Quantitative growth is not enough: why economies need deeper structural reform
Economic performance is often judged by a single number: the annual growth rate. Yet this figure alone does not reveal the quality of economic transformation. An economy may record positive growth while unemployment remains elevated and per capita income improves only marginally. Stability in numbers does not automatically translate into structural progress. The central question, therefore, is not how much the economy has grown, but how it has grown—and whether that growth reflects a genuine shift in productivity and competitiveness.
Official data from Jordan’s Department of Statistics show that the economy recorded real growth of 2.5% in 2024 compared with 2023. Data through the third quarter of 2025 indicate growth of around 2.7% year-on-year. Government and IMF projections suggest that growth could approach 2.9% in 2026. These figures signal relative stability, particularly in a challenging regional environment. However, they remain within a moderate range that preserves macroeconomic balance without generating a substantial improvement in employment or income levels.
The distinction between limited growth and transformative growth lies in productivity. Economies can expand through higher spending, credit expansion, or increased labor participation. Such expansion may support short-term stability. But long-term transformation occurs only when the efficiency of labor, capital, and technology improves. Productivity growth drives wage increases, strengthens competitiveness, and enhances resilience. Without sustained productivity gains, economic expansion remains fragile and vulnerable to external shocks.
Equally important is the allocation of resources. Growth quality depends not only on how much investment takes place, but also on where it is directed. When capital flows into low value-added activities, the broader impact on exports, job creation, and technological upgrading remains limited. In contrast, directing resources toward competitive and tradable sectors enhances long-term growth potential. The composition of investment, rather than its volume alone, determines whether growth becomes cumulative and self-reinforcing.
Another structural challenge is the size of the informal economy. In several countries in the region, informal activity is estimated to represent between 20% and 30% of GDP. A large informal sector weakens productivity, narrows the tax base, and limits social protection coverage. It also distorts competition between formal and informal firms. Gradually integrating informal activity into the formal economy—through simplified regulations and lower compliance costs—can expand the tax base and improve overall efficiency without imposing additional fiscal burdens.
Public debt further illustrates the constraints facing the growth model. The debt-to-GDP ratio stands at around 90%, according to the latest official data, excluding government liabilities to the Social Security Investment Fund. While this level does not necessarily signal an immediate crisis, it reduces fiscal flexibility. The sustainability of public debt ultimately depends on the relationship between economic growth and borrowing costs. When real growth consistently exceeds the cost of financing, debt becomes more manageable. When growth remains modest, fiscal pressures accumulate over time.
These structural realities highlight the need for more comprehensive tools to assess economic performance. Relying solely on annual growth rates can obscure important weaknesses in productivity, competitiveness, and employment quality. Policymakers could consider developing a national growth-quality index that combines indicators such as productivity growth, the share of export-oriented sectors, productive investment levels, and sustainable job creation. Similarly, public debt should be evaluated not only by its size but by the economic returns it generates.
Public sector efficiency is also central to structural reform. Administrative clarity, regulatory stability, and procedural speed are not merely governance issues; they are productive factors that shape investment decisions and influence economic confidence. Countries that have achieved sustained growth typically combine macroeconomic stability with institutional effectiveness.
In the final analysis, positive growth alone is not enough to ensure that an economy is on a sustainable path. Growth that does not raise productivity, improve resource allocation, and generate value-added employment remains limited in impact. True economic transformation begins when policy shifts from focusing on the quantity of growth to improving its quality. Only then does each increase in output translate into tangible improvements in income, employment opportunities, and economic resilience.
Economic performance is often judged by a single number: the annual growth rate. Yet this figure alone does not reveal the quality of economic transformation. An economy may record positive growth while unemployment remains elevated and per capita income improves only marginally. Stability in numbers does not automatically translate into structural progress. The central question, therefore, is not how much the economy has grown, but how it has grown—and whether that growth reflects a genuine shift in productivity and competitiveness.
Official data from Jordan’s Department of Statistics show that the economy recorded real growth of 2.5% in 2024 compared with 2023. Data through the third quarter of 2025 indicate growth of around 2.7% year-on-year. Government and IMF projections suggest that growth could approach 2.9% in 2026. These figures signal relative stability, particularly in a challenging regional environment. However, they remain within a moderate range that preserves macroeconomic balance without generating a substantial improvement in employment or income levels.
The distinction between limited growth and transformative growth lies in productivity. Economies can expand through higher spending, credit expansion, or increased labor participation. Such expansion may support short-term stability. But long-term transformation occurs only when the efficiency of labor, capital, and technology improves. Productivity growth drives wage increases, strengthens competitiveness, and enhances resilience. Without sustained productivity gains, economic expansion remains fragile and vulnerable to external shocks.
Equally important is the allocation of resources. Growth quality depends not only on how much investment takes place, but also on where it is directed. When capital flows into low value-added activities, the broader impact on exports, job creation, and technological upgrading remains limited. In contrast, directing resources toward competitive and tradable sectors enhances long-term growth potential. The composition of investment, rather than its volume alone, determines whether growth becomes cumulative and self-reinforcing.
Another structural challenge is the size of the informal economy. In several countries in the region, informal activity is estimated to represent between 20% and 30% of GDP. A large informal sector weakens productivity, narrows the tax base, and limits social protection coverage. It also distorts competition between formal and informal firms. Gradually integrating informal activity into the formal economy—through simplified regulations and lower compliance costs—can expand the tax base and improve overall efficiency without imposing additional fiscal burdens.
Public debt further illustrates the constraints facing the growth model. The debt-to-GDP ratio stands at around 90%, according to the latest official data, excluding government liabilities to the Social Security Investment Fund. While this level does not necessarily signal an immediate crisis, it reduces fiscal flexibility. The sustainability of public debt ultimately depends on the relationship between economic growth and borrowing costs. When real growth consistently exceeds the cost of financing, debt becomes more manageable. When growth remains modest, fiscal pressures accumulate over time.
These structural realities highlight the need for more comprehensive tools to assess economic performance. Relying solely on annual growth rates can obscure important weaknesses in productivity, competitiveness, and employment quality. Policymakers could consider developing a national growth-quality index that combines indicators such as productivity growth, the share of export-oriented sectors, productive investment levels, and sustainable job creation. Similarly, public debt should be evaluated not only by its size but by the economic returns it generates.
Public sector efficiency is also central to structural reform. Administrative clarity, regulatory stability, and procedural speed are not merely governance issues; they are productive factors that shape investment decisions and influence economic confidence. Countries that have achieved sustained growth typically combine macroeconomic stability with institutional effectiveness.
In the final analysis, positive growth alone is not enough to ensure that an economy is on a sustainable path. Growth that does not raise productivity, improve resource allocation, and generate value-added employment remains limited in impact. True economic transformation begins when policy shifts from focusing on the quantity of growth to improving its quality. Only then does each increase in output translate into tangible improvements in income, employment opportunities, and economic resilience.
Economic performance is often judged by a single number: the annual growth rate. Yet this figure alone does not reveal the quality of economic transformation. An economy may record positive growth while unemployment remains elevated and per capita income improves only marginally. Stability in numbers does not automatically translate into structural progress. The central question, therefore, is not how much the economy has grown, but how it has grown—and whether that growth reflects a genuine shift in productivity and competitiveness.
Official data from Jordan’s Department of Statistics show that the economy recorded real growth of 2.5% in 2024 compared with 2023. Data through the third quarter of 2025 indicate growth of around 2.7% year-on-year. Government and IMF projections suggest that growth could approach 2.9% in 2026. These figures signal relative stability, particularly in a challenging regional environment. However, they remain within a moderate range that preserves macroeconomic balance without generating a substantial improvement in employment or income levels.
The distinction between limited growth and transformative growth lies in productivity. Economies can expand through higher spending, credit expansion, or increased labor participation. Such expansion may support short-term stability. But long-term transformation occurs only when the efficiency of labor, capital, and technology improves. Productivity growth drives wage increases, strengthens competitiveness, and enhances resilience. Without sustained productivity gains, economic expansion remains fragile and vulnerable to external shocks.
Equally important is the allocation of resources. Growth quality depends not only on how much investment takes place, but also on where it is directed. When capital flows into low value-added activities, the broader impact on exports, job creation, and technological upgrading remains limited. In contrast, directing resources toward competitive and tradable sectors enhances long-term growth potential. The composition of investment, rather than its volume alone, determines whether growth becomes cumulative and self-reinforcing.
Another structural challenge is the size of the informal economy. In several countries in the region, informal activity is estimated to represent between 20% and 30% of GDP. A large informal sector weakens productivity, narrows the tax base, and limits social protection coverage. It also distorts competition between formal and informal firms. Gradually integrating informal activity into the formal economy—through simplified regulations and lower compliance costs—can expand the tax base and improve overall efficiency without imposing additional fiscal burdens.
Public debt further illustrates the constraints facing the growth model. The debt-to-GDP ratio stands at around 90%, according to the latest official data, excluding government liabilities to the Social Security Investment Fund. While this level does not necessarily signal an immediate crisis, it reduces fiscal flexibility. The sustainability of public debt ultimately depends on the relationship between economic growth and borrowing costs. When real growth consistently exceeds the cost of financing, debt becomes more manageable. When growth remains modest, fiscal pressures accumulate over time.
These structural realities highlight the need for more comprehensive tools to assess economic performance. Relying solely on annual growth rates can obscure important weaknesses in productivity, competitiveness, and employment quality. Policymakers could consider developing a national growth-quality index that combines indicators such as productivity growth, the share of export-oriented sectors, productive investment levels, and sustainable job creation. Similarly, public debt should be evaluated not only by its size but by the economic returns it generates.
Public sector efficiency is also central to structural reform. Administrative clarity, regulatory stability, and procedural speed are not merely governance issues; they are productive factors that shape investment decisions and influence economic confidence. Countries that have achieved sustained growth typically combine macroeconomic stability with institutional effectiveness.
In the final analysis, positive growth alone is not enough to ensure that an economy is on a sustainable path. Growth that does not raise productivity, improve resource allocation, and generate value-added employment remains limited in impact. True economic transformation begins when policy shifts from focusing on the quantity of growth to improving its quality. Only then does each increase in output translate into tangible improvements in income, employment opportunities, and economic resilience.
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Quantitative growth is not enough: why economies need deeper structural reform
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