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Jordan Remittance Income
Remittances to Jordan traditionally have been the largest
source of foreign currency earnings and a pillar of economic
prosperity. In 1980 remittance income was US$666 million, but by
1986, according to official statistics published by the Central
Bank, remittance income had increased to an estimated US$1.5
billion at the then-prevailing exchange rate. According to a UN
estimate, however, Jordan's 1986 remittance income was about
US$1.25 billion and subsequently declined slightly. Actual
remittance income was probably higher because much of the money was
funneled back to Jordan through unofficial channels. Economist Ian
J. Seccombe, who has produced authoritative studies of the
Jordanian economy, estimated that real remittance inflows were
perhaps 60 percent higher than the official receipts. Another
expert, Philip Robins, estimated that real remittances could be
twice the official receipts. Official figures did not include
remittances in kind, such as automobiles brought back to Jordan and
then sold by returning expatriates, nor remittance income exchanged
at money changers rather than at banks.
Throughout the late 1970s and early 1980s, official statistics
reported that remittance income exceeded export income, in some
years by over 200 percent. Remittance income accounted for between
25 percent and 33 percent of the liquid money supply, about 20
percent of the GNP, and exceeded the figures for total government
development spending, or total foreign aid receipts.
As early as the mid-1970s, however, remittance income and labor
export created economic and demographic distortions. The problems
were so pronounced that in the 1970s Crown Prince Hasan called for
the creation of an international fund to compensate Jordan and
other labor-exporting nations for the negative effects of
emigration.
The billions of dollars that Jordanian emigrants pumped back
into their home economy fueled prolonged double-digit inflation,
especially of housing prices. To rein in inflation and to attract
and capture remittances, the government tried to tighten the money
supply by maintaining high interest rates for bank deposits. As a
consequence, loan costs rose, hampering the investment activity of
businesses and farms that needed finance. Also, and because
remittances tended to be spent on imported luxury goods, the
merchandise trade deficit expanded.
Jordanian labor export also had an unanticipated impact on the
domestic labor force. Over time, foreign demand grew
disproportionately for Jordan's most highly educated and skilled
technocrats and professionals, such as engineers. This "brain
drain" caused a serious domestic scarcity of certain skills. At the
same time, wages for unskilled labor were bid up as Jordanian
employers competed for manual workers. Progress on major
infrastructure development projects was hampered. For example,
according to a United States government study, the labor shortage
idled heavy equipment on the East Ghor (also seen as Ghawr) Canal
project for up to 70 percent of the work day. Ironically, Jordan
was obliged eventually to import "replacement labor"--usually lowskilled workers from Egypt and South Asia--who transferred their
wages out of Jordan. The number of foreign guest workers in Jordan
grew compared to the number of Jordanians working abroad. The
foreign guest workers also sent home a greater proportion of their
wages than did the Jordanians working abroad. In the 1970s, such
wage outflows constituted less than 10 percent of Jordan's
remittance inflows, but by the late 1980s they offset nearly 25
percent of inflows, neutralizing much of the benefit of labor
export.
Data as of December 1989
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