Does industry have a future?

The question whether Jordanian industry has a future must have been on the minds of the officials who prepared the “Jordan 2025” document to represent the vision for Jordan after 10 years, as requested by His Majesty the King.

Let me put the question in other words: Is Jordan a country of industry or of services?

It seems the planners of the vision opted to see the future of Jordan as an industrialised country. This trajectory was evident in targeting the industrial contribution to the gross domestic product to rise from 22 per cent in the base year (2014) to 27 per cent in 2025.

This means that the industrial sector should grow at a higher rate than the economy in general.

At the same time, the plan expects the contribution of services sector to the GDP to decline from 68 per cent in the base year to 61 per cent 10 years later.

It is clear that the planners see the future of the Jordanian economy in industry rather than in services.

All previous three-year and five-year economic plans over the past half a century adopted this objective and showed bias in favour of industry at the expense of services.

To the disappointment of many, the result was in the opposite direction.

Whether planners like it or not, Jordan is a country of services in the first place. Industry was always weak and unable to compete in the local market and in export markets. It expects government favours in many ways.

What will actually happen in the coming 10 years is that the services’ contribution to GDP will continue to remain high or to rise because they have the actual advantage in the Jordanian economy.

By services I mean tourism, medical services, higher education, communications, technology, banking, insurance, trade, transport, etc.

These activities are the backbone of the economy. They grow on their own strength. They support the Treasury financially and, unlike industry, do not act as a burden.

Industry, on the other hand, is knocking at the doors of the government to save it. It is unable to survive on its own; not in the domestic market and not in export markets.

Industry demands more tax exemptions and higher protection as it is under stress due to the government’s unwise trade policies: it entered into free trade agreements with advanced industrial countries in Europe and America, and countries that subsidise their industries, such as Turkey and the Gulf states, the products of which swept the local market at a time the local industry lacks the capacity to provide products qualified to match imports or be close in value.

Free trade agreements with Europe, Turkey and Saudi Arabia forced Jordan’s industry to shrink. They opened up exchange of trade in one direction. Trade balances with those countries are hopelessly against Jordan.

No one could realistically expect small Jordanian industries to compete with the giant countries with which the government entered free trade agreements. Jordanian infant industries cannot, by any means, compete against the subsidised Turkish and Gulf states industries.

It would be an achievement if industry’s contribution to GDP maintained its current level.