Trade Liberalization and Foreign Investment in Jordan

This paper discusses trade reforms adopted by Jordan since the severe economic crisis it experienced in 1988. These reforms gained momentum in the early 1990's, and in accordance with Jordan's request to join the GATT/WTO, tariff and non-tariff barriers have been reduced gradually. Accompanying these reforms were attempts at reforming investment regulations to attract more foreign investments, improving export incentives and initiating institutional reforms in various areas to promote the industrial sector and to support the shift from an import-substituting strategy to an export-oriented one. Nevertheless, the reforms have not, as yet, achieved their aforementioned goals. The paper, therefore, concludes that Jordan should intensify its efforts in both trade and investment by enhancing domestic producers' competitiveness through market forces. The faster implementation of its liberalization program, the adoption of more trade liberalization, and the expediting of the process of reforming foreign investment legislation will enable Jordan to achieve its ultimate goal of moving from import substitution to export promotion.