International competitiveness of Jordan's manufacturing industry
The International competitiveness of Jordan's manufacturing sector has recently been of considerable concern to officials in Jordan. This study examines Jordan's capacity to compete successfully in foreign markets and with imports in Jordan's market, and the impact of the recent policies on the price and short-run aspects of competitiveness for a period from the mid-1970s to the early 1990s. Unlike previous studies, assessment and analysis of Jordan's relative competitive position are built on indicators constructed exclusively for the manufacturing sector covering import, export, and overall dimensions of competitiveness. The OECD model has been employed using export, import and producer prices, and trade double weights for manufactures. The results show that Jordan's competitiveness deteriorated until the mid-1980s. Subsequently, competitiveness improved with the most pronounced gains being achieved at the end of the 1980s and in the early 1990s, particularly in import and overall competitiveness. The maintenance of a strong Jordanian dinar associated with other unfavourable internal and external developments in Jordan's and competitors' prices before the mid-1980s, and the favourable developments in these prices including the devaluation of the Jordanian dinar at the end of the 1980s, may explain the initial deterioration in competitiveness and the subsequent improvement. Between the mid-1970s and the late-1980s the gains achieved in import competitiveness process were reflected in most years in declines in the import penetration ratio; and in the case of the export competitiveness process were translated into higher market shares. The Constant-Market-Share approach shows that one-third of the expansion in Jordan's manufactured exports was attributable to improved competitiveness. The Commodity effect, particularly for chemicals, was favourable to this expansion, while the concentration of exports on the sluggish import demand of the Middle Eastern countries resulted in a slight unfavourable market effect.