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Jordan Strategy Forum launches Product Space Report

By JT - Aug 09,2020 - Last updated at Aug 09,2020

AMMAN — The Jordan Strategy Forum (JSF) has launched the third version of its regular series about “Jordan’s Product Space”. 

The report, titled “Economic Complexity: Where Does Jordan Stand? Improving Exports and Competitiveness”, is part of the forum’s efforts to understand the economy’s exports, and to encourage stakeholders to seize new opportunities to develop and diversify the exports of the national economy, according to a JSF statement.

The report addresses the issue of Economic Complexity, developed by Harvard University, as a possible factor that explains the disparities in economic growth and prosperity between nations, read the statement.

“The income gaps between countries are due to their productive capabilities,” the statement said.

Due to the difficulties to measure the productive capabilities of economies, the Harvard Team coined the term “Economic Complexity Index” (ECI). The ECI uses the exports of countries, and reduces every country’s economic system into two dimensions: Diversity and ubiquity, according to the statement.

Diversity is the number of products that a country exports competitively — a country exports a commodity competitively when its exports of the product, as a share of total world exports, is higher than global exports of the product as a share of total global trade.

Ubiquity is the number of countries in the world that are able to export a product competitively.

Based on the concepts of diversity and ubiquity, the Harvard team ranks countries all over the world according to their complexity index and provides a “product space” for each economy. 

With reference to the level of Jordan’s Economic Complexity and the shape of its product space, the report reveals three observations. 

First, for decades, the economy has “never realised” a surplus in its trading performance. During the period 2011-2019, the mean annual trade deficit to GDP ratio was equal to -34.8 per cent, the forum said. 

Second, Jordan exports are concentrated. For example, textile and accessories account for about 27.6 per cent of total national exports. 

Third, Jordan’s national exports are also concentrated in terms of geographical distribution. The greater Arab Trade Zone Countries and North America make-up more than 70 per cent of total national exports, the JSF said in the statement.

The report notes that Jordan’s ECI has come down from +0.35 in 2010 to +0.17 in 2018. The Jordanian economy has become “less complex”, the statement said. 

Within this context, the report discusses the reasons behind the deterioration in Jordan’s complexity.

Based on the economy’s main exported products — textile products, chemical products and agricultural products — it is shown that the complexity of these products have not been to the advantage of Jordan’s ECI, according to the statement.

The report stresses the importance of boosting the Economic Complexity Level of Jordan and increasing Jordanian exports’ competitiveness as a way for realising sustainable economic growth. “Jordan cannot continue to export more of the same,” the JSF said.

Moving forward, Jordan should utilise its production-base and exploit new opportunities to diversify its production and exports. Jordan needs to gradually transition to an “ever-expanding range” of new and more complex products, according to the report.

 

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