Services dominate Jordan’s economy

Government economic planners always favoured material production and looked down at the services sector, treating it as a weak point.

Based on this understanding, all economic and social plans adopted by Jordan over the past five decades aimed at boosting material production, providing it with exemptions and generous incentives.

Services, meanwhile, were left to take care of themselves, which they did. 

The material production targeted by planners is the combination of industry, agriculture and construction. The emphasis is placed on industry.

Services that planners think do not deserve encouragement and stimulating include healthcare, higher education, tourism, banking, insurance and transport.

Jordan’s Ten Year Vision (2015-2025), which was recently issued, adhered to the principle of favouring material production at the expense of services.

The vision aimed at raising industry’s share in the gross domestic product from 22.3 per cent to 27.4 per cent within 10 years, raising the agricultural contribution to the GDP from the present 2.8 per cent to 3.4 per cent, and the construction share from 4.2 per cent to 5.8 per cent.

All the projected expansion of material production will, according to the vision, take place at the expense of services.

The contribution of services should decline from 68.1 per cent to 61.4 per cent of the GDP.

Unfortunately for our economic planners, things are going, and will continue to go, in the opposite direction.

Whether planners like it or not, the Jordanian economy is an economy of services.

The services component in the GDP is rising without incentives and exemptions, and despite the fact that they are required to pay the highest taxes.

Since services make up two-thirds of the GDP, any substantial growth of the GDP is dependent on the growth of services.

Services are seen and neglected by our planners as a slogan or concept, but they definitely do not dare to call for a reduction, freezing or slowing down in tourism activity, medical services, higher education, banking and insurance or transport and communications.

Jordan’s specific circumstances, its geographical position, and the quality of its manpower make it a services centre of first class.

Industry and agriculture, important as they may be, are struggling for survival. They are unable to compete, both in the local market and abroad. We cannot objectively depend on them for the future.

In this respect, things are expected to go in the other direction.

Industrial production will grow at a snail’s pace, unable to compete in price or quality with products imported from the Far East or the Gulf states.

Agricultural production is condemned to decline due to loss of arable land to expanding towns and cities, not to mention the lack of sufficient water for irrigation and the near absence of local labour willing to work in agriculture.

On the contrary, the share of services in the GDP will continue to rise, to reach perhaps 70 per cent by 2025, reflecting Jordan’s inherent advantage in the sector.

This is what happened in the past and this is what will happen in the future.