2014 Index of Economic Freedom

Jordan

overall score69.2
world rank39
Rule of Law

Property Rights60.0

Freedom From Corruption45.6

Limited Government

Government Spending66.9

Fiscal Freedom94.0

Regulatory Efficiency

Business Freedom62.0

Labor Freedom72.9

Monetary Freedom81.3

Open Markets

Trade Freedom79.6

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 6.4 million
  • GDP (PPP):
    • $38.7 billion
    • 2.8% growth
    • 4.1% 5-year compound annual growth
    • $6,042 per capita
  • Unemployment:
    • 12.2%
  • Inflation (CPI):
    • 4.8%
  • FDI Inflow:
    • $1.4 billion
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Jordan’s economic freedom score is 69.2, making its economy the 39th freest in the 2014 Index. Its score is 1.2 points worse than last year, due primarily to a deterioration in regulatory efficiency as measured by business freedom, labor freedom, and monetary freedom. Jordan is ranked 4th out of 15 countries in the Middle East/North Africa region, and its overall score continues to be well above the world and regional averages.

Over the 20-year history of the Index, Jordan has advanced its economic freedom score by nearly 7 points, with increases in four of the 10 economic freedoms. Double-digit improvements of over 15 points in freedom from corruption, fiscal freedom, and trade freedom have offset declines in such areas as property rights and financial freedom. Jordan has been rated generally “moderately free” over the past two decades.

Despite the region’s ongoing political and security challenges, Jordan’s economy has been resilient. The economy has benefited from earlier years’ reform agenda in the areas of privatization and public finance management. High levels of trade freedom and investment freedom continue to sustain market openness, keeping the economy relatively competitive. Promoting the transition to a more open and flexible economy, the financial sector has taken steps to meet international standards.

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Background

Jordan is a constitutional monarchy with relatively few natural resources. Its economy is supported by foreign loans, international aid, and remittances from expatriate workers. In 2011, King Abdullah responded to “Arab Spring” demonstrations by dismissing his cabinet and ceding greater authority to the judiciary and parliament. The government also implemented two economic relief packages and a supplementary budget to subsidize the middle class and the poor. In 2000, Jordan joined the World Trade Organization and signed a free trade agreement with the United States; in 2001, it signed an association agreement with the European Union. Jordan negotiated a $2.1 billion standby arrangement with the International Monetary Fund in 2012 to finance its budgetary and balance-of-payments deficits. The presence of hundreds of thousands of Syrian refugees poses serious administrative and resource problems for the government.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 45.6 Create a Graph using this measurement

Influence peddling and lack of transparency undermine the fairness of government procurement and dispute settlement. The use of family, business, and other personal connections to advance business interests is regarded as a normal aspect of the culture. Anti-corruption efforts have had mixed results. Property rights are respected for the most part. The judiciary is generally independent, but the king is the ultimate authority.

Limited GovernmentView Methodology

The top individual income and corporate tax rates are 14 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden is 14.4 percent of gross domestic income. Government spending is 33 percent of GDP. Public debt continues to climb and has reached about 80 percent of gross domestic income.

Regulatory EfficiencyView Methodology

With no minimum capital required, launching a business takes 12 days, but licensing requirements remain burdensome, costing about five times the level of average annual income. Progress toward reforming bloated public-sector employment has been dismal, and the labor market remains rigid. Faced with budget deficits, the government reduced subsidies and increased prices for fuel in 2012 and plans to do the same for electricity.

Open MarketsView Methodology

Jordan has a 5.2 percent average tariff rate. Licenses are required for some agricultural products. New investment may be subject to government screening. The evolving financial sector remains relatively stable. Along with financial-sector policies that are intended to enhance competition and efficiency, the banking sector is guided by regulations that generally conform to international standards. The state owns no commercial banks.

Country's Score Over Time

Bar Graph of Jordan Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Jordan to other economic country groups

Regional Ranking

rank country overall change
1Bahrain75.1-0.4
2United Arab Emirates71.40.3
3Qatar71.2-0.1
4Jordan69.2-1.2
5Israel68.41.5
6Oman67.4-0.7
7Kuwait62.3-0.8
8Saudi Arabia62.21.6
9Lebanon59.4-0.1
10Morocco58.3-1.3
11Tunisia57.30.3
12Yemen55.5-0.4
13Egypt52.9-1.9
14Algeria50.81.2
15Iran40.3-2.9


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