Micro Economics Class- March 14th Project 1: The idea of this project is to understand the internal and external

factors affecting an industry and that is reflected on a good or service. Students are asked to analyse Market conditions, Industry conditions, also to evaluate Supply, Demand. You are also asked to look at Future Outlook. Finally, I need you to examine the challenges. Your conclusion should have steps what to do next.... You can email me at anytime : samerasfour@gmail.com Background: Jordan, like many other Middle Eastern countries, is facing daunting economic and demographic challenges as a result of global financial and economic crises and the Arab Spring. Gross Domestic Product (GDP) grew only modestly in the first half of 2011 at 2.4%. Real GDP growth is expected to recover in 2012, but will struggle to reach the highs of 2004-2008. According to a recent Economist Intelligence Unit report, GDP is expected to pick up to an average of 4.8% between 2013 and 2015. This growth rate will not be sufficient to generate adequate employment opportunities for those seeking to enter the labor force. Jordans Competitiveness and the Business Climate The World Economic Forum (WEF) defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. Jordans international competitive rankings for indices such as the World Banks Doing Business Index and the World Economic Forums Competitiveness Index have not been high historically, and they have decreased steadily over the last few years. In 2011, Jordans ranking in the World Banks Doing Business Report dropped from 100 to 111. Their standing in the WEFs Global Competitiveness Report has fallen from 50 in 2010 to 65 in 2011. This trend needs to be reversed if Jordan is to achieve rapid economic growth. The main weaknesses, as indicated in the reports, are related to (1) innovation, (2) labor market efficiency, (3) getting credit, (4) starting a business, and (5) protecting investors. These weaknesses are not new and have been frequent subjects of discussion between the government, the private sector and the international community. Transparency International conducts an annual Corruption Perception Index. For the past 4 years Jordan has ranked close to 50th worldwide and 6th in the Middle East region, with neighboring Syria, Egypt and Lebanon all scoring significantly lower. Jordan scores 5 out of a range of 10 (10very clean and 0 very corrupt). While this signifies that moderate corruption does exist, it is unlikely to be a major constraint to business growth. Economic development efforts in Jordan suffer from the weakness of both public and private sector institutions. Government institutions are hampered by constantly changing Ministers and a resistance to implement progressive changes and support investments that will encourage competitiveness. This has been particularly true after the Arab Spring when the government took on a much more conservative approach designed to ensure future stability. There are many promising young entrepreneurs and industries in Jordan but many businesses are not fully poised

to enter global markets in a significant way, hampered both by capacity and competitiveness gaps and by regulatory challenges. Efforts to increase Jordanian competitiveness must include improvements in numerous interdependent factors such as the business environment, finance, infrastructure, research and development (R&D) as well as constant collaboration between government and public institutions, the private sector, educational and research entities, intermediaries, financial institutions, and other enablers and stakeholders. Workforce Development While educational levels are relatively high, the skills taught in schools are often mismatched with the requirements of the labor market, resulting in a Jordanian unemployment rate that is amongst the highest in the region. The unemployment rate reached 13.1% during the first quarter of 2011(10.8 % for males and 22.8% for females) and a recent World Bank report indicated that an estimated 60% of working-age youth are jobless. More than 60,000 young Jordanians are expected to enter the workplace in 2011. There are five young people under the age of fifteen that are poised to enter the labor market for every one Jordanian that is nearing retirement age. Furthermore, International Labor Organization (ILO) data suggests that there will be further deterioration in the labor market as Qualifying Industrial Zones (QIZ) employment is falling and the number of companies requesting Ministry of Labor (MOL) permission for mass layoffs tripled in 2009. During the preceding period of prosperity Jordans youth obtained high levels of education with expectations that they would land high quality job and commensurate salaries. However the supply for high quality jobs is significantly less than expected resulting in new job seekers having the choice between low skilled and low pay employment or unemployment. Jordan has one of the lowest rates of female economic participation among Arab states. Women constitute 48% of the population but their economic activity rate does not exceed 12%4 despite the fact that 91% of women are literate and a higher proportion of girls (55%) than boys (45%) go through the secondary school cycle. Many of the economic opportunities created thus far by the Jordanian government have remained inaccessible to women, despite their equivalent levels of education. The low rate of womens participation in the workforce, and the economy in general, is leading to increased pressure on the remaining breadwinner and in female-headed households. These depressed rates of low economic participation of women in Jordans economy represent foregone economic growth opportunities for the Jordanian economy and for Jordanian households locked in poverty. The challenge for Jordan is to foster a truly competitive environment, one that embraces innovation as a path to prosperity. Jordan has not been spared from the wave of unrest and protesting that has recently spanned the Middle East North African (MENA) region. These protests, although frequent, have for the most part been peaceful to date. Unemployed but well educated youth make up a significant portion of those protesting. Jordanian youth are frustrated

because they cannot find reasonable employment and see little hope of improvement in the future. Traditional avenues of employment, mainly in the public sector, are limited. It is only the private sector that has the capacity to create sufficient jobs and reduce youth unemployment. However, for many of the reasons mentioned above, the private sector in Jordan is struggling to grow. There is a need to both address the challenges that exist in the enabling environment and, at the same time, assist in promoting the growth and competitiveness of private industries that have the capacity to hire and promote the professional growth of Jordanians seeking work.