2013 Index of Economic Freedom

Jordan

overall score70.4
world rank33
Rule of Law

Property Rights60.0

Freedom From Corruption45.0

Limited Government

Government Spending68.8

Fiscal Freedom93.6

Regulatory Efficiency

Business Freedom69.2

Labor Freedom75.5

Monetary Freedom82.0

Open Markets

Trade Freedom79.6

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 6.3 million
  • GDP (PPP):
    • $36.9 billion
    • 2.5% growth
    • 5.1% 5-year compound annual growth
    • $5,900 per capita
  • Unemployment:
    • 12.3%
  • Inflation (CPI):
    • 4.4%
  • FDI Inflow:
    • $1.5 billion
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Jordan’s economic freedom score is 70.4, making its economy the 33rd freest in the 2013 Index. Its score is 0.5 point better than last year, with gains in property rights and the control of government spending but an increase in the level of perceived corruption. Jordan is ranked 4th out of 15 countries in the Middle East/North Africa region.

Despite a challenging policy environment that reflects the region’s economic and political uncertainty, Jordan registered its sixth consecutive year of progress toward greater economic freedom, achieving “mostly free” status for the first time. Regulatory processes are relatively efficient and competitive. Improvements in public finance and the privatization of government enterprises have been staples of the reform agenda. Recent reforms have made business formation and operation easier, and the minimum capital requirement has been eliminated.

Nonetheless, substantial challenges to long-term economic development remain, particularly in implementing deeper institutional and systemic reforms that are critical to strengthening the foundations of economic freedom in Jordan. Political influence can be a problem within the judicial system, undermining respect for the rule of law, and corruption is a widespread aspect of life.

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Background

In 2011, King Abdullah responded to “Arab Spring” demonstrations by dismissing his cabinet and ceding more authority to the judiciary and parliament. The government also implemented two economic relief packages and a supplementary budget to subsidize the living conditions of the middle class and poorer citizens. The economy depends heavily on international aid and remittances from expatriates. 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. Qualifying Industrial Zones export goods made with some content from Israel to the United States duty-free. Public debt is a growing problem.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 45.0 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. 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 traditional aspect of the culture and a normal part of doing business.

Limited GovernmentView Methodology

The top income and corporate tax rates are 14 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden equals 15.9 percent of total domestic income. Government spending is equivalent to 32.3 percent of total domestic output. The deficit has risen slightly to 6.2 percent of GDP, and public debt stands at about 70 percent of GDP. Hikes in the gas tax and energy prices were implemented to narrow the deficit.

Regulatory EfficiencyView Methodology

The business start-up process takes seven procedures, but licensing requirements cost more than five times the level of average annual income. Progress toward reforming bloated public-sector employment has been dismal, and the labor market remains rigid. Inflation has subsided, and many controls have been eliminated, but government efforts to continue liberalizing prices have been stymied by the Muslim Brotherhood.

Open MarketsView Methodology

The trade-weighted average tariff rate is 5.2 percent, with non-tariff barriers, including some import licensing, adding to the cost of trade. Foreign investors receive national treatment, but bureaucracy, red tape, and inconsistent enforcement of regulations inhibit new investment. The evolving financial sector remains relatively stable. The state owns no commercial banks but does own five specialized credit institutions.

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
1Bahrain75.50.3
2Qatar71.30.0
3United Arab Emirates71.11.8
4Jordan70.40.5
5Oman68.10.2
6Israel66.9-0.9
7Kuwait63.10.6
8Saudi Arabia60.6-1.9
9Morocco59.6-0.6
10Lebanon59.5-0.6
11Tunisia57-1.6
12Yemen55.90.6
13Egypt54.8-3.1
14Algeria49.6-1.4
15Iran43.20.9


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