2018 Index of Economic Freedom

Jordan

overall score64.9
world rank62
Rule of Law

Property Rights57.6

Government Integrity51.9

Judicial Effectiveness57.3

Government Size

Government Spending69.4

Tax Burden92.4

Fiscal Health27.7

Regulatory Efficiency

Business Freedom63.0

Labor Freedom58.9

Monetary Freedom88.7

Open Markets

Trade Freedom82.0

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 7.0 million
  • GDP (PPP):
    • $85.6 billion
    • 2.5% growth
    • 2.6% 5-year compound annual growth
    • $12,278 per capita
  • Unemployment:
    • 13.2%
  • Inflation (CPI):
    • -0.8%
  • FDI Inflow:
    • $1.5 billion
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Jordan’s economic freedom score is 64.9, making its economy the 62nd freest in the 2018 Index. Its overall score has decreased by 1.8 points, with steep declines in the fiscal health, government spending, and property rights indicators overwhelming improvements in judicial effectiveness and government integrity. Jordan is ranked 5th among 14 countries in the Middle East and North Africa region, and its overall score is above the regional and world averages.

The Economic Policy Council has launched a plan to boost growth through a range of economic reforms and infrastructure projects, funded by both the government and the private sector, to improve the business environment. The government intends to continue fiscal consolidation, including revenue-raising measures and improving tax collection. There has been little progress on labor market reform, and economic freedom is further curtailed by corruption and the judicial system’s vulnerability to political influence.

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Background

Independent from the U.K. since 1946, the Hashemite Kingdom of Jordan is a constitutional monarchy with relatively few natural resources. King Abdullah II took the throne in 1999 with an ambitious reform agenda. The economy, one of the region’s smallest, is supported by foreign loans, international aid, and remittances from expatriate workers. In 2000, Jordan joined the World Trade Organization and signed a free trade agreement with the United States. In 2011, the king responded to Arab Spring demonstrations by dismissing his cabinet and ceding greater authority to the judiciary and parliament. Ongoing conflicts in Iraq and Syria have severely disrupted Jordan’s economy and regional trade, and more than 700,000 Syrian and Iraqi refugees have strained its limited resources.

Rule of LawView Methodology

Property Rights 57.6 Create a Graph using this measurement

Government Integrity 51.9 Create a Graph using this measurement

Judicial Effectiveness 57.3 Create a Graph using this measurement

Interest in real property is recognized and enforced after it has been recorded in legal registries. The judiciary is generally independent, and the courts facilitate and protect the acquisition and disposition of property. The law provides criminal penalties for official corruption, but the government does not implement it well. Officials often engage in corrupt practices with impunity in the absence of institutional checks and balances.

Government SizeView Methodology

The top individual income tax rate is 14 percent. The standard corporate tax rate has been increased to 20 percent. The overall tax burden equals 13.0 percent of total domestic income. Over the past three years, government spending has amounted to 32.0 percent of total output (GDP), and budget deficits have averaged 5.8 percent of GDP. Public debt is equivalent to 95.0 percent of GDP.

Regulatory EfficiencyView Methodology

Bureaucratic obstacles and delays affect business formation and operation, and there seems to be little momentum for reform. In 2016, the U.S. Department of Labor removed the Jordanian garment industry from its “List of Goods Produced by Child Labor or Forced Labor.” In 2017, Jordan’s government continued its multiyear plan to increase prices to reduce losses at the state-owned electric and water companies.

Open MarketsView Methodology

Trade is significant for Jordan’s economy; the combined value of exports and imports equals 91 percent of GDP. The average applied tariff rate is 4.0 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average. The evolving financial sector remains relatively stable. The state owns no commercial banks but does own five specialized credit institutions. Activity and liquidity in capital markets remain limited.

Country's Score Over Time

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Regional Ranking

rank country overall change
1United Arab Emirates77.60.7
2Qatar72.6-0.5
3Israel72.22.5
4Bahrain67.7-0.8
5Jordan64.9-1.8
6Kuwait62.2-2.9
7Morocco61.90.4
8Oman61-1.1
9Saudi Arabia59.6-4.8
10Tunisia58.93.2
11Egypt53.40.8
12Lebanon53.2-0.1
13Iran50.90.4
14Algeria44.7-1.8


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