Currently, Jordan is ranked 36th in the world in terms of
the ratio of remittances to the GDP. The countries that are ranked higher than
Jordan are almost all low-income developing countries, and some are extremely
poor.
اضافة اعلان
Remittances from expatriate Jordanians (a workforce of
approximately 270,000), mainly in the oil-producing countries of the Gulf, have
been a major source of revenue and foreign currency to Jordan. Historically,
one of the main reasons the banking industry in Jordan was established was to
handle remittances. However, remittances have been decreasing as a percentage
of the GDP, which should sound the alarm or at least prompt some policy
measures.
Let us look at the data.
In 1972, a year before the October War, the percentage of remittances to
GDP was 2.6 percent, the lowest ever. After the October War and the quadrupling
of oil prices, the percentage started to rise in an accelerated manner,
reaching 21.2 percent of the GDP in 1975 and 24 percent in 1976. After 1976, it
began to decline as Jordan’s economy grew at unprecedented rates. The
remittances percentage finally bottomed at 18.4 percent in 1980, and then began
to rise again, reaching 23.6 percent in 1982.
After two years of a slight decline, the percentage of
remittances to GDP rose to 24.9 percent in 1984, the highest percentage ever,
as more and more Jordanians returned with their savings due to a global oil
glut, thus infusing large amounts of funds into the economy. The disastrous
years 1988 and 1989 saw an increase in the percentage that was more likely due
to the fall in GDP than an increase in remittances.
After 1989, as would be expected when people are worried
about the destination they are sending money to, remittances started to fall as
a percentage and continued the slide until 1991. In 1992 the remittances jumped
to 15.9 with the repatriation of Jordanians from the Gulf countries due to the
invasion and liberation of Kuwait.
Remittances continued to rise thereafter as Jordanians
continued to receive compensations for their losses and some began to find
their way back into the Gulf countries. The trend lasted until 1994 when the
percentage declined slightly, then peaked in 1996 at 22.8 percent after the
signing of the peace agreement with Israel. The next peak (22.4 percent) came
in 2000, after which the percentage has been dropping steadily. It has been
steadily falling since 2014, from a high of 17.3 percent to 8.9 percent in
2020.
Jordanian talent, unable to find gainful employment at home, cannot be blamed. At the same time, banning such a valuable export is not a reasonable solution. The only feasible and proper answer is to create jobs at home…
Why is it falling? The answer is manifold: some Gulf
countries allowed the expatriates to purchase real estate there at low down
payments and interest rates, which took the funds away from the Jordanian real
estate market; the Jordanian labor force is finding worthy competition from the
laborers of other countries, which means that they have to accept lower wages;
Jordanian expatriates are purchasing real estate in countries that grant
citizenship to property owners (having a second citizenship has become a global
trend in recent years); increasingly people are going global in their
investment, and real estate is no longer the only option (stocks and
cryptocurrencies are others, for example).
One should not however lament the dwindling inflow of
remittances; after all, the remittances are a paltry price for the brain drain
that induced them. A Jordanian leaving to work elsewhere is akin to plucking a
tree from one’s farm and sending it to another to produce there. The exporting
farmer loses the effort he had spent growing the tree for the few pennies he
acquires from lending it to the neighboring farm which reaps the fruits,
packages them, exports them, and as a result, becomes wealthy.
Jordanian talent, unable to find gainful employment at home,
cannot be blamed. At the same time, banning such a valuable export is not a
reasonable solution. The only feasible and proper answer is to create jobs at
home, and develop ways and means to cumulate added value from the fruits of the
brain power in Jordan. In other words, development is badly needed, and it
should be topmost on the agenda. Time to start thinking about a solution. The
problem is already here.
The writer is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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