Jordanian Economic System History to Modern day - Term Paper Example

?       Jordanian Economic System History to Modern day                                   Economics is the very foundation based on which a nation functions. It is a well-known fact that in order for a country to come up socially and politically among the world nations, it has to show stable economic growth. A country has to be able to maintain a balance between the two both on a micro as well as macroeconomic level. It is only by this balance that the economy of a nation can come up. There are many countries in the world that have seen phenomenal economic growth in the past few years while there are some others that still need to get better with its economic policies. Most of these policies get entangled with political motives and thus it does not meet the full growth level that it is otherwise bound to meet.   When it comes to economy, some of the most important factors that need to be taken into account are that of production, efficiency and cost of the industries. Only through a more sustainable industry can a nation come up. A review of the economic history of a nation can help in determining the current economic status of a nation. This paper will deal with the economy of Jordan, its economic history, and the development that it has attained over the years. The paper will also provide a detailed insight over projects that are being planned for the future to bring in greater level of development.   In the past few years, Jordan has seen phenomenal economical growth as well as political stability. It is known in the world forum as an upcoming nation that has great potential of become a part of the group of developed nations if it is able to follow the sustainable economic growth that it has built with greater caution over the years. The history of Jordan dates back several thousand years and features prominently in many significant historical references. The nation has been under the rule of several kingdoms that includes Greeks, Persians, Ottomans, Egyptians, Romans and British and is named so after the river Jordan. The economy of the company has seen many upheavals over time and in recent years has managed to regain its ancient glory. It is now well respected amongst economically developing nations.   Economical History of Jordan   Jordan gained independence in the year 1946 when the United Nations declared the nation Independent from the rule of the British.  If we delve into the economic history of Jordan, it becomes clear that Jordan since its independence in 1946 and its takeover by the West Bank has managed to position itself in a prominent place in world economy. Soon after the annexation, Jordan experienced a great level of economic growth in different areas as a result of availability of large arable lands and a large amount of supply of water from West Bank. It is to be noted that it is one of the most flourishing periods in the economy of Jordan. The annexation opened up the doors for economic prosperity for the nation as it now stood to gain an upper hand in agriculture.   The country however experienced a slump period in its economy since Israel defeated and took over West Bank and sent the people of Jordan back from West Bank. Jordan suffered a major set back due to this as it experienced a great deal of loss in terms of resources and materials. The Black September Civil war, that Jordan fought in September of 1970, to quash the Palestine military served to create a major set back for the economic growth of the region. The Black September civil war put a stop to the economical prosperity that the nation faced after the annexation. Soon after recovering from the civil war, the country again got back to its full form and had a stable growth until 1980s.   A Short Lived Boon in 1980   In the 1980s the country had a considerable boon in the economy due to the nation's capitalization on the oil economy. Oil market is one of the biggest commodities in the world today and is mandatory to move industries and promote growth. This stands in favor of the Jordanians. Though the oil market boon contributed to the economic development and gave a boost to the economy, it did not go up to the level that was expected. This could be attributed to the socio-economic climate prevalent in the country at that time. Jordanians spent money heavily properties in exotic locales and showed more interest in a luxurious lifestyle. The economic boon that the nation received was not utilized in developing the country.     The Gulf Crisis   The unplanned economical expenses and the failure to capitalize on the boon lead to a great lot of issues thus leading to the 1990 Gulf crisis. This end to the oil boon created great economic downfall to many countries in the Gulf region including Persia. As a result many political, economic as well as social issues arose. Inflation rates touched an all time high and there was a great deal of shortages for resource and materials. Jordan was also supportive of Iraq and thus many Jordan nationals were asked to leave from their adopted homes in neighboring countries.   At the later part of 1980s, Jordan faced major economical setbacks and there were a lot of issues like unemployment and non-availability of sustainable means of growth path. The debt held by Jordan rose to a considerable extent and the friendly relationship that Jordan had with Iraq came to an end. This further caused a blow to the economy of Jordan, as it no longer got the privileges it enjoyed with the oil market. From then on, the economic growth rate of the country has been quite sluggish and we can attribute several causes to this condition. Political as well as social issues were also a major reason behind the downfall of the economy of the nation. As Wilson R, Rightly said if there was anything that could have changed the fate of the country and helped it regain the economic stability that it enjoyed once, it is an efficient administration (1991).   Administrative Efficiency   It was only under the reign of King Abdullah II, that the nation was able to bounce back to its full growth. All of the potential areas of growth were explored during this period and the country was able to make use of it to join the ranks of other economies. The King promoted the country in terms of tourism as well as Information and Communications Technology (ICT). All of these were a slow yet steady step towards a more sustainable economy. The king planned the rise of economy in such a way that it does not cause a high level of inflation in the country; instead it supported a slow yet steady rise in the economical aspects. One of the major factors that contributed to the gradual economic development of the nation is the political stability of the nation. After a series of civil war, Jordan understood that it would be self-destructive to encourage or be a cause for any sort of civil war in the nation.   Jordan decidedly started to focus more on its internal activities and exerted all efforts in the economic development of the nation and not on the wars of the neighboring countries. Very many changes in policies and outlooks introduced in the 1990s turned out fruitful for the nation and its economy. The growth levels were gradual yet steady as compared to the sudden ups and downs of the 70s This became the foundation for a lot of development schemes and organizations. King Abdullah took all the necessary initiative necessary to keep the economic growth steady and longstanding and passed targeted schemes and programs for achieving his goals. Added to all of these measures, Jordan also understood that it needed to be proactive in terms of economy and planned its economical moves edged towards a place in the global economy. The nation understood that only if the nation’s economical policies and procedures were in sync with the global economy would it be able to get the most benefit out of it. The country also invested wisely and was not ready to put all the eggs in one basket. It invested equally on all spheres of business and included the nation in the global trade activity (Marashdeh O 1995).   Opening of the Free Trade Market   In the year 2001, Jordan joined hands with the World Trade Organization as a member showing its interest to become a global economy and demonstrated its sincerity to become a hotspot in the world economy. The growth levels of the nation increased manifold ever since it joined the global set up of market economy. Many industries and organizations were willing to invest heavily on the growth and infrastructure of the country to make it an International hub. With this help, Jordan was also able to make it as one of the most popular tourist destinations in the world as well as a hub for ICT and real estate. Even, Jordanians who had settled out of the country started investing in its real estate thereby making it one of the fastest growing businesses in the country. There is also evidence that some other nations invested in Jordan's real estate market as well. Jordan was thus able to compete with international countries in terms of real estate, ICT and tourism with its free economic policy (Mazur M 1979).   The country also made its legislations and country policies more lenient to facilitate international investments. Although the oil market still maintained the highest potential, the country sought to distribute its growth equally over other areas as well to avoid falling into the same pattern of its past crisis.  The economic stability that the country had obtained also served to protect it from the effects of rising inflation rates that touched up to 13% mark. Jordan still fared better than its neighboring countries. The country faced some pressures in its economic status in the years 2007 and 2008 because of the increase in the oil price in the world level. But the country was able to balance it well with its growth in other sectors in the year 2007. Some of the areas of industries that lent a helping hand to Jordan during this oil crisis were that of tourism, mineral manufacturing and that of pharmacy.   Achievements so far in Economical scene   Modern Jordan is a developing and refined nation that has taken many bold steps to reassure its economic position. King Abdulla II introduced several lenient policies to foster foreign direct investment and an economic prosperity that is self-sustaining. It has now successfully started concentrating more on tapping the natural resource of the country. There remains no doubt in future sustainability as the country is already doing well in pharmacy, mineral and tourism. (Lucas E 2006).   The Economic Plans of Future   The free trade agreement that Jordan has entered into is bringing in the much-needed direct foreign investments and it has been able to manage fairly high gross domestic product (GDP) growth rates all the while. Added to all these developments, the government is also looking to bring in a special economic zone (SEZ) in Jordan. It is planning to set the economic zone up in the areas of Jordan that have not seen development and those areas where unemployment is rife. This plan if executed well shows promise in completely changing the livelihood of people living in that region.  Once a SEZ comes in such an area, many developments, right from infrastructure to transportation will be taken care of because of the development initiatives taken by the investors in those regions.   The current economic crisis has taken its toll on Jordan as well but the nation has managed to maintain its place among its neighbors because of the economic growth of the many other industries in the country. These continue steadfast in their contribution to the country's economy and are also benefited by foreign investors who give them the much-needed development initiatives.   The future of Jordan’s economy looks brighter and much steadier now than what it was a decade ago. The nation is seeing spectacular growth in the Information Technology sphere and investments on infrastructure and growth from developed nations show promise of higher employment rates. Jordan now concentrates heavily in mineral resources and its Uranium exports are expected to grow over the next few years. It is also fast developing into a hotspot for tourism and attracts tourists from all around the world. The Government recognizes the growth potential and has invested especially in growing the hospitality and tourism spheres of the nation. Outcome of the Initiatives The outcome of the initiatives taken towards economic stability initiative has been phenomenal and expected to take Jordan to the next level in development. It has already been considered as the upper middle class of developing nations. Jordan in its self-sustainable growth and futuristic vision has paved the path for future International investments in the nation that will add to this growth. The country's liberalized economic policies have opened its doors to global investment to develop its infrastructure. Jordan has traversed through many upheavals in its economic history and has proved itself to be an apt study of economic development that is based on sound administrative and political policies.    Reference: Wilson R (1991). Politics and the Economy of Jordan, Routledge Inc Marashdeh O (1995). The Jordanian Economy, Al-Jawal Corporation Inc Mazur M (1979). Economic Growth and Development in Jordan, West View Press Inc Lucas E (2006). Institutions and Politics of Survival in Jordan, State University of New York Press    Read More