2016 Index of Economic Freedom

Jordan

overall score68.3
world rank46
Rule of Law

Property Rights60.0

Freedom From Corruption49.0

Limited Government

Government Spending62.0

Fiscal Freedom91.7

Regulatory Efficiency

Business Freedom64.9

Labor Freedom68.4

Monetary Freedom83.1

Open Markets

Trade Freedom73.4

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 6.7 million
  • GDP (PPP):
    • $79.6 billion
    • 3.1% growth
    • 2.7% 5-year compound annual growth
    • $11,927 per capita
  • Unemployment:
    • 11.1%
  • Inflation (CPI):
    • 2.9%
  • FDI Inflow:
    • $1.8 billion
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The Syrian crisis has disrupted trade and caused a large influx of refugees, straining public services, finances, and labor market conditions in Jordan. Despite ongoing consolidation, the budget is in deficit, and public debt has increased to about 90 per cent of GDP.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 68.3 (down 1.0 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 46th
  • Regional Ranking: 5th in the Middle East/North Africa Region
  • Notable Successes: Trade Freedom and Monetary Freedom
  • Concerns: Management of Public Spending and Business Freedom
  • Overall Score Change Since 2012: –1.6

Privatization has reduced state ownership across most sectors, but substantial challenges to long-term development remain, particularly in implementing deeper systemic reforms, including improved transparency and rule of law, critical to the emergence of a more dynamic private sector.

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Background

In 2011, constitutional monarch King Abdullah responded to Arab Spring demonstrations by dismissing his cabinet and ceding greater authority to the judiciary and parliament. The government also implemented two economic relief packages and a supplementary budget to subsidize the middle class and the poor. Jordan has relatively few natural resources and imports 97 percent of its energy needs. Foreign loans, international aid, and remittances from expatriate workers support the economy. In 2000, Jordan joined the World Trade Organization and signed a free trade agreement with the United States; in 2001, it signed an association agreement with the European Union. Jordan negotiated a $2.1 billion standby arrangement with the IMF in 2012 to finance its budgetary and balance-of-payments deficits. The conflict in Syria and Iraq has brought regional trade to a standstill and triggered an influx of more than 600,000 Syrian refugees.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 49.0 Create a Graph using this measurement

The use of family, business, and other personal connections to advance business and financial interests (known as wasta) is endemic in Jordan. Weak investigative journalism, limited access to information, and a lack of institutional checks and balances undermine efforts to combat widespread corruption. Property rights are respected for the most part. The judiciary is generally independent, but the king is the ultimate authority.

Limited GovernmentView Methodology

The top individual income tax rate is 14 percent. As of January 1, 2015, the standard corporate tax rate rose to 20 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 15.3 percent of GDP. Government spending amounts to 35.6 percent of total domestic output. The deficit has risen to over 6 percent of GDP, and public debt stands at about 90 percent of GDP.

Regulatory EfficiencyView Methodology

The business start-up process takes fewer than 10 procedures, but the cost of licensing requirements equals over five times the average annual income. Progress in reforming bloated public-sector employment has been dismal, and the labor market remains rigid. Continuing with liberalizing reforms that began with the elimination of fuel subsidies, the government plans to move toward market-based electricity pricing.

Open MarketsView Methodology

Jordan’s average tariff rate is 8.3 percent. The Jordan Investment Board screens foreign and domestic investment. Investment in some sectors of the economy is capped. Many state-owned enterprises have been privatized. The evolving financial sector remains relatively stable. The state owns no commercial banks but does own five specialized credit institutions. Activity and liquidity in capital markets remain limited.

Country's Score Over Time

Bar Graph of Jordan Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Jordan to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Bahrain74.30.9
2United Arab Emirates72.60.2
3Qatar70.7-0.1
4Israel70.70.2
5Jordan68.3-1.0
6Oman67.10.4
7Kuwait62.70.2
8Saudi Arabia62.10.0
9Morocco61.31.2
10Lebanon59.50.2
11Tunisia57.6-0.1
12Egypt560.8
13Algeria50.11.2
14Iran43.51.7


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