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Economy and Business in Jordan

Jordan is a poor country with few natural resources. With $ 4200 in gross domestic product per capita, Jordan's economy is ranked 95th in the world. Most of the country's area is covered by desert and the country has a large refugee population. Jordan has nevertheless managed to build an economy around trade and tourism.

Business of Jordan

Jordan's role as a regional trade player is largely due to its being considered a stable country in an unstable part of the world. However, the economy is not robust and the country is heavily dependent on aid. In 2018, the national debt was 91 per cent of GDP. Economic growth in the country is low, at around two per cent a year, and unemployment is high, around 19 per cent.

Business

According to COUNTRYAAH, Jordan has few natural resources and limited agricultural opportunities due to a lack of arable land and water. Water supply to meet the needs of the population and business is a constant problem, as in the rest of the region. Unlike most other countries in the Middle East, Jordan does not have oil deposits of commercial significance, and the country relies on importing oil, which it has normally obtained at favorable prices from neighboring countries, depending on political economic conditions. The Jordanian nutritional structure is unilateral, with relatively low commodity production and a large public service and administration. Building and construction as well as transport - including a lot of goods transport in transit - are important industries, and an investment is being made in building an IT industry. There is also a focus on further development of tourism, but this sector is vulnerable to political economic activity.

The state has played a key role in the Jordanian economy, but privatization was implemented from the late 1990s, as part of a liberalization of the economy. Liberalization happened, among other things, as a result of the throne change when King Abdullah 2 took power in 1999. This liberalization was also a prerequisite for Jordan's membership in the World Trade Organization (WTO) from 2000. Traditionally, Jordanian workers in the Gulf states, especially Iraq and Kuwait, have had great importance to the economy through money shipments to the home country, but Jordan also relies heavily on outside financial assistance, and is one of the largest recipients of aid from the United States, as well as from several Arab states.

Jordan's economic development is closely linked to developments in Israel and Palestine in the west and Iraq and Saudi Arabia in the northeast and south. The economy has, therefore, several times in modern times been subject to several dramatic changes as a result of the political situation in the Middle East. Jordan participated in the first Arab-Israeli war in 1948, then took control of the West Bank and East Jerusalem, which were politically and economically integrated into the kingdom. As a result of the Six Day War in 1967, Jordan lost control of these areas to Israel. As a result, Jordan lost revenues from tourism to the biblical sites and rich agriculture in parts of the Jordan Valley. They also lost several major cities in the densely populated and more resourceful West Bank.

With the Middle East peace process in the early 1990s, Jordan established political and economic relations with the Palestinian Authority and with Israel, with which Jordan signed a peace agreement in 1994. This opened up opportunities for increased trade, and cooperation on several projects - both with Palestinian and Israeli authorities. The latter include the establishment of a business zone at the border and plans for joint development of the two countries' respective cities on the Red Sea, Aqaba (Jordan) and Eilat(Israel). Jordan and Israel have also entered into agreements on joint management of water in the border areas, whereby Jordan is supplied with water from Israel. An initial trade protocol with the Palestinian authorities was signed in 1995, but due to the second intifada of 2000 and Israel's reprisals, the benefits of economic intercourse were limited.

The Gulf Wars have also had a significant impact on the Jordanian economy; both the Iraq- Iran war 1980-1988 and the Allied war against Iraq 1991 - as well as the subsequent sanctions against Iraq - and then the 2003 war that toppled Saddam Hussein's regime in Iraq. Jordan and Iraq have a common history, border on each other, and have had significant economic relations, including through the wars - which Jordan himself did not participate in. Jordan took Iraq's party in the war against Iran, which strengthened economic relations, including increased Iraqi trade through Aqaba and increase in Jordanian exports to Iraq. When Iraq invaded Kuwait, In 1990, Iraq was Jordan's most important trading partner, supplying, among other things, about 80 percent of oil imports, while Kuwait assisted the country with financial aid and jobs for Jordanians. These sources of income were hit by the war, which also led a number of Palestinians with Jordanian citizenship to flee to Jordan. A sudden population growth of around ten percent and an increase in unemployment to about 30 percent put extra pressure on public services. However, the influx of Palestinian refugees also brought in capital, which to some extent compensated for the loss of transferred income from lost jobs in Kuwait. Despite the strong reliance on trade with Iraq, Jordan joined the UN sanctions against the country after the Second Gulf War, which hit the Jordanian economy hard. Significant foreign aid, not least from the US, averted economic crisis. As Iraq was granted permission by the United Nations to export oil against imports of food and medicine, trade with and through Jordan resumed; The same was true after the Iraqi Baath regime collapsed following the 2003 US-led invasion.

Agriculture and fishing

Due to low rainfall and large areas of desert and the semi-desert is less than ten percent of Jordan's land area suitable for agricultural production. Israel's occupation of the West Bank caused Jordan's most valuable agricultural land to be lost, with serious consequences for agricultural production - especially fruits and vegetables. In order to increase the self-sufficiency of food, but also to stimulate increased exports, a plan for the development of artificial irrigation plants in the Jordandalen was already prepared in the latter part of the 1950s, partly based on foreign aid. The plan was continued in the construction phase, which gradually included a number of support measures for the development of the agricultural industry. Water from the Yarmu River in the north, and other smaller watercourses, with outlets towards the Jordan Valley, are utilized for agricultural purposes through an extensive transmission system of canals, tunnels and magazines. Despite the supply of water also from Israel, the lack of water is a limiting factor in Jordanian agriculture. In the 1980s, the sector accounted for about ten percent of the sector GNI; in 2000, just over two percent. In 2019 this had risen to six per cent. At the same time, about four per cent of the working population was employed in agriculture.

Agricultural production is concentrated on cereals, fruits and vegetables, and yields vary greatly in areas not under artificial irrigation. Precipitation largely determines the geographical distribution of production. Cereals and parts of fruit production take place in areas with sufficient rainfall during the growing season, mainly on the western hills, north of Amman, and west towards the Jordan Valley. In the country's most productive agricultural area, the Jordandalen, fruits, vegetables, also tropical species and some citrus fruit are based on extensive use of artificial irrigation. The dry areas east and south of the country are largely exploited by Bedouins to feed sheep and goats, but there are also some cattle and camels. Some of the traditional pastures are used for growing olives and fruits. Jordan is not self-sufficient in food, but exports some fruits and vegetables.

Jordanian fishing in the Gulf of Aqaba and the Red Sea has traditionally been of minor importance. Catches increased somewhat in the 1990s.

Mining and energy

Jordan has few viable mineral resources beyond phosphate. These deposits, on the other hand, are large, and Jordan is among the world's largest exporters of phosphate ore, which is mined in the areas south of Amman and at Ma'am. Phosphate ore is Jordan's most important export item; The reserves are estimated at approximately 1000 million tonnes (2018), located in Rsaifa and Wadi Hasa, among others. Potassium carbonate and potassium salts are extracted from the Dead Sea, where considerable quantities of both industrial salt and table salt are also produced. Jordan is the Middle East's largest producer of salt, with significant exports. The recovery from this yields other mineral by-products such as bromides and magnesium oxide. Among other things, deposits of other minerals, including gypsum, copper and magnesium, as well as uranium and vanadium, are found in the phosphate reserves. The deposits of quartz sand, clay, pot ash and feldspar, suitable for the production of building materials and ceramics, are utilized on a smaller scale.

Propagating oil deposits have only been detected to a lesser extent, and Jordan relies on importing oil. However, the country has significant deposits of shale oil estimated at about 40 billion tonnes, which are considered exploitable and can contain around 4000 tonnes of oil. Jordan has some gas reserves, proven in 1987; estimated at approximately 213 billion cubic feet (2015). Gas from the Risha field near the Iraq border has been used for energy production. In 2003, imports of gas began from Egypt, delivered through a pipeline across Sinai to the Aqaba power plant. Oil to Jordan from Iraq is transported by tanker; the old oil pipeline from Mosul to Haifa in Palestine (later Israel) is long gone out of business. Jordan's favorable geographical position may indicate that pipelines are being built from the Gulf to Aqaba, including for export of Iranian oil.

The production of electric energy was previously based on oil, but the most important energy source is now natural gas, both imported and self-produced. Gas from the Risha field accounts for around ten percent of power generation, while the new Rihab power plant is powered by gas from Egypt. An interconnection of the electricity networks in Jordan and Egypt was completed in 1999.

Industry

Jordan's industrial development is of recent date, substantially concentrated around Amman and Zarqa, as well as Aqaba. Despite the lack of industrial tradition, several significant industries have been developed for the production of consumer goods, processing and further processing of minerals and imported crude oil. The industrial sector accounts for about 28 per cent of the country's GDP.

The country has an oil refinery, in Zarqa, with a capacity of around 90,000 barrels per day. The heavy industry also includes the production of mineral fertilizers, based on the country's phosphate deposits, as well as cement - which is also exported. A number of consumer goods are produced, and the country manufactures a number of chemical and mineral products based on the domestic extraction of raw materials.

Tourism

The tourism industry is growing and of vital importance to the country's economy. Unrest and severe restrictions on travel between countries in the region have been a serious obstacle to the development of the tourism industry. In 2003, the number of visitors from abroad was 3.9 million, but since the Arab Spring in 2011 this has decreased, and the number of tourists is regularly between two and 2.5 million a year. The vast majority come from other Muslim countries. Many Muslims travel through Jordan on their pilgrimage to Mecca.

Historic sites and areas, many known from Bible history, are the main destinations for tourists from Western countries. Most visited is Petra northeast of Aqaba and Jerash north of Amman. Due to short travel distances, many of Jordan's tourists also take the opportunity to visit places in Israel. The coastal areas of the Gulf of Aqaba are popular destinations for tourists from other Arab countries and for the Jordanians themselves, as are the resort hotels along the banks of the Dead Sea.

Foreign Trade

Jordan traditionally has a significant trade deficit abroad, not least because of the dependence on oil and food imports. Transfers from Jordanian workers abroad as well as foreign aid and borrowing, normally offset much of the deficit, but have been uncertain sources of income since the early 1990s. Exports make up about 36 per cent of the country's GDP.

Phosphates, potassium carbonates, fertilizers, other chemicals and agricultural products, especially vegetables, are the most important export products in value. Vehicles, other transport equipment, machinery, crude oil, steel, other inputs for domestic production and consumables are imported. Most of the exports go to other Arab countries, with Iraq as by far the most important trading partner for both exports and imports.

Transport and Communications

Jordan has traditionally been a transit area for trade between the Arabian Peninsula, the Persian Gulf and west to the Mediterranean ports. The country's location still contributes to the development of infrastructure and transport, although the conflicts in the region place great restrictions on the development of the transport industry, based on traffic westwards to Egypt and Israel or northwards to Syria, Lebanon and Turkey.. Jordan's significance as a transit hub was reinforced during and after the first two Gulf wars, as most of Iraq's trade went through Jordan. Road transport is one of the country's most important industries, accounting for about 20 per cent of private sector employment.

The narrow-gauge Hijaz railway runs from Syria via Amman and Ma'an to the border with Saudi Arabia, with siding to Aqaba and the phosphate quarries in Shidiya. Almost all rail traffic in Jordan is for the transport of phosphate ore.

Jordan's main road network is well-developed with connections to neighboring countries' capitals. Particular traffic, not least of freight traffic, is the 330 km long main road between Amman and Aqaba. The country's main airport, Queen Alia, is located at Zizya, 40 km south of Amman, the other international airport is at Aqaba. The modern port of Aqaba is the only country in the country and important for both Jordan's and Iraq's foreign trade. A ferry route for car and passenger transport runs between Aqaba and Nuweibeh in Egypt.

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