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Economic Development in Jordan (SABEQ)

2006-2012 || U.S. Agency for International Development

Abstract

The Jordan Economic Development Program (SABEQ) was a broad based economic reform initiative focused on private-sector led growth and job creation. Working with both the public and private sectors, Deloitte provided technical assistance to diversify Jordan’s competitiveness in global markets, spur public sector reform processes, and increase the number of available jobs for Jordanians. The program’s multi-sector activities have had the combined effect of helping to expand trade and investment, enhance productivity and competitiveness through innovation, promote regional development, reduce government constraints, and further develop the financial sector. The program’s activities to create jobs, increase exports, enhance revenues, and facilitate investment focus on those sectors in the knowledge economy where Jordan’s educated workforce constitutes a competitive advantage.

The Challenge

The Jordanian economy, with its narrow export base, was challenged to create job opportunities for its growing workforce. With strikingly high unemployment, Jordan’s labor force did not have the skill sets that matched those required in the job market. The country’s economy was narrowly focused on a few industries and within a small geographic area. Productivity, innovation, and global competitiveness lagged while poverty and unemployment remained high in some areas.

How We Helped

Deloitte’s approach was to analyze more than a dozen sectors to identify those that held the most potential for growing Jordan’s economy in the near term through integration into global value chains. Ultimately, this led to the prioritization of five sectors:  Medical Services, Clean Technology and Water Conservation Entrepreneurship, Information and Communications Technology, Architecture and Engineering Services, and Contract Research Organizations within the pharmaceuticals sector.

Within these sectors, the program identified gaps, prioritized interventions, and launched innovation clusters to promote dialogue and game-changing connections among stakeholders. Interventions included such activities as enhancement of technical quality and capabilities through specialized training, achievement of internationally-recognized accreditations, participation in high-visibility international events and exhibitions, creation of new associations and incubators, enhanced service delivery and advocacy of existing associations, creation of a unified “Turn to Jordan” brand, and promotion of pilot projects in new technologies.

To sustain growth in these sectors and promote investment in Jordan, the program also supported the Government of Jordan (GOJ) in the promotion of business-friendly public policy. To develop a legal and regulatory climate conducive to investment, the program supported the establishment of the Development and Free Zones Commission (DFZC) as the sole zone authority, including implementing related legal instruments, supporting systems, and change management. Work with the Jordan Investment Board (JIB) resulted in a resurgence of JIB’s ability to promote Jordan in an effective manner, leading to the generation of thousands of leads and millions of dollars in investment.
The program also developed a consultative mechanism for government that provides business organizations with practical tools for the design, implementation, and discussion of policy issues. The program specifically built GOJ capacity in using regulatory assessment tools around vocational licensing, building permits and consultation law. Additional legal and regulatory support resulted in the passage of a Minimum Capital Law. This law reduced the minimum capital requirement for opening a company from 30,000 JD to 1,000 JD, a change which facilitated the creation of over 7,500 companies to date.

The program’s cross-cutting solution teams support these efforts with activities to expand employment opportunities, develop work-place skills, foster gender integration, and deepen competitive business skills in areas such as export promotion, advocacy and with professional communities. Much of these activities take place in the regions, including the launch of career development and knowledge centers at regional universities, and employment matching and training at regional industries.

Solution

Achieving program goals has been largely due to its innovation-based strategy to promote competitiveness.  Synchronizing this strategy with strategic initiatives such as Jordan 2020 and the National Agenda laid the foundation for significant growth in knowledge economy sectors.

The capstone of the program’s work across the targeted sectors was the formation of innovation clusters to provide a sustainable mechanism for growth. The innovation clusters brought together stakeholders in each targeted sector to drive synergy within the economic development effort.   Through their focus on five pillars of development, namely a) business development, b) access to capital, c) enabling environment, d) research and development, and e) investment, the innovation clusters created an approach that identified gaps and linked existing programs for greater effectiveness.  

To date, the program has facilitated the creation of 62,000 jobs, an increase in exports in targeted sectors by more than 75%; an increase in direct revenues in targeted sectors by more than 65%; and over one billion dollars in foreign investments. Our team is implementing a $6.3 million grants program targeting local organizations that contribute to the growth of Jordan’s economy, particularly those in the knowledge economy. To date, over 120 grants totaling over $6 million have been awarded to business associations, NGOs, and educational and R&D institutions.  

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