Resource information
Since the early 1990s, Jordan has
initiated efforts toward far-reaching stabilization and
structural reform. The reforms have aimed at laying the
foundations for a reduced role of the state,
private-sector-export-oriented-growth, employment, poverty
reduction, and overall improvement in the welfare of the
population. Due to this intensive effort, inflation has been
reduced, the current account of the balance of payments has
been stabilized, and budget deficits have been reduced. In
addition, structural reforms have encompassed domestic
taxation/subsidy policies, trade liberalization policies,
monetary/financial sector policies, exchange rate policies,
administered prices, and privatization. The reforms
initiated since 1989 have made Jordan one of the leaders of
reform in the Middle East and north Africa region, despite
its experiencing several changes in government and adverse
external shocks in the 1990s. The country has further
integrated into the global economy, with a major shift in
trade policy that included an Association Agreement with the
European Union in 1999, membership in the World Trade
Organization in 2000, and a free-trade agreement with the
USA in 2001. Jordan has achieved progress in privatization,
most notably in public utilities. Despite deep structural
reforms and macroeconomic stability, strong and sustainable
growth in real output has been elusive. Three factors have
been identified as major constraints to faster growth: 1)
external volatility and adverse regional neighborhood
effects; 2) slow response of private investment, both in its
level and in terms of productivity; and 3) significant
export competitiveness problems. Increasing growth
performance as a means to reduce poverty and improve the
welfare of Jordanians is the first key development challenge
identified in this Development Policy Review. The other key
development challenge in Jordan is to improve the quality
and efficiency of its core public services. Efficient
delivery of public services is especially critical in
education and health and in the water sectors.
