Date of Award:

5-1985

Document Type:

Dissertation

Degree Name:

Doctor of Philosophy (PhD)

Department:

Economics and Finance

Department name when degree awarded

Economics

Committee Chair(s)

Basudeb Biswas

Committee

Basudeb Biswas

Committee

W. Cris Lewis

Committee

L. Dwight Israelsen

Committee

Reed Durtschi

Committee

Keith Taylor

Abstract

This study examines Jordan's development policy and analyzes the role of Jordan's external public borrowing in economic development during the period 1967-1983. Mainly, Jordan's rapidly increasing external indebtedness is related to its development strategy which is based on the concept of unbalanced growth. This strategy has emphasized' the concentration of development resources (including external loans) in certain areas (e.g. Amman and Zarka) and certain economic sectors (e.g. industry and service) which are assumed to be growth propelling. The agricultural sector has been seriously ignored in Jordan's development process.

Jordan's growth has been quite impressive, but the problems of poverty and inequality have remained intact. On an ave rage, the real growth rate of the GNP was 7 percent per year during the period of study. However, the Jordanian economy suffers not only from inequality i n income distribution but also in opportunity (i.e. lack of access to goods and services).

In order to show the impact external borrowing has on Jordan's economic growth and on a set of macroeconomic variables, an econometric model based on the production function approach was developed and a set of regression equations was specified. The findings of the model and a series of regress ion analyses showed that external borrowing was negatively associated with GOP growth rate and domestic savings. However, it was positively associated with in vestment, imports and exports. The association with consumption was positive, but statistically insignificant. Overall, external debt retarded economic growth and didn't help to reduce Jordan 's deficits during the 1967-1983 period.

Increasing debt deteriorate the balance thereby affecting the service obligations recently may of payments in the near future, level of Jordan's international reserves and possibly threatening its development process. Hence, it is argued that Jordan should adopt vital policy measures to curb its external debt burden.

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