Catch Up Effect
Regrettably, when examining the data provided, it can be seen that there is not a significant catch-up effect between the Jordanian and Qatar markets. Qatar’s economic growth is significantly ahead of Jordan’s, which is mostly due to the strength of its oil and gas industry.
Economic Growth
An examination of the economies of Qatar and Jordan shows a significant degree of disparity wherein Qatar far outpaces Jordan in terms of GDP (Qatar: 173 billion, Jordan: $36 billion), GDP per capita (Qatar: 92,501, Jordan: $5,899) and GDP percentile growth (Qatar: 18.8%, Jordan: 2.5%). The reason behind Qatar’s economic success can be attributed to its export-based economy that centers primarily on exporting oil, natural gas, and petroleum-based products to various international consumers (Sharp, 3-6). As a direct result of such actions, Qatar was able to become the richest country in the Arab world due to the power of its natural resource exports alone. On the other end of the spectrum, Jordan is, unfortunately, is not rich in resources as compared to other countries within the Middle East (CIA: The World Factbook: Jordan, 344).
Lacking significant amounts of natural resources in the form of oil and gas resulted in the country relying on international exports in order to address its energy needs (Mishal, 20-34). It must be noted that due to its current location the country has had to deal with significant scarcities in its water supplies and, as such a large percentage of income that could have gone into industrial development, is instead spent on providing basic utilities to its local populace (Country Report: Jordan, 1-20).
Standard of Living
When comparing the standard of living of Jordan and Qatar, it can be seen that the difference is actually quite low, primarily due to the significant amount of investments the Jordanian government has made into education resulting in the creation of a higher standard of living despite having fewer natural resources. Recent studies such as Sharp (2012) state that Jordan has a high standard of living with the current rank of 11th within the developing world. In fact, it can even be stated that Jordan has the second-highest standard of living within the Middle East being second only to Qatar.
The reason behind this is a combination of government initiatives in affordable housing, financial management, and education, which have resulted in significant boons for the local population. Not only that, despite the relative instability within the Middle East, Jordan actually enjoys a relatively high level of political stability with few, if any, instances of social unrest. All of this has led to significant improvements in the overall perception of foreign investors in the country, resulting in high levels of foreign direct investments, which have boosted the country’s industrial potential to a significant degree. It must also be noted that due to the demand for Jordanian labor within the Middle East, this has also resulted in an increase in foreign currency remittances to Jordan, which has enabled it to boost its foreign currency reserves.
Employment
Despite such obstacles, the Jordanian economy is actually quite robust in terms of the strength of its labor force as compared to Qatar. Based on the study of Khatoon (2010) it can be seen that the Jordan is actually one of the largest suppliers of skilled labor within the Middle East, easily surpassing Qatar in terms of the amount of its population that is involved within the local labor force (Khatoon, 21-32). It must be noted, though, that reliance on Qatar on its oil and gas industry can actually be considered a negative aspect of its economy, given that oil and natural gas resources are finite in nature. In the long term, it can be expected that when Qatar’s natural resources run out, Jordan will be able to surpass them due to the robustness of its local industries and the strength of its skilled labor force. One particularly interesting aspect of Jordan’s employment profile is that due to the relatively high demand for skilled Jordanian workers, this has resulted in a large percentage of the labor population (approximately 1.1 million) actually being situated in various countries abroad.
It is based on this that current statistics on the country’s labor force are actually inaccurate given that most of these workers remit money back to their families from locations overseas and, as such, contribute significantly to the Jordanian economy without actually being employed within the country. Aside from its industrial parks that are fueled through significant foreign direct investments, Jordan also enjoys rather healthy tourism and medical tourism sector that brings in approximately $4.4 billion in revenue per year. When combined with the country’s IT and agricultural industry, it can be seen that Jordan has a sufficiently diverse assortment of potential industries for its local labor force. This is in direct contrast to Qatar, which is only now starting to develop its local tourism industries through a variety of ventures such as the FIFA World Cup.
Stable Prices
A look at Jordan’s economy reveals a relatively stable local economy, with inflation being kept in between the 4.5 to 5.5 range. While the country was affected by the 2008 financial crisis, as evidenced by the 14 point increase in inflation, overall, Jordan has been able to practice sound macroeconomic policies and has been able to keep inflation within the country to a minimum. The same cannot be said for Qatar; between the periods of 2006 to 2007, the country experienced massive inflation from 11.84% in 2006 to 15.05% in 2008. This may have been due to the significant global demand for oil at the time, as evidenced by data after the 2008 financial crisis (resulting in a drop in the demand for oil) wherein inflation within the country actually fell to -4.86% in 2009 to 1.92% in 2011. Such a result is indicative of the inherent vulnerability of the local economy of Qatar to oil price shifts and, as such, should be a cause for concern given the volatility of oil prices.
Works Cited
“CIA: The World Factbook: Jordan.” CIA World Fact Book (2011): 344. MasterFILE Premier. Web.
“Country Report: Jordan.” Jordan Country Monitor (2011): 1-20. International Security & Counter Terrorism Reference Center. Web.
Khatoon, Syeeda. “Impact OF US FTAS On The Economies Of Israel, Jordan And Bahrain.” International Journal Of Business Insights & Transformation 3.2 (2010): 21-32. Business Source Premier. Web. 2012.
Mishal, Zakia A. “Financial Development And Economic Growth: Evidence From Jordan Economy.” Journal Of Business & Economic Studies 17.2 (2011): 20-34.
Business Source Premier. Web.
Sharp, Jeremy M. “Domestic Politics And The Economy.” Congressional Research Service: Report (2012): 3-6. International Security & Counter Terrorism Reference Center. Web. 2012.