The Economic Impact of the Regional Instability and the Syrian Civil War on Jordan: An Economic Performance Index Analysis

Abstract

The Middle East and North Africa (MENA) region has had a long history of civil wars with significant political, social, and economic consequences. The Syrian civil war that began at the time of the Arab Spring in 2011 has affected neighboring countries, and the greater region in many ways. Although some attention has been given to the human catastrophe that the war has inflicted, especially with respect to refugees, little attention has been given to its economic impact on neighboring countries. This research will analyze how the Syrian civil war has affected the economy of the Hashemite Kingdom of Jordan. As Syria’s southern neighbor, Jordan’s economy was challenged in significant ways: the country received a substantial number of Syrian refugees, its main trade route was largely eliminated, and it engaged in significant military activity to protect itself from several direct Syrian-related military threats. The research focus was to better understand the burden the neighboring war posed to the Jordanian economy. To address this, the study employed the economic performance index (EPI) to examine Jordan’s overall economic performance before and after war. It assessed the impact of regional instability on Jordan’s trade flow by calculating the annual percentage change in importation and exportation. This study found that the civil war has negatively affected the overall performance of the Jordanian economy and trade. The results indicated that the Jordanian economy performed better before the Syrian civil war. The analysis revealed that the Jordanian economy experienced an increase in the rates of inflation and unemployment, as well as surging governmental deficits and declining investments and gross domestic product (GDP) growth as a result of the civil war in Syria. The macroeconomics analysis reveals the level to which the Jordanian economy has been affected by the civil war and raises valuable lessons for economic policy.