Like many lower-middle-income countries, Jordan embraced the ideals of free market capitalism that characterized the globalization era of the 1990s and first decade of the 2000s. Jordan was the first Arab country to conclude free trade agreements with the United States in 2001 and third with the European Union in 2002. During that same period, it privatized a number of its industries, such as those in the telecom, mining and industrial sectors. Foreign direct investment grew from 0.2% of GDP in 1996 to a record 23.5% of GDP in 2006.That peak in foreign investment coincided with the global financial crisis of 2007, which may have also marked peak globalization, after which it fell into retreat because of its destabilizing impact on national politics, interests and sovereignty.
Populist leaders like Donald Trump were elected by the very same rural voter base that had become increasingly jobless and marginalized because of neoliberal market forces that relocated jobs to urban centers as well as overseas. Brexiteers extracted the United Kingdom out of the third largest global economy because of the perception that Britain had lost its sovereignty and national identity in a much larger political configuration. More recently, the conflict in Ukraine and strategic competition between the US and China has forced many countries to rethink open trade and investment ties and fueled protectionism.
The pandemic also dealt a blow to globalization because it reemphasized the importance of self-sufficiency for national security. For its part, climate security also highlighted how inefficient supply chains had become under globalization, forcing countries to cluster production and consumption closer together.
Little thought has been given to Jordan’s globalization experience and its foray into market capitalism
While the pandemic was a wake-up call for Jordanian authorities to consider increasing self-sufficiency in strategic sectors of the economy like food security, little thought has been given to Jordan’s globalization experience and its foray into market capitalism. This matters because many of the economic ills being witnessed in the country today are a result of this experience.
Take privatization for instance. Under the guise of modernization, neoliberal economic policies created private sector monopolies (almost exclusively foreign owned) that seized the productive assets of the state without assuming any of its socio-economic burdens. Excessive taxation by the government in recent years is strongly tied to the fact that the government has few forms of other domestic revenue as a result of this privatization drive. This excessive taxation is fueling the outflow of talent and capital abroad, heightening Jordan’s dependence on foreign aid and assistance and throwing the government deeper into debt. Of equal importance, privatized industries had historically played an important role in building Jordanian society while neoliberal economic policies prioritized and continue to prioritize profitability ahead of everything else.
As the trend of unfettered hyper-globalization that characterized the past two decades reverses, countries like Jordan need to consider opportunities to position themselves in the new version of the global economic order that emerges. Jordan for instance is uniquely positioned to benefit from what Professor Klaus Schwab (Chairperson of the World Economic Forum) has referred to as trust-shoring, the practice of trading and transacting between trusted countries, as well as near-shoring, the practice of trading and transacting with countries in close geographic proximities to reduce supply chain risks and climate emissions.
Countries like Jordan need to consider opportunities to position themselves in the new version of the global economic order that emerges
Jordan’s close political relationship with the United States and the European Union and its geographic proximity to the latter should position Jordan favorably to realize both.
To brushstroke Jordan’s experience with globalization as a failure is perhaps unfair. Lower-middle-income countries like Jordan rarely set global economic trends and in many ways must acquiesce to the accepted wisdom and inherent logic of economic development that is produced by the West. While some Jordanians hold a sneaking suspicion that Jordan’s globalization experience was part of a systematic plan to erode the state’s power, others utilize this for their own political gain and seek to undermine government wherever possible.
The truth of the matter is that globalization did spur Jordan to reform its economy, many aspects of which may have been archaic, but a lack of inclusion, transparency and thoughtful policy-making undermined the very same social contract that had made Jordan so resilient and stable in the past.
Undoubtedly, there are countless other lessons to be learned from this experience. There is no point in dwelling in the past unless it is to learn from it.
Image: Jmossjm
