Horticultural exports from Jordan : prices, policies and prospects

To rebuild its foreign exchange reserves, the country needs to strengthen the traded goods sector. This study analyzes the prospects for expansion of Jordanian horticultural exports, focusing on macroeconomic policies which are not directly related to the horticulture sector but which are crucial determinants of the real exchange rate. Chapter II reviews recent developments in Jordan"s macroeconomic circumstances, together with plans and targets for structural adjustments. Chapter III analyzes product and input prices from the farm to the foreign markets, while Chapter IV reviews the special characteristics of Jordan"s labor market, including the impact of devaluations of the Jordanian dinar. Chapter V summarizes the impact of changes in the price of foreign currency on the comparative advantage of Jordanian horticulture. The final chapter develops a model which predicts future exports of vegetables under various exchange rate and macroeconomic policy scenarios. Results show that exports could grow by as much as 11% annually over the next five years if Jordan pursues policies to reduce the fiscal deficit and ensure that the exchange rate reflects its true value. However, if policies permit an appreciation of the real exchange rate (as happened from 1976 to 1988), real exports could decline by more than 50% over the same period.