Trade Liberalization Policy: is it working for Jordan?

Jordan - 19 November 2012

Jordan has followed a policy of trade liberalization and active economic integration during the last three decades. Although it has clearly succeeded in expanding the size foreign trade, it is less obvious whether this trade expansion has positively reflected in term of real economic growth. The main objective of the study is to evaluate the impact of such policy of trade liberalization on real economic growth. A sample of annual data covering the period 1970-2009 is used in the estimation. The relationship between trade openness and real economic growth is evaluated at both the aggregate and sectoral levels. The study utilized different econometric techniques including Granger causality, static and dynamic regression analysis to achieve its objective. The results of econometric analysis indicate to the existence of both static and dynamic positive effects of trade openness on overall real economic growth. It also provides evidence in support to the existence of positive and significant effect of trade openness on the per-capita output of both industrial and construction sectors.
 

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