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Hashemite Kingdom of Jordan Report No. 103433-JO Public Disclosure Authorized Hashemite Kingdom of Jordan Promoting Poverty Reduction and Shared Prosperity Systematic Country Diagnostic Public Disclosure Authorized February 2016 Middle East and North Africa Region The World Bank Group Public Disclosure Authorized Public Disclosure Authorized Table of Contents Abbreviations .............................................................................................................................................. v Acknowledgements ...................................................................................................................................... i Executive Summary .................................................................................................................................... ii Introduction ................................................................................................................................................. 1 Chapter 1 Context ....................................................................................................................................... 3 Chapter 2 Major features and emerging challenges ................................................................................ 5 Economic Structure ................................................................................................................................... 7 Chapter 3 Conceptual framework ........................................................................................................... 17 Chapter 4 Macroeconomic sustainability ............................................................................................... 21 Debt Trajectory ....................................................................................................................................... 23 Chapter 5 Poverty and Shared Prosperity Assessment ......................................................................... 27 Poverty and Access to Infrastructure Services ........................................................................................ 31 Poverty in the Syrian influx .................................................................................................................... 33 Poverty and Job Creation ........................................................................................................................ 34 Chapter 6 Constraints .............................................................................................................................. 37 Business Climate ..................................................................................................................................... 37 Access to finance ................................................................................................................................. 41 Prevalence of informality .................................................................................................................... 43 Governance ............................................................................................................................................. 44 Transparency and Accountability ....................................................................................................... 46 Environment and Natural Resources ....................................................................................................... 49 Water and Climate Change ..................................................................................................................... 52 Jobs ......................................................................................................................................................... 54 Economic Growth and Labor Market Conditions ................................................................................... 61 Participation of Jordanians in the labor market ................................................................................ 63 Educational Attainment of the Jordanian Labor Force ...................................................................... 65 Non-Jordanian labor force ................................................................................................................. 67 Public sector bias ................................................................................................................................ 67 Gender Differentials ................................................................................................................................ 69 Social Safety Nets ................................................................................................................................... 71 Human Resources: Education ................................................................................................................. 73 Health ...................................................................................................................................................... 76 Energy ..................................................................................................................................................... 79 i Electricity ............................................................................................................................................ 79 Urban and Local Development ............................................................................................................... 81 Transport ................................................................................................................................................. 82 Transport, trade, and welfare ............................................................................................................. 85 Chapter 7 Prioritization ........................................................................................................................... 88 Sector/Thematic Priorities ....................................................................................................................... 91 Knowledge Gaps ..................................................................................................................................... 99 Annex 1 ICT Sector in Jordan .......................................................................................................... 101 Overview of sector ................................................................................................................................ 101 Constraints/Challenges .......................................................................................................................... 101 Opportunities ......................................................................................................................................... 102 Annex 2 Renewable Energy Sector in Jordan .................................................................................. 104 Overview of sector ................................................................................................................................ 104 Progress to date in promoting RE and remaining constraints ............................................................... 104 Opportunities for scale up ..................................................................................................................... 106 Conclusion ............................................................................................................................................ 107 Annex 3 Survey on Quality of Implementation Processes .............................................................. 108 Annex 4 Existing Studies ................................................................................................................... 112 List of Figures Figure ES 1: Jordan SCD Conceptual Framework ................................................................................. viii Figure ES 2: Prioritization ....................................................................................................................... xii Figure 2.1: Jordan: Growth, Fiscal and Current Account Balances, 1980-2015 (% of GDP) ................. 5 Figure 2.2: Jordan per capita growth within range of comparator countries ........................................... 7 Figure 2.3: Growth dynamics idiosyncratic to three sub-periods since 2000 .......................................... 7 Figure 2.4: Economic activity has been diverse ...................................................................................... 8 Figure 2.5: TFP rose steadily until 2009 ................................................................................................. 8 Figure 2.6: Jordan has lower TFP than any other non-oil MENA country ............................................. 8 Figure 2.7: Private demand leads growth since 2011 .............................................................................. 8 Figure 2.8: Jordan’s current account transfers in the top 7 percentile globally ..................................... 10 Figure 2.9: Jordan’s current account deficit in line with other low income countries........................... 11 Figure 4.1: Total reserves in Jordan are comparable to those in upper middle income countries ......... 21 Figure 4.2: Fiscal balances tempered by foreign grants ........................................................................ 22 Figure 4.3: Domestic funds insufficient for current expenditures ........................................................
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