This paper discusses major macroeconomic issues and places them in the context of Jordan and three of her neighbours; Syria, Saudi Arabia and Israel.
The major macroeconomic issues important to a given economy and which also indicate the economic performance of that economy according to McConnell and Brue are unemployment, GDP, inflation and human development index. In most cases, the human development index is be termed as the welfare of the people in that economy as it encompasses per capita GDP, life expectancy, education (attainment and literacy) and in remote cases purchasing power.
Unemployment is expressed as a percentage of the number of persons constituting the workforce that is not involved in gainful employment. According to McConnell and Brue (2005), the workforce, in this case, is usually persons aged 18-65. Children, students and senior citizens are not involved in this. In most cases, there is always a given number of individuals not employed due to various reasons such as sickness, switching jobs etc hence the classification of unemployment into frictional, structural cyclical among others. Economists recommend an unemployment level of 4% for an economy to function well.
Inflation is often defined as the general increase in the price level in an economy. McConnell however dispute this explanation and say that inflation is the excess supply of money in an economy with an increase in the general price level being the most obvious sign.
GDP as a summation of all the economic activities in an economy is often regarded as the most reliable indicator of the performance of an economy through its suitability has of late been challenged as it rarely captures the real change in social welfare of the people (Thornhill, 2009). Unfortunately, these figures might be flawed as a result of inflation and hence the need to change the figure from its nominal form to real form by adjusting it to inflation to obtain real GDP.
The real GDP growth rate in Jordan
Before the credit crunch hit the global economy, the country was growing at a steady rate. This was mainly fueled by its solid and steady manufacturing economy based on phosphates and potash reserves in the making of fertilizers. Growth is also attributed to closer ties with the western world thus more foreign investments in the country. Such developments plus a growing IT sector are creating valuable employment opportunities thereby reducing unemployment levels.
As earlier said, the stance taken by Jordan in embracing western relations has been responsible for turning the fortunes of the country around. More western companies are investing in the growing economy as a foot ground for more developments in the Middle East and the larger Arab Asia. Again the government has relaxed the Islam culture that in one way or another promotes gender inequality. As a result, there has been higher female enrolment in schools and even more women participating in the labour force thus driving the economy further into prosperity.
References
Jordan GDP – real growth rate.
List of countries by Human Development Index. Web.
McConnell, C. and Brue, S. Economics: Principles, Problems, and Policies, New York: McGraw-Hill Professional, 2005.
Thornhill, T. “A measure remodeled” Financial Times, 2009. Web.