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A new paradigm for economic growth

Jun 13,2020 - Last updated at Jun 13,2020

Economic growth means achieving a positive increase in the quantities of goods and services that the economy produces during a specific period, usually measured by a fiscal year. What determines the size and rate of economic growth in the economy is the extent of abundance of the factors of production or primary and sub-primary resources. This is known as capital, human resources and their efficiency, which is known as the work component, the extent of technological development and, finally, the productivity component of both the capital and labour components; usually this component is the major contributor to the size and rate of growth in the economy.

What drives economic growth is the volume of both domestic (i.e., private and public consumption) and global demand  (exports) for goods and services produced in the economy. What controls the volume of domestic demand is the rate of population growth and the purchasing power of the population, in addition to the competitiveness of local products in terms of quality and price, compared to what is available in the global markets (imports).

China, for example, has in the past used its economic growth to rely heavily on exports, investment and cheap labour. After a while, the Chinese discovered the shortcomings of such an export-oriented economy and began looking for a more sustainable economic growth model. They came up with a new model of growth driven locally, enhanced by innovation, started by imitation as a start, strengthening local markets and reducing the income gap between the rich and the poor. After China had borrowed technology from the West and prepared it for use in domestic industries, it decided years ago to manufacture the technology and its trademarks.

The Jordanian market is overly open to international markets, and the biggest indication of this is the quantities and volume of imports that enter the Jordanian market and the size and quality of the non-Jordanian workforce present on the Kingdom's land. 

It is not required to close the market, but rather to target economic growth rates. I believe that every commodity imported from abroad is a strong opportunity for every Jordanian citizen and investor to produce that commodity locally, and every expatriate worker can be replaced by a Jordanian worker, whatever his job is.

Our agricultural and pharmaceutical products and some food industries are a living example of the capabilities of our economy.

The driving force behind future economic growth in Jordan must depend in many sectors, mainly on the domestic market first and export markets second. If the local industries can satisfy the tastes and needs of the local market, then they will be able to reach the external markets. We know that the local market is small in terms of population, but it is large in terms of the number and quality of imported goods and services that can begin to be replaced locally if the intention, support and facilities are available.

Replacing any number of imported goods and producing them locally means simply increasing economic growth rates, increasing employment rates, and thus reducing unemployment rates and increasing the Kingdom's foreign exchange earnings.

 

The writer is an economic expert

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