Dr. Yusuf Mansur*
Export growth alone is not enough to
judge the success of an economy. A country may export more while remaining
locked into simple, low-value, or primary products. This is why the Economic
Complexity Index (ECI), developed by Harvard's Growth Lab, has emerged as a
more comprehensive measure of long-term economic development.
The index assesses not only the
diversity of a country's exports but also the sophistication and rarity of
those products relative to the rest of the world. It reflects the amount of
knowledge, technology, skills, and institutional capability embedded in
production. Countries that export a wide range of technologically advanced
products score highly, while those dependent on raw materials or basic
commodities receive lower rankings.
Jordan ranked 26th globally in 2001,
but by 2023 its position had fallen to 45th, representing a decline of 19
places over 22 years, despite improvements in several other economic
indicators. The real concern is not merely Jordan's current ranking, but the
fact that it once occupied a much stronger position. This suggests that
Jordan's productive capabilities have not evolved as rapidly as those of
competing economies, causing its relative standing to decline even as exports
continued to grow. More broadly, Jordan remains positioned around the middle of
the global rankings, performing below what its educational achievements and
human capital would suggest.
Perhaps even more significant is the
long-term trend. Jordanian studies indicate that the economy has become less
complex over the past decade. The decline in its relative ranking reflects the
fact that many other countries have upgraded their industrial capabilities and
diversified their export baskets at a much faster pace.
Why has this happened? The first
reason lies in the structure of Jordan's exports. The country's export basket
continues to rely heavily on phosphates, potash, fertilizers, garments, food
products, and certain chemical industries. These sectors are undoubtedly
important—they generate foreign exchange earnings and create employment—but
they are not sufficient on their own to propel Jordan into the ranks of the
world's more complex economies. The Economic Complexity Index rewards countries
that export machinery, precision equipment, electronics, industrial components,
specialized chemicals, medical devices, and other products that only a limited
number of countries can manufacture competitively.
Second, Jordan has not yet succeeded
in transforming its strong educational base into an equally strong productive
base. Every year, the country graduates large numbers of engineers,
pharmacists, and information technology specialists. However, many of these
highly skilled professionals either work abroad or are employed in service
industries whose value is not fully reflected in export-based measures of
complexity. This creates a clear paradox: Jordan possesses substantial human
capital, yet its institutions have not converted enough of that knowledge into
sophisticated, exportable industrial products.
Third, investment in research,
development, and innovation has remained relatively modest. At the same time,
collaboration between universities and industry has been weak. In highly
complex economies, universities do not operate in isolation; they play a
central role in developing new products, advanced materials, and innovative
production processes. In Jordan, however, much academic research remains
disconnected from the practical needs of businesses and international markets.
Fourth, Jordanian manufacturing faces
structural challenges arising from the country's relatively small domestic
market and the high cost of production, particularly energy, financing, and
transportation. Regional instability and border closures over the past decade
have further constrained firms' ability to expand into new markets. Since the
1990s, Jordan's strategic vision has emphasized greater integration with
advanced economies, which generally offer larger and more stable markets than
many neighboring countries. Yet this objective has only been partially
realized. In addition, Jordan's participation in global value chains remains
relatively limited, reducing opportunities for technology transfer, industrial
learning, and productivity growth.
Fifth, industrial policy has not
always been sufficiently focused or consistent. Economic complexity cannot be
increased simply by supporting every sector equally. Instead, governments must
identify industries that build upon existing capabilities while enabling
movement into higher-value products. Jordan does not need to start from
scratch. It already possesses competitive foundations in pharmaceuticals,
fertilizers, chemicals, information technology, and renewable energy. The
challenge is to move these sectors beyond traditional production toward more
specialized and technologically sophisticated products.
In the phosphate sector, for example,
the objective should not be merely to increase exports of raw materials, but to
expand production of specialized fertilizers, industrial chemicals, and battery
materials. In pharmaceuticals, Jordan can move beyond generic medicines into
biotechnology, clinical research, medical devices, and active pharmaceutical
ingredients. In the energy sector, opportunities exist to manufacture
components for solar energy systems, energy storage technologies, green
hydrogen, and associated engineering services.
Jordan should also recognize digital
exports and knowledge-based services as integral components of economic
complexity, even if they are not fully captured by traditional merchandise
trade indicators. Software development, cybersecurity, digital financial
services, engineering design, and creative industries all have the potential to
become significant sources of value creation and export earnings.
The objective, therefore, is not
simply to increase exports but to transform their composition. This requires a
coherent industrial policy, a dedicated innovation and advanced manufacturing
fund, incentives linked to technology transfer and workforce development,
government procurement policies that encourage advanced domestic production,
and stronger partnerships between universities and the private sector.
Jordan's declining position in
economic complexity should not be viewed as a final verdict but rather as an
early warning. The country possesses the educational and industrial foundations
needed to reverse the trend. Still, it must accelerate its transition from
exporting what is readily available to producing goods and services that embody
greater knowledge, technological sophistication, and value added.
Ultimately, the question that should
guide Jordan's economic policy is not simply: How can we increase the value of
our exports? Rather, it should be: How can we ensure that every dinar of
exports contains more knowledge, technology, and value added? Only then will
economic growth represent not merely an increase in quantities produced, but a
genuine enhancement of the nation's productive capabilities.
*The writer is a Former
Jordanian Minister of State for Economic Affairs.
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