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Services bloom in Jordan抯 economyTuesday, January 19, 2016 > 09:26:12
(The Jordan Times)
Jordan’s economy is dominated by services. Major indicators of the economy confirm this established fact.
All efforts, plans and incentives meant to increase the industry’s share of the gross domestic product have failed.
The trend was always moving in the opposite direction, while the services sector, without support, subsidies and exemptions continued to grow faster than the supported and sometimes subsidised industry, agriculture and electricity sectors.
As a starting point, one has to take note of the fact that value added in services is responsible for 67 per cent of Jordan’s GDP, while the combined contribution of industry, agriculture, mining, construction, water and electricity does not exceed 33 per cent of GDP.
Another indicator that points out the superiority of services and their major role in the Jordanian economy is the fact that preliminary estimates show the balance of trade in commodities results in a big deficit.
By contrast, the trade balance of services shows a surplus, indicating that Jordan is successful in services, but not in industry.
Trade deficit in commodities is evident in the statistics showing imports in 2015, which reached JD14.5 billion against exports of JD5.58 billion, a deficit to the order of JD8.9 billion.
On the contrary, the surplus in the service trade balance is the result of exports of JD4 billion against imports of JD3.1 billion, with a net surplus of JD900 million.
One third of the services produced in Jordan are meant for export. They include medical services, higher education, tourism, transport, banking, insurance, computer programming, etc., all of which are distinguished activities able to compete in the world market.
They deserve encouragement. It is not bad for Jordan to have as high a share of services in its economy as 67 per cent. Services form, for example, around 85 per cent of the economy of the largest and most developed economy, the US’.
The high rate of services in Jordan’s economy is not a weak point. It does not cause the economy to be fragile, exposed and too sensitive to external factors as claimed by some analysts. It is a strong point that secures the flexibility needed to adapt to changing circumstances.
One should not forget another advantage attributed to services: they create many jobs, most of them more qualified and earning high salaries.
People engaged in services could make up around 72 per cent of the labour force.
Moreover, services do not need huge amounts of capital, like industry. The cost of generating a job opportunity in services does not exceed one third of the cost of generating a job in industry.
In other words, investment in services is more feasible, with higher return relative to the capital involved.