Is there A Relationship between Raw Materials Exports and Economic Growth in Jordan? Using the Co – Integration Method for 1990-2019

Abstract

Jordan is one of the few countries in the world with huge reserves of potash and phosphates. Potash covers 60% of the space of the country with reserves reaches 1.3 billion tons, compared to 1.46 billion tons of phosphate. Exports of raw materials reach 46% of total exports. In spite of this fluency, the national economy still has a steady slowdown in economic growth and the total number of raw materials unable to make a positive shock in the economy. In this study, the two researchers attempt to estimate the production function of raw materials exports in Jordan during the period 1990-2019 and to resolve the relationships between production factors of labor and capital with short-run economic growth, as well as the size and type of economies of scale in the raw material sector. The co-integration method is used during 1990-2019. The study using the Cobb-Douglas production function. The study concludes that labor and raw material exports have a positive impact on the economic growth in Jordan in the long run. In the short run, all the independent variables have a positive impact on economic growth. On the other hand, the total value of the factors of the production (labor and capital) is 0.989 units, so the economies of scale in the sector are decreased. This means that an increase in the average cost of the unit produced. The study recommends that the Jordanian economy needs to concentrate investment in promising subsectors in extractive industries, the need to strengthen the productive base with more technologies appropriate to the size of production in the sector, as well as the need for qualified labor, and more control the marketing and administrative expenses in the sector.