Jordan Table of Contents
When it became apparent that Jordan could not shift the trade balance in the short term by dramatically reducing imports and increasing exports, government economic planners attempted to alter the composition and direction of external trade by slowly pursuing a two-pronged policy. Jordan tried to improve its gross barter terms by exporting products with higher value added; for example, prices of consumer goods tended to be higher and more stable than those of raw materials. Likewise, Jordan tried to increase the efficiency of its imports by increasing imports of capital goods and raw materials while lowering imports of consumer goods. The concept was that Jordan should import relatively more and export relatively less of goods that contributed directly toward economic growth.
The changes in the relative composition of exports were more pronounced than changes in the relative composition of imports between 1974 and 1986, according to figures compiled by the Central Bank. Nonetheless, changes were not dramatic in either category. Consumer goods declined from 45 percent to about 37 percent of total imports, but capital goods also declined from 26 percent to 23 percent of total imports. Raw materials increased from 19 percent to 34 percent of total imports, but this rise primarily reflected a growing oil bill, as Jordan could no longer obtain oil at discount prices. Raw material exports declined from 53 percent to 38 percent of total exports, capital goods exports were cut in half from 12 percent to 6 percent, and consumer goods exports were boosted from 35 percent to 56 percent of total exports. Phosphates continued to generate 20 percent of export earnings.
Although the shift in external trade composition appeared to coincide with government policy, economist Rodney Wilson has pointed out that part of the shift was illusory. Customs classifications may have been misleading and also may have changed over time. Many consumer imports were listed as capital imports and raw material or capital goods exports often were listed as consumer goods exports. For example, fertilizers, a major export, were listed as consumer goods.
Because the categorization of imports and exports according to their value added or ultimate economic disposition was ambiguous, a more specific breakdown of exports and imports by product was warranted. In 1987 energy imports made up approximately 13 percent of the import bill; food imports constituted about 11 percent of the import bill. Basic manufactures, such as textiles, iron, and steel together represented 9 percent of import cost; machinery and transportation equipment constituted 20 percent, and imports of miscellaneous manufactured articles constituted 10 percent of imports (see table 12, Appendix). In 1987 28 percent of Jordanian export earnings were of chemical products, including fertilizers. Raw phosphate exports generated about 25 percent of export earnings, and potash exports accounted for about 11 percent of export earnings. Food and food products constituted about 8 percent and basic manufactures, such as cement, about 4 percent (see table 13, Appendix).
At least some of the shift in import composition appeared to contribute to economic growth insofar as it was correlated with GNP growth. In the early 1980s, the average value of consumer goods imports as a percentage of GNP dropped marginally, from 23 percent to 21 percent, while capital goods imports increased from 15 percent to 23 percent of GNP. The value of total imports as a percentage of GNP climbed almost 40 percent between 1973 and 1983, reaching about 87 percent; however, the rate of this growth slowed during the period and was outpaced by GNP growth.
Data as of December 1989