Macroeconomic Evaluation of Privatization in Jordan (1998-2011) Theoretical, Descriptive and Empirical Analysis

Abstract

It has been fifteen years since Jordan started privatizing its public sector in 1998. Several articles[1] have been carried out to study privatization in microeconomic level in particular the efficiency of Privatized Firms in Jordan. One important motivation for privatization in Jordan is to help develop the economy by boosting GDP growth rates. This study provides a descriptive, and empirical analysis of Jordan's Privatization process. It tries to investigate the effect of Privatization in Jordan on several macroeconomic indicators such as economic growth, public debt, unemployment rate, foreign direct Investment and financial development. The results from Engle Granger Method of cointegration show no significant evidences have been found between  privatization and some of these macroeconomic variables which are integrated from the same level. However, privatization in Jordan was found to be accompanied by a growth in the levels of inflation rates and foreign direct investments during the period of study. Privatization in Jordan exercises its positive effects on the growth of GDP indirectly via its positive impact on the foreign direct investment.

Keywords: Privatization, Jordanian economy, macroeconomic impacts of privatization, Granger Method of cointegration.

[1] Khrisat, Khasawneh & Al-Waked (2012), Hassoneh, Ershaida, Mobaydeen & Rezq ( 2010), Bdour, Qaqish & Ta'ani (2007) and Al-Tarawneh (1999).