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Atlas of Jordan

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Myriam Ababsa

Chapter seven - Jordan’s Rentier Economy

The Structure of the Economy

Myriam Ababsa et Chantal Demilecamps

Texte intégral

Business Sectors | Myriam Ababsa

1Jordan’s economy is mostly services (71.3% of GDP in 2010) driven by the tourism sector, followed by transport and telecommunications, then finance and real estate (fig. VII.18 and VII.19). The telecommunications market is booming and the 6,000 Jordanians who graduate from the six universities specialized in information and communication technology (the country has 22 universities in total) are insufficient for the Jordanian market (Oxford Business Group 2010, p. 86).

Figure VII.18 — Gross Domestic Product by Economic Activity at current basic prices in million JD (2002-2008).

Figure VII.18 — Gross Domestic Product by Economic Activity at current basic prices in million JD (2002-2008).

Figure VII.19 — The Relative Importance of Economic Sectors to GDP at constant Basic Prices in 2010.

Figure VII.19 — The Relative Importance of Economic Sectors to GDP at constant Basic Prices in 2010.

2While the number of land-lines is decreasing, households with an internet connection increased from 13.7% to 29% between 2006 and 2009 (Oxford Business Group 2010). However, there are still very few websites in Arabic, so the internet is of limited interest to most non-English speaking Arabs.

32010 was a record year for tourism and revenues, but the Arab Spring greatly affected tourism from Europe and the U.S., which was offset by a greater number of Arab tourists, mainly from the Gulf. Airport traffic consequently declined, while the port of Aqaba benefited from a boom driven by re-exports to Iraq.

4Jordanian industry is driven by large textile companies located in the Qualifying Industrial Zones (QIZ), that employ mostly Asian workers engaged in social dumping by accepting wages below the minimum salary of JD 150 per month (this practice was made legal for QIZ in 2009). The manufacturing of medical equipment and the pharmaceutical industry (the Al‑Hikma Company for example) are thriving sectors that contribute to exports.

5The construction sector developed rapidly between 2005 and 2007, with major projects like the new Amman downtown in Abdali (Mawared joint venture) and gated communities in Aqaba (fig. VII.5). These projects were suspended by the economic crisis, while two gigantic new projects were launched: the new town of King Abdullah bin Abdel Aziz in Zarqa (for 500,000 residents in 2020, financed with Saudi capital) and the huge Marsa Zayed project in Aqaba costing $ 10 billion.

6The mining sector is booming, driven by phosphate (6.5 million tons) and potash exports (1.9 million tons in 2010). However the drop in world prices has led to a decline in revenues.

7Agriculture accounts for only 3% of GDP, due to limited farmland (only 252,000 irrigated hectares) and in spite of substantial aid from the state in 2011: $ 42 million to support small producers and $ 56.6 million for fodder. Jordanian agricultural products contain such high levels of pesticides that some cannot be exported to Europe. In March 2011, following complaints received from Arab importers of agricultural products, the government introduced a “Golden List” of producers who comply with international standards on pesticides and fertilizers.

838.6% of Jordanians over the age of fifteen work the public sector (HEIS 2008), but over one third of the workforce is employed in the armed forces and the civil service in the governorates that are sparsely populated and traditional supporters of the regime: Kerak (31.7%), Tafila (36.6%), Aqaba (35.4%) and Ajlun (38.8%) (fig. VII.20).

Figure VII.20 — Percentage of Household head working for the public sector by governorate in 2008.

Figure VII.20 — Percentage of Household head working for the public sector by governorate in 2008.

9The regional distribution of the working population (fig. VII.21) shows regional production structures. Thus the governorates of Amman and Zarqa have far higher rates of employment in the service sector (in Amman: finance 5%, trade 15.7% and communications 7.8%), and in industry (11.7% in Zarqa and 8.1% in Amman). They are the country’s centre of production. Tafila governorate has a sizeable mining sector (15%) with its phosphate mines (however this high percentage is partly the result of the area’s small population). Finally, 40% of workers in the governorate of Aqaba were employed at the port and in the transport sector in 2008.

Figure VII.21 — Distribution of employment by sector and governorate in 2008.

Figure VII.21 — Distribution of employment by sector and governorate in 2008.

Figure VII.22 — Distribution of Enterprises by Governorate in 2006.

Figure VII.22 — Distribution of Enterprises by Governorate in 2006.

Figure VII.23 — Total registered Capital of Enterprises in 2006.

Figure VII.23 — Total registered Capital of Enterprises in 2006.

Figure VII.24 — Number of Enterprises per 1000 persons in 2006.

Figure VII.24 — Number of Enterprises per 1000 persons in 2006.

Figure VII.25 — The distribution of Medium and Large Enterprises in 2006.

Figure VII.25 — The distribution of Medium and Large Enterprises in 2006.

10The oversized public sector employs 38.6% of the workforce (452,180 people out of 1,172,701 in 2010). The private sector consists of 147,327 businesses: 620 with over 100 employees, 516 with 50 to 99 employees, 1,830 with 20 to 49 employees, 13,085 with 5 to 19 employees and the vast majority (131,276) with only one to four employees (small grocery stores, small repair shops, self-employed artisans etc.) (DOS 2006, UNDP 2011) (fig. VII.26).

Figure VII.26 — Dominance of Micro Small and Medium Enterprises Including Number of Employees and Establishments by Sector.

Figure VII.26 — Dominance of Micro Small and Medium Enterprises Including Number of Employees and Establishments by Sector.

11The Jordan Human Development Report of 2011 focuses on the role in economic growth of small businesses (with between 1 and 49 employees according to the department of statistics, but with between 1 and 19 employees for the UNDP) and medium-sized enterprises (between 50 and 99 employees for the DOS, but between 20 and 99 for the UNDP). These small and medium-sized businesses represent 60% of the private sector and employ 37% of Jordanians (HDR 2011, p. 15). 85% of these SMEs are in commerce and services, and 80% are located in Amman, Zarqa and Aqaba (where they enjoy tax exemptions). The governorates of Balqa‘ and Aqaba have a high number of medium-sized enterprises, their illiteracy and unemployment rates are the lowest in the country (HDR 2011, p. 20) (fig. VII.25).

12Most large companies are located in Amman (424), Zarqa (47) and Irbid (39) (fig. VII.23), they include 110 factories in Qualifying Industrial Zones. In 2008, they employed 46,000 workers, mostly from Bangladesh, India and Sri Lanka. While there were still 24,000 Jordanian workers in the QIZs in 2004, there were only 9,000 in 2011 (fig. VII.27) (Ejeilat 2012). On average, these workers earn JD 1,737 per year, a quarter of which is spent in Jordan. In 2006 an American NGO report of Human Rights condemned the working conditions as being close to slavery (16 hours of work daily and movement mostly restricted to inside the compound). These plants represent 36.9% of the clothing industry (Ejeilat 2012).

Figure VII.27 — Number of Entreprises and Workers in the six Jordanian Qualifying Industrial Zones in 2010.

Figure VII.27 — Number of Entreprises and Workers in the six Jordanian Qualifying Industrial Zones in 2010.

Restructuring of Agriculture | Chantal Demilecamps

13Since the founding of the Kingdom of Jordan, agriculture has been a key element of development policies; a vehicle for appropriating land for the settlement of nomads and the assimilation of refugees. The government also promoted the expansion of cultivated land to ensure the country’s food self-sufficiency, but this approach was completely changed by recent liberal policies and the opening of markets. In addition, agriculture consumes 75% of Jordan’s water resources and creates relatively little wealth (3 % of GDP into 2011). Its future is therefore called into question by increasing water scarcity.

Two types of agriculture

14Jordan’s unusual climate and farming context, namely its utilizable agricultural area that covers only 12% of land (FAOStat 2005) and its semi-arid to arid climate, coupled with the country’s recent history, has led to two major types of agriculture: a traditional sector and a productive modern sector.

15Across the country, the total cultivated area was estimated in 2010 to cover 259,300 hectares (DOS 2012), and was divided between arable crops (50%), fruit orchards (32%) and vegetables (18%). Irrigation has been necessary for the large-scale development of agriculture, and irrigated zones account for 39% of the total cultivated area, in considerable expansion since 2000 (tables VII.1-VII.2).

Table VII.1 — Jordan cultivated land in 2010.

Crops

Total Area (ha)

Irrigated Area (ha)

Non-Irrigated Area (ha)

Tree Crops

82 712

44 724

37 988

Field Crops

128 556

12 862

115 694

Vegetables

48 080

44 885

3 195

Source DOS 2012.

Table VII.2 — Jordan cultivated land in 2000.

Crops

Total Area (ha)

Irrigated Area (ha)

Non-Irrigated Area (ha)

Tree Crops

86 945

34 818

52 126

Field Crops

115 578

11 030

104 547

Vegetables

32 881

31 061

1 819

Source DOS 2012.

16Traditional rain-fed agriculture is mostly in mountainous areas and the highlands of the North West (fig. VII.28). These are mediterranean-style family farms, which combine grains, olive groves and orchards. A significant portion of production is for the family’s own consumption. Many farmers also have other jobs.

Figure VII.28 — Jordan Agricultural Land Use.

Figure VII.28 — Jordan Agricultural Land Use.

17In the Jordan Valley and the desert-like plateau to the east, intensive modern farming methods use irrigation and farms are commercial, mechanized and highly input-intensive. These farms generally produce vegetables (tomatoes, cucumber, cabbage, beans, squash, etc.) and fruit (bananas and citrus fruits in the valley, apples, peaches and olives on the plateaux) (Courcier and Arrighi 2002). The owners are mostly investors who do not work on the farm, but delegate to sharecroppers.

18Livestock is also reared throughout the country. Intensive poultry and dairy cattle farming have grown rapidly. Many medium and large sized production and processing plants (dairies, slaughter houses, etc.) have been set up, especially around the highland towns (Jerash, Irbid, Amman, Zarqa and Salt). In parallel, goats and sheep are still reared extensively using traditional methods on 745,000 hectares of permanent pasture (FAO 2005). This activity is socially and culturally important for the Bedouin. For the poorest farmers, livestock is often a complementary activity, since the flock is a form of capital that can be moved in times of crisis (Van Aken, Courccier, Venot and Molle 2007) (table VII.3).

Table VII.3 — Distribution of livestock (number of heads) in 2010 - DOS 2012.

Sheep

Goats

Cattle

Heads number

2 333 010

883 720

64 600

Source DOS 2012.

19There are now several major producing areas, characterized by different cropping systems and types of farmers. The agriculture of these regions has an economic impact that varies considerably. The main agricultural regions are presented below:

  • The Jordan Valley and south Ghor: modern and intensive farming, mainly irrigated by surface water ;

  • Irrigated zones of the eastern deserts (Mafraq, Azraq and Disi) : fruit orchards and vegetables irrigated by pumped groundwater ;

  • The mountains with rain-fed mediterranean crops (formerly the Ottoman caza of Ajlun ; today the governorates of Irbid, Jerash and Ajlun) ;

  • Cereal and vegetable crops around urban centres, mainly outside Amman ;

  • Sheep grazing pasture in the plains which stretch from the north to the south of the country bordering the desert to the east (badiya).

Increased dependence on food supplies due to liberal economic policies

20Despite the modernization of many sectors of production, food self-sufficiency in Jordan differs greatly depending on products. The country imports all cereals and sugar, and highly depends on imports for red meat and dairy products. It is only truly self-sufficient for vegetables, chicken, eggs, the main fruits (citrus fruits, bananas and grapes) and olive oil. The country’s limited resources prevent it from reaching a level of self-sufficiency above 30% for food products. The food situation has forced the country to increase imports of agricultural products from the United States. This food dependency is a political tool and a means of exerting pressure to ensure Jordan’s cooperation regarding the “American peace” imposed in the Middle East (Ferragina 1995).

21Jordan’s agricultural trade balance is strongly negative. If we consider all products (fruits, vegetables, dairy products, livestock, animal feed, grains, etc.), the trade balance reached US$ 816 million (CIHEAM 2006), which represents about 15% of Jordan’s trade deficit.

22Imports of agricultural goods account for 19.6% of total Jordanian imports, a quarter of which are cereals, with a significant proportion of fodder and processed products. Grain self-sufficiency in Jordan was only 8.5% in 2002 and 2% in 2011(Medagri 2003).

23With regard to livestock, Jordan imports huge quantities of dairy products and meat, which accounted for 20% of agricultural imports in 2002 (DOS 2007) and 5% of total imports. Livestock breeding is itself heavily dependent on imported feed.

24This situation of food dependency is also linked to the implementation of various trade agreements. Jordanian agriculture must now adapt to a context of increasing competition and regional instability. The future of many products depends on the maintenance of trade barriers and subsidies.

Table des illustrations

Titre Figure VII.18 — Gross Domestic Product by Economic Activity at current basic prices in million JD (2002-2008).
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-1.jpg
Fichier image/jpeg, 68k
Titre Figure VII.19 — The Relative Importance of Economic Sectors to GDP at constant Basic Prices in 2010.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-2.jpg
Fichier image/jpeg, 72k
Titre Figure VII.20 — Percentage of Household head working for the public sector by governorate in 2008.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-3.jpg
Fichier image/jpeg, 148k
Titre Figure VII.21 — Distribution of employment by sector and governorate in 2008.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-4.jpg
Fichier image/jpeg, 76k
Titre Figure VII.22 — Distribution of Enterprises by Governorate in 2006.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-5.jpg
Fichier image/jpeg, 180k
Titre Figure VII.23 — Total registered Capital of Enterprises in 2006.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-6.jpg
Fichier image/jpeg, 132k
Titre Figure VII.24 — Number of Enterprises per 1000 persons in 2006.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-7.jpg
Fichier image/jpeg, 184k
Titre Figure VII.25 — The distribution of Medium and Large Enterprises in 2006.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-8.jpg
Fichier image/jpeg, 148k
Titre Figure VII.26 — Dominance of Micro Small and Medium Enterprises Including Number of Employees and Establishments by Sector.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-9.jpg
Fichier image/jpeg, 48k
Titre Figure VII.27 — Number of Entreprises and Workers in the six Jordanian Qualifying Industrial Zones in 2010.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-10.jpg
Fichier image/jpeg, 196k
Titre Figure VII.28 — Jordan Agricultural Land Use.
URL http://books.openedition.org/ifpo/docannexe/image/5028/img-11.jpg
Fichier image/jpeg, 195k

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