Foreign Grants

• During the years included in the 2005-2011 period, the value of foreign grants receivedby the government did not fall below JD 304.3 million. The average value of grantsreceived annually for the same period was approximately JD545 million.

• The years with the highest values of received grants are 2008 and 2011, JD718.2 millionand JD1215 million, respectively

• Foreign grants received in 2011 constitute 31.8% of the total value foreign grants during2005-2011.

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

Foreign Grants, 2005-2011

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FDI

• The net inflows of foreign direct investment (FDI) for the period of 2005-2011 amounted toa total of JD 12,290 million. The annual average of inflows of FDI equated to JD 1755.77million; 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 JD1,043 million. It was during the 2009-2010 period that the lowest annual growth rate in FDIinflows was experienced, -31.59%, it was not to recover in 2011.

• Interestingly, 2012 saw an increase in FDI, according to the Jordan Investment Board. The 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.

FDI Inflows and Growth 2005-2011

In 2011, FDI reached their lowest level throughout the 2005-2011 period

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Conclusions

• Jordan’s trade deficit was subject to fluctuations between 2005 and 2011, hoveringbetween JD 3.556 and JD 5.895 billion.

• The greatest rate of increase in the trade deficit, 48.48% occurred in 2005, while the tradedeficit reached its highest in value, JD 5.895 billion, in 2011. During the 2010-2011 periodthe trade deficit increased by over JD 1 billion, the only other period in which this increasewas equaled or surpassed was during the 2004-2005 period.

• Jordan continues to import far more than it exports, posing a significant problem to thenation’s economic reserves.

Trade Balance, 2005-2011

In 2011, Trade Deficit was at its biggest level throughout the 2005-2011 period

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Conclusions

Foreign Reserves• Foreign reserves are currently at below US$7 billion; their lowest point since 2007.

• The fall in the reserves was due to:

– 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. 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% to 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%

The current size of reserves JD4.8 bn is not cause for alarm. The IMF had requested at theoutset of its economic reform and restructuring programs that Jordan maintains reservesthat are sufficient to cover 1.5 months of imports.

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

(months)

5.5 7.2 9.1 5.2 4.7 5.1 4.7 6.1 7.8 7.3 6.1

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• The Consumer Price Index (CPI) increased by 38.84 from 94.125to 129.967 between2005-2011.

• The greatest increase occurred during 2007-2008. The second greatest increaseoccurred during the 2009-2010 period, this is followed by the increase experiencedduring the 2010-2011 period.

• The only period in which the consumer price index decreased was during 2008-2009.The decrease was due to a dramatic drop in oil prices that year.

Consumer Price Index, 2005-2011

In 2011, the CPI reached its biggest level throughout the 2005-2011 period

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Remittances

• 260,000 Jordanian expatriate workforce (10- 12% of the GDP).

• Jordan experienced an overall increase in remittance receipts between 2005 and 2011.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%.

Remittance Receipts (JD Million), 2005-2011

The greatest decrease in remittance receipts occurred in 2011, amounting to a decrease of JD 95.2 million, or 4.2%.

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Poverty• 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 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.

• 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 poverty pockets, while 4 were removed, and 14 new areas became classified as poverty pockets.

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Unemployment

• Unemployment in Jordan may be described as chronic, hovering between a high of15.3% and a low of 12.3% over the last decade.

• Jordan has severe case of Structural Unemployment, a disparity between the skills ofworkers seeking employment and the demand in the labor market, which is the maincause of Jordan’s persistently high unemployment rate.

Unemployment Rate in Jordan (%), 2000-2012 Q2

13.714.7

15.314.5 14.7 14.8

13.913.1 12.7 12.9

12.312.9

11.4 11.6

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2012 Q2

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Youth Unemployment

• Suffer the highest unemployment rates

• In 2008-2011, unemployment of the youth group aged 15-19 years hovered between a 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.

Quarterly Youth Unemployment Rate, Q1 2008 – Q3 2011

The rates are considered extremely high by international standards and higher than theregional unemployment average for youth of 25%.

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Jordan In International Rankings

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• The Global Competitiveness Report (GCR) evaluates and reports the business operatingenvironment and competitiveness in 142 countries, as of 2012.

Major Indicators

RankPerformance

Difference2009-2010 2010-2011 2011-2012

133 Countries 139 Countries 142 Countries

Basic Requirement 46 57 61 -4

Institutions 25 41 45 -4

Infrastructure 42 61 59 +2

Macroeconomic

Environment105 103 97 +6

Health and Basic

Education57 65 72 -7

Efficiency Enhancers 66 73 78 -5

Higher Education

and Training42 57 59 -2

Market Efficiency 43 46 54 -8

Labor Market

Efficiency106 112 107 +5

Financial Market

Development52 54 65 -11

Technological

Readiness61 62 59 +3

Market Size 82 84 88 -4

Innovation & Sophistication Factors 51 65 70 -5

Business

Environment

Development

49 66 68 -2

Innovation 59 68 77 -9

Jordan has experienced a drop of 6 places over the last year

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Conclusions

• Regionally the GCR indicates that Jordan, Egypt, Algeria and Libya have each recorded significant drops in their rankings between 2009 and 2011.

• 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.

• 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, however dropped in ranking between 2010 and 2011.

Global Competitiveness Rankings of Jordan and Regional Countries 2009-2012

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Conclusions

• Ease of Doing Business: Jordan suffered a major drop in ranking in the Report, whichexamines various aspects of the business environment and its resulting affects on theperformance of a firm.

• In, Overall Ease of Doing Business, Jordan suffered a steady decline in ranking, from 73rd

place in 2005 to 111th in 2011.

• Comparing the 2005 report to the 2011 report, Jordan has seen no change in the easeof starting a business and has seen slight improvements in registering property andtrading across borders. All other indicators however have showed a decline in ranking.The largest drop has been seen in the ability to enforce contracts.

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

Doing Business Report, 2005-2011

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Conclusions

• In the Doing Business Report of 2011, Jordan is ranked 9th overall in a region of 14countries. However, if you are to exclude all of the oil producing countries, Jordan isconsidered advanced in the region.

Countries Doing Business Ranks, 2011Jordan 111

Oman 57

Qatar 50

UAE 40

Bahrain 28

Saudi Arabia 11

Kuwait 74

Egypt 94

Yemen 105

Syria 144

Lebanon 113

Iran 129

Algeria 136

Iraq 166

Doing Business Report, 2011

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2000 2005 2009 2010

Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank)

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)

• 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 improved since 2000.

• Jordan’s legal system and property rights and sound money ranking saw the worst decline of all indicators.

Economic Freedom of the World Report 2000-2010

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Country Population(Million)

Population under 25

GDP per capita, 1000 at PPP

Democracy Corruption Freedom of the Press

Index of 100 = most unstable

Algeria 35.9 47.5% 8.2 125 105 141 49.7Bahrain 1.2 43.9% 24 122 48 153 36.5Djibouti 0.9 57.2% 2.3 126 91 159 NAEgypt 84.6 52.3% 5.9 138 98 130 65.7Iraq 31.4 60.6% 4 111 175 144 65.7Jordan 6.4 54.3% 5.2 117 50 140 48.7Kuwait 3.5 37.7% 40.6 114 54 115 21.7Lebanon 4.3 42.7% 13.4 86 127 115 30.7Libya 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 46.8Oman 3.3 51.5% 23.3 143 41 153 58.4Palestine 4.1 64.4% 2.9 93 NA 181 NA Qatar 1.7 33.8% 66.9 137 19 146 20.7KSA 27.1 50.8% 22.9 160 50 178 52.5Somalia 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 67.3Tunisia 10.4 42.1% 8.6 144 59 186 49.4UAE 6.7 31% 27.2 148 28 153 24.3Yemen 24.3 65.4% 2.9 146 146 173 86.6

• Regionally Jordan ranked in the top 33% scoring 7th out of 21 countries. In regards tocorruption 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.• 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 isranked 7th out of 14.

Population, GDP per capita at PPP, Democracy, Corruption, Freedom of the Press

Economist Intelligence Unit “Democracy Index”; Transparency International’s Corruption Perceptions Index; Freedom House’s Freedom of the Press; The Economist

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Development Challenges1. 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 million. This small population makes Jordan a relatively small market for local producers to operate in.

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 of 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.

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.

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4. Population Growth: Jordan’s high rate of population growth has two main sources: the 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 education system and has placed pressure on the Kingdom to create more jobs.

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 the educational system, health system, and water and sanitary systems.

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.

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Conclusions

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 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 as well as having the highest average annual income per person.

8. Corruption: In recent years, Jordan has taken significant strides in fighting corruption. In 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 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.

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Conclusions

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.

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 commodity prices.

11. Water Limitations: Jordan's 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 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.

Introduction

Arab Spring Brief

Jordanian Economy

Jordan & Rankings

Conclusions

Conclusions

• Though the Jordanian economy was in poor shape prior to the Arab Spring, much due 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.

• 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 of the Arab Spring on economic freedom in Jordan were relatively unsubstantial; as shown by the economic figures and international reports and rankings.

• 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.