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The Impact of Trade Liberalization on the Manufacturing Sector in Jordan

Author

Listed:
  • Mohammad Alawin
  • Bader Obeidat
  • Muawiya Attiyat
  • Buthaina Muhtaseb
  • Ghazi Al-Assaf
  • Alaaeddin Al-Tarawneh

Abstract

This study examines the impact of the degree of trade openness, real exchange rate (RER) and the level of imports on the production of the manufacturing sector in Jordan for the monthly period (1992-2012). This study applies the Chow test for structural changes. The results show that the year 2000, when Jordan officially joined the World Trade Organization (WTO), represents a year of structural change. Thus, the study has divided the full period into two sub-periods. In addition, the results of the study indicate the absence of a cointegration relationship over the period leading up to Jordan's accession to the WTO. The period that follows the trade openness has shown the presence of cointegration and long-term relationship among the variables. Specifically, for the second period, the study found that the degree of trade openness has a positive and a statistically significant effect on the manufacturing production. Therefore, the study recommends that the government continue to support the manufacturing sector and not to raise any input costs on it, especially given the relatively high cost of fuel and electricity. This should keep the competitiveness of this sector relatively high.

Suggested Citation

  • Mohammad Alawin & Bader Obeidat & Muawiya Attiyat & Buthaina Muhtaseb & Ghazi Al-Assaf & Alaaeddin Al-Tarawneh, 2017. "The Impact of Trade Liberalization on the Manufacturing Sector in Jordan," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 10(1), pages 1-34, February.
    • Handle: RePEc:ibn:jsd123:v:10:y:2017:i:1:p:34
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    References listed on IDEAS

    as
    1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    2. Rim BEN AYED MOUELHI, 2007. "The Impact Of Trade Liberalization On Tunisian Manufacturing: Structure, Performance And Employment," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 25, pages 87-114.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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