Jordan is a small but strategically important country in the Middle East, bordered by Syria, Iraq, Saudi Arabia, Israel, and the West Bank. The country operates in a complex and dynamic environment, influenced by various political, economic, social, technological, environmental, and legal factors. To understand the implications of these factors on Jordan’s development and progress, it is essential to conduct a PESTEL analysis. This article going to explore the key findings of a PESTEL analysis of Jordan and discuss their implications for the country’s future growth and success.
About Jordan
| Category | Information |
|---|---|
| Capital | Amman |
| Official language(s) | Arabic |
| Other recognized regional languages | English |
| Government | Unitary parliamentary constitutional monarchy |
| King | Abdullah II |
| Prime Minister | Bisher Al-Khasawneh |
| Area | 89,342 sq km |
| Population | 10.5 million (2021 est.) |
| Currency | Jordanian dinar (JOD) |
| GDP (nominal) | $44.7 billion (2020 est.) |
| GDP per capita | $4,172 (2020 est.) |
| Human Development Index (HDI) | 0.728 (2020) (high) |
| Main industries | Tourism, information technology, pharmaceuticals, agriculture |
Political Factors
Jordan has 10 million people in the Middle East. Jordan’s external environment, including political issues that affect economic growth and development. It can be examined using PESTEL. Due to significant unemployment and limited freedom of expression, this country is plagued by political instability. International relations dynamics, where regional powers have created an unpredictable geopolitical climate that could disrupt trade with important partners like the UAE and Saudi Arabia, also affect Jordan’s political scene.
Government policies also slow liberalization since bureaucracy hinders business decision-making in Jordan (Saikal et al., 2020). Therefore, investors may view operating costs in Jordan unfavorably compared to other countries globally because locally-based companies face significant administrative burdens when trying to fully engage their markets and are subject to laws set forth by these decision-makers despite possible overbearing effects on potential revenue streams.
Economic factors
Jordan’s emerging market economy has grown rapidly in the past decade. Jordan’s economy can be better understood using PESTEL analysis. Jordan’s diverse economy relies on US, German, and Japanese help and investments. To attract investment and create jobs, the government invests in education, healthcare, and transportation infrastructure. Its export-oriented manufacturing sector is a substantial contributor to GDP due to its advantageous location as a hub for trade and tourism.
Inflationary pressures from growing import costs raise consumer goods prices, and SMEs’ higher borrowing costs due to poor credit ratings hurt their financial stability. Recent policy reforms have reduced regulatory restrictions to encourage foreign investment, but potential barriers to starting new businesses or expanding existing ones still prevent SMEs from achieving sustainable growth targets.
Social factors
Social factors shape any nation’s commercial climate. Jordan needs PESTEL examination of numerous social factors. First, large population expansion may increase demand for products and services. However, youth unemployment is rising. To match market expectations, new jobs or education must be created. Second, Jordan’s location on ancient trade routes that connected Asia and Europe has made it a diverse society with many ethnicities and nationalities, which has both pros and cons.
Thirdly, urbanization and modernity have changed lifestyles, including diets that can cause childhood obesity (WHO statistics report). Businesses in Jordan’s social milieu must carefully negotiate these obstacles to prosper regionally or nationally(Albatayneh et al., 2022)
Technological factors
The Kingdom of Jordan, located in the heart of the Middle East, is a rapidly growing economy with significant technological advancements. The Technological factors play a vital role in determining the country’s competitive advantage and future growth potential. In terms of Infrastructure, Jordan has made considerable investments in modernizing its telecommunications network in recent years.
As per analysis, Mobility has become an integral part of Jordanian society as Smartphone penetration reaches over 50%. The government is committed to promoting IT development and attracting foreign investment through economic incentives like tax breaks for technology start-ups. Furthermore, E-commerce and Digitalization are emerging trends that have transformed trade practices and created new online marketplaces while also providing novel opportunities for small business owners to thrive on social media platforms.
However, cybersecurity remains an area where more work needs to be done as digital transformation creates new channels for cyber-attacks amid rising dependence on technology-based systems across sectors including financial services and healthcare domains.
Environmental factors
Jordan, a Middle Eastern nation, uses PESTEL to analyze environmental issues. Jordan faces water scarcity, desertification, deforestation, air pollution, and waste management. Climate change-related droughts and heatwaves worsen these environmental challenges. Poor infrastructure has made renewable energy sources harder to obtain, increasing hazardous gas emissions and air pollution, which harms local populations.
The government has responded by establishing new policies for conserving water resources, public awareness campaigns promoting sustainable farming practices, and other critical initiatives aimed at mitigating some of these challenges facing its ecosystem while initiating solutions to protect biodiversity in Jordan’s threatened ecosystems, including wetlands and forests essential for sustaining irreplaceable wildlife species within its borders (Abdoh et Thus, considering economic and environmental factors when doing business or investing in Jordan over time could improve sustainability standards in light of global climate change concerns.
Legal Factors
Legal variables define Jordan’s socio-economic landscape, therefore PESTEL analysis must include them. Commercial regulations in Jordan are crucial to enterprises and international investment. These laws govern financial transactions by enforcing contracts, transferring property rights, and resolving disputes. Jordan also protects patents, trademarks, and copyrights, unlike many other Middle Eastern countries.
Labor laws, which govern employment contracts including compensation, hours, and overtime leave, are another important consideration. It also respects workers’ right to organize unions, collectively bargain, and conduct industrial action when necessary while safeguarding their safety in dangerous working circumstances through occupational health standards compliance policies enforced by relevant authorities. Thus, local and international companies seeking to invest or enter Jordan’s growing markets must understand these legal factors.
Conclusion
In conclusion, the PESTEL analysis of Jordan reveals a complex and rapidly changing environment, with various opportunities and challenges. The country’s strategic location, diverse economy, and young population are significant strengths that can help it to navigate the challenges associated with each of the six factors.
At the same time, Jordan must be proactive in addressing weaknesses, such as high unemployment rates, limited natural resources, and political instability in the region. By leveraging its strengths and addressing its weaknesses, Jordan can continue to grow and succeed in a highly competitive global environment, improving the standard of living for its citizens and strengthening its position in the region.
References
- Abdoh, H. M. B., Saany, S. I. A., Jebur, H. H., & El-Ebiary, Y. (2020). The effect of PESTLE factors on E-government adoption in Jordan: A conceptual model. IJETT, 68, 19-23.
- Albatayneh, A., Hindiyeh, M., & AlAmawi, R. (2022). Potential of renewable energy in water-energy-food nexus in Jordan. Energy Nexus, 7, 100140.
- Saikal, S. L., Ge, L., Mir, A., Pace, J., Abdulla, H., Leong, K. F., … & Padovese, V. (2020). Skin disease profile of Syrian refugees in Jordan: a field‐mission assessment. Journal of the European Academy of Dermatology and Venereology, 34(2), 419-425.