Jordan's is relatively a small economy, open to the outside world. As such, it is influenced to a great extent by external factors which do not lend themselves to scrutiny. Under the circumstances, uncertainty becomes the name of the game. It calls for a special approach to management, because decision makers are faced with too many probabilities and variables that are too hard to predict.
Therefore, rigid strategies and long-term plans are only a waste of time and effort. Such strategies and plans become obsolete almost immediately after formulating them. Jordan has excelled in managing crises and was successful in turning most of them to its advantage.
Among external factors that impact the Kingdom's economy are: 1) the volume of Arab and foreign grants to the treasury to support the budget or to finance certain vital projects (5 per cent of the gross domestic product); 2) the fluctuation of petroleum prices, the cost of which forms up to 20 per cent of the GDP; 3) the flow of Arab and foreign investments ($2 billion); 4) finding jobs in the Gulf states (one-third of Jordan's manpower); 5) guest workers (one- third of Jordan's labour force); 6) unstable circumstances in the region, sometimes bordering on civil war (Palestine, Iraq and Lebanon); 7) international terrorism (Al Qaeda and the like).
The fact that external factors have a big impact on the Jordanian economy and its financial position is being used in two different ways, depending on whether one is a supporter or an opponent of the government. Those who sympathise with the government use external factors as a ready excuse for shortcomings and failures. They blame factors not controllable by the government, blaming inflation and deficit on the rising prices of petroleum.
Those who oppose the government try to explain successes and other economic performances by external factors, insisting that the government should not claim credit.
The high growth of the economy, for instance, is explained as either the result of the wise policies and good management of the government or as the result of windfall benefits and the goodwill of donors and creditors.
Success or failure at the economic level does not depend only on external factors. Good management of the economy at the macro level is also essential. In fact, some positive external factors are produced by internal efforts.
Foreign investments, for instance, do not flow to the country without good reason; it is evident that we did our homework. Foreign grants do not come by accident. Jordan must be playing a constructive regional role. Security and stability do not come about by good luck. The acceptability of our manpower in the Gulf states' markets is not without justification.
All in all, some external factors should be earned by hard work, and others should be taken as a given.
Favourable external factors are, no doubt, helpful, but the internal administration of the economy is vital. If we cannot control some external factors, we definitely have full control of how to deal with, and respond to, them.
The high economic growth rate registered during the past three years is, at least in part, the result of an elaborate economic reform programme, whereby distortions were removed, investment climate was improved and productivity was enhanced. The moderate political role played by Jordan was also instrumental, and its financial fruits can be noticed and quantified.
A small country like Jordan cannot afford to look internally and aim at self-sufficiency and protection. Opening up to the outside world is the only viable option, including, but not limited to, the freedom of trade and improving competitiveness. There is no way to isolate the country to avoid the consequences of regional and international developments. We have to be positive, influence and be influenced by such developments, whether favourable or otherwise.
By Fahed Fanek
© Jordan Times 2007
