2017 Index of Economic Freedom

Jordan

overall score66.7
world rank53
Rule of Law

Property Rights60.1

Government Integrity49.8

Judicial Effectiveness49.5

Government Size

Government Spending73.3

Tax Burden91.3

Fiscal Health55.5

Regulatory Efficiency

Business Freedom63.9

Labor Freedom58.1

Monetary Freedom86.7

Open Markets

Trade Freedom82.0

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 6.8 million
  • GDP (PPP):
    • $82.7 billion
    • 2.5% growth
    • 2.7% 5-year compound annual growth
    • $12,123 per capita
  • Unemployment:
    • 12.9%
  • Inflation (CPI):
    • -0.9%
  • FDI Inflow:
    • $1.3 billion
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Economic freedom in Jordan has suffered in recent years with rising public debt and persistent budget deficits. The country has become home to a large number of refugees, putting further stress on the government’s finances. Regional instability also disrupts trade routes and restricts tourism inflows.

The government has eliminated nearly all fuel subsidies, and many state-owned enterprises have been privatized. A three-year agreement with the International Monetary Fund concluded in August 2016 supports fiscal consolidation and structural reforms. Future adjustments are planned to focus on better-targeted capital spending and private-sector development. Overall economic freedom is curtailed by corruption and the judicial system’s vulnerability to political influence.

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Background

In 2011, constitutional monarch King Abdallah II responded to Arab Spring demonstrations by dismissing his cabinet and ceding greater authority to the judiciary and parliament. Since then, constitutional amendments aimed at restoring power to the crown have raised concerns that Arab Spring reforms were superficial. Foreign loans, international aid, and remittances from expatriate workers support the economy. In 2000, Jordan joined the World Trade Organization and signed a free trade agreement with the United States. The ongoing conflicts in Iraq and Syria have severely disrupted traditional economic activities and have exacerbated the challenges of governing an already diverse population.

Rule of LawView Methodology

Property Rights 60.1 Create a Graph using this measurement

Government Integrity 49.8 Create a Graph using this measurement

Judicial Effectiveness 49.5 Create a Graph using this measurement

Property rights are respected for the most part. The judiciary is generally independent, but the king is the ultimate authority. The use of family, business, and other personal connections to advance business and interests, known in the Middle East as wasta, is endemic in Jordan. Weak investigative journalism, limited access to information, and a lack of institutional checks and balances undermine efforts to combat widespread corruption.

Government SizeView Methodology

The top individual income tax rate is 14 percent. As of January 1, 2015, the standard corporate tax rate rose to 20 percent. The overall tax burden equals 16.7 percent of total domestic income. Government spending has amounted to 29.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 4.2 percent of GDP. Public debt is equivalent to 91.7 percent of GDP.

Regulatory EfficiencyView Methodology

Despite persistent bureaucratic obstacles and delays, reforms carried out in recent years have made business formation and operation more efficient and dynamic. Progress toward reforming bloated public-sector employment has been dismal. Under ongoing IMF agreements, the government has eliminated nearly all fuel subsidies and in 2016 pressed ahead with price increases to reduce losses at the state-owned electric and water companies.

Open MarketsView Methodology

Trade is important to Jordan’s economy; the value of exports and imports taken together equals 98 percent of GDP. The average applied tariff rate is 4.0 percent. The government screens foreign investment and restricts investment in some sectors of the economy. Along with financial-sector policies that are intended to enhance competition and efficiency, banking supervision and regulation generally conform to international standards.

Country's Score Over Time

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Regional Ranking

rank country overall change
1United Arab Emirates76.94.3
2Qatar73.12.4
3Israel69.7-1.0
4Bahrain68.5-5.8
5Jordan66.7-1.6
6Kuwait65.12.4
7Saudi Arabia64.42.3
8Oman62.1-5.0
9Morocco61.50.2
10Tunisia55.7-1.9
11Lebanon53.3-6.2
12Egypt52.6-3.4
13Iran50.57.0
14Algeria46.5-3.6


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