Department of Political Studies - University of Catania

Jean Monnet Chair of European Comparative Politics


Jean Monnet Working Papers in Comparative and International Politics


Al-Omari Bilal KHALAF

Economics Department, Bologna University

Jordan Economy and the EU Association Agreement


November 2002 - JMWP nį 46

Abstract:

This paper aims at determining the most important variables that could affect Jordanís- EU trade, and to specify the impact of Jordan-EU Association Agreement on Jordan Economy. We have modified the Gravity equation to suite with Jordan case. We suppose that, in the short run, the effect of integration on Jordanís economy could be negative, since the integration will create trade diversion; while in the long run it could be positive due to trade creation. We also suppose that these variables have vital effects on Jordanís exports-imports with the EU countries. However, the regression will illustrate that by single country for each of total exports-imports, and by item products such as; Agricultures, Chemicals, Manufactures, Machinery and Other.**

 

There has been a marked shift in many countries since the early 1980s towards liberalizing international trade. Trade liberalization is a powerful instrument for increasing competition; formal trade policies such as the level and dispersion of tariff are one aspect of the trade regime. Many Free Trade Areas (FTA) have been established around the world (NAFTA, EFTA, LAFTA, EEC, etc.). All these examples indicate to the important of the economic integration between countries.

Currently, economic relations between Mediterranean (MED) countries, and the European Union (EU) are governed by cooperation agreements dating from the 1970s. These agreements are unlimited in duration, and provide duty Ėfree access to the EU markets for industrial goods, and preferential access for agricultural commodities. These agreements were reformed in 1995 at the Barcelona conference into association agreements, with the goal of establishing a Free Trade Area in 2010. The major policy issue facing many countries in the south of Med region is how to follow the rest of the world in liberalizing, privatizing and deregulating markets?

A basic tenet of economic reform efforts undertaken in the last decade in many countries in the region has been that reform be gradual. Jordan is no exception from economic reform programs; it started in 1989 in gradual steps through help of the International Monetary Fund (IMF), and the World Bank (WB).

Why was the EU-Jordan Association Agreement developed?

Foreign initiative in Jordan most notably includes recent major attempts by the United States and the European Union to forge stronger links with Jordan, partly out of concern over potential instability in the region, partly for economic reasons. On the European front, one of these initiatives is the Euro-Med Association Agreement (AA), which signed into law last May. As agreed upon at the Euro Mediterranean Conference held in Barcelona in November 1995. The central feature of this pan-Mediterranean policy is the implementation of free trade agreements between the EU and each of the twelve non-member Southern and Eastern Mediterranean (SEM) countries, including Jordan and Lebanon, by 2010 (though it appears now that this will not be the case in all likelihood until 2012 at the earliest).Under this accord, Jordanian exports are granted immediate duty free entry to the EU, in the case of industrial goods, and phased in reductions of tariffs for agricultural products. Because the agreement provides for reciprocal treatment, the AA will progressively give the EU preferential access to the Jordanian market in a maximum of 12 years from the day the accord comes into force, to include almost all imports from the EU, except for cigarettes, alcohol, used cars, tomato paste, clothing, furniture and carpets, which are important sources of Jordanian customs revenues.At the same time, trade between Jordan, and the EU member countries has remained important for Jordan marginal for Europe. In 2001, Jordanian exports to the EU countries totalled JD50 million. By contrast, 31 per cent of the Kingdom's purchases from abroad came from the EU, equivalent to some JD1.1 billion.

Jordanís Trade Balance with the European Union

Fuelled by the 22% increase in Jordanian imports, the trade deficit rose by approximately 40% in 2001. According to the Central Bank of Jordan, the trade deficit for 2001 was $ 2 billion, compared to $ 1.8 billion in 2000. On the other hand, domestic exports grew at a modest 5% during 2001 with total value of $ 1.3 billion compared to $ 1.1 billion in 2000 [Jordan Central Bank, Annual Report, 2002, p.18].

Jordanís trade deficit is setting into a regular pattern of decline, albeit one which reflects sluggish economic activity. On the import side, purchases from Arab countries rose, while those from Europe declined. As the figures in the next table demonstrate, the percentages of Jordanís exports to EU countries from 1977-2001 are not significant, while Jordanís imports from EU countries are. Jordanian exports to EU countries peaked in 1996, at 8.29% percent of total exports, and reached their lowest levels in 1981, representing only 0.08% of total exports. At the same time, imports from EU countries to Jordan reached their highest levels in 1979, when they accounted for 43% of Jordanís total imports; by 1990, this figure had declined to a low of 30.7%.

The evolution of the trade flow between the EU and Jordan over the last five years - after Jordan signed the Association Agreements with the EU in 1997- reflects the elusive growth of Jordanian economy. Imports from the EU increased slightly in volume from 1997 through 2001, but it did not increase in value, because it is†† still not more than 32.5%, 32.3%, 31.0%, 33.0% and 31.0% respectively. We can find that on the other side that, Jordanís exports into EU markets during the same period has negative fluctuation in 1998 which arrived at 0.29% to achieve 5.08%, 3.03% and 3.07% in 1999,2000, and 2001 respectively.

In sum, these fluctuations added up to a slight decrease in 1998 (-4,3%) of the permanent surplus in favor of the EU in the balance of trade with Jordan. This surplus increased again in 1999, which was higher than 1997 and 1996. The slowdown in growth of the past few years continued in 2000 and 2001, with actual performance falling below the level required to maintain per capita income, meet the challenges of unemployment and improve standards of living. But significant developments took place in 1999 that are likely to positively impact economic growth in 2000.

Table 1: Jordan EX.IM, Trade Balance with the EU 1977-2001

By 1000 JD

Year

EX to the EU

IM from

the EU

Trade Balance

with the EU

Total % of EX to the EU

Total % of IM from the EU

1977

872

179.130

-178.258

1.44

39.4

1978

1.340

190.418

-189.078

2.08

41.5

1979

1.138

255.295

-254.157

1.38

43.3

1980

2.096

303.168

-301.072

0.09

42.3

1981

2.760

389.699

-386.939

0.08

37.2

1982

3.621

375.229

-371.608

0.10

32.8

1983

9.460

366.072

-356.612

0.27

33.1

1984

12.25

359.748

-347.463

0.21

33.5

1985

11.78

341.267

-329.519

0.20

31.7

1986

19.57

319.352

-299.765

0.38

37.5

1987

17.33

311.041

-293.738

0.31

33.9

1988

25.90

324.315

-298.385

0.35

31.7

1989

25.10

401.062

-375.962

0.21

32.6

1990

22.28

531.408

-329.150

0.16

30.7

1991

18.66

552.544

-533.858

3.12

32.3

1992

19.34

698.716

-679.402

3.05

31.5

1993

28.21

814.351

-786.080

4.09

33.1

1994

40.84

838.152

-797.328

5.14

35.4

1995

63.01

859.261

-796.250

6.27

33.1

1996

86.27

963.627

-877.380

8.29

31.6

1997

77.72

946.995

-870.243

7.29

32.5

1998

69.02

887.829

-818.797

0.29

32.3

1999

60.90

834.900

-774.000

5.08

31.0

2000

35.50

1.074.200

-1.038.700

3.03

33.0

2001

50.00

1.089.000

-1.039.000

3.07

31.0

Source: Department of Statistics; Amman. Jordan, Statistical Year Book,

Issue No.53, Pp.505-508, 2001.

Even if Jordan had signed a preferential agreement with EU countries in 1977- granting free access to EU markets for Jordanian products - and also the Association agreement in 1997. We can find that, Jordanian imports from the EU average between 30% to 35%, which is significant for the EU side, while Jordanian exports to the EU average between 1.0% to 3%, which does not represent a significant portion of Jordanís exports. In this context we must ask why Jordan has a trade deficit with the EU or with others?

We may find many reasons; in fact, largely due to revenues generated from tourism and exports of labor to the Gulf States, Jordan enjoys a positive balance in trade in services. The services sector is the greater contributor to GDP at 70% as compared to industrial output, which contributes approximately 30%. When compared to government services 20% contribution to GDP, manufacturing contributes far less at 13.5%. Contributes to GDP from services and industry agricultural 3.4% and mining 2.6%. This is significant when drawing on the experiences of the economic success stories of Tunisia, Asia, and Latin America where the manufacturing and the development of light industry have played a catalytic role in economic growth in these countries. Jordan has taken examples from countries such as these into account when developing its own export-oriented growth paradigm. While Jordan has a relatively small industrial base and limited natural resources, it does have an educated workforce and, through directing FDI in industry as well as services, it can create much needed employment opportunities and ensure long-term investment. The government has begun the process by signing agreements for the development of large joint-venture downstream projects in the minerals sector, which is estimated to attract over Euro 1 billion in FDI in the last year [EC, Delegation, Annual Report, 2001, p.15].

Notwithstanding, constraints caused by the security situation and also weak intra Ėregional trade among Med countries can be partly explained by the prevalence of generally trade-restrictive regimes. Non-tariff barriers, such as licensing, bans, state trade monopolies and restrictive foreign exchange allocations, are also extensive in a number of economies. However, as more Arab countries join the World Trade Organization (WTO), non- tariff barriers will be abolished and tariffs on imports will be capped at a specific level to be reduced gradually in the coming years. The decision on Jordanís membership in the WTO came in December 1999, in the wake of a series of trade-related intellectual property rights passed in late 1999. With WTO membership and IPR legislation, Jordan may become suitable place for foreign investors; it may also provide Jordanís trade with the Arab countries in the Med region and also with the EU. But, to secure its place in the global marketplace, help its exporters enjoy quota and duty free access to the EU and US and reduce barriers to entry in other strategic markets, Jordan will have to further intensify efforts to attract investment, both local and foreign, improve the competitiveness of its local enterprises and create employment opportunities.

The Jordan-EU agreement also entails a process of alignment of policies and regulations and upgrading of administrations with a view to creating a single Euro-Mediterranean market, for example in the fields of technical standards, conformity assessments and certifications, protection of industrial and intellectual property rights, competition, state aid and monopolies, veterinary and plant health, company law, accounting and auditing standards, data and consumer protection, financial services, public-procurement, and customs. On the economic side, the agreement contains a detailed timetable for the creation of a free trade area compatible with WTO requirements, to be completed over a transitional period of up to twelve years, starting with May 1, 2002, in which Jordan will gradually eliminate customs duties on EU exports of industrial products to the Kingdom. Industrial exports from Jordan already had duty-free access to the EU under the Cooperation Agreement of 1977. However, the EU has not been, until now, a prominent export destination for Jordanian products, something that the new agreement may contribute to change. In agricultural trade, a gradual liberlisation is foreseen, with immediate further concessions for Jordanian exports. These concessions will be reviewed as early as this year; we must examine the best ways of bringing further liberlisation to this sector, subject to a gradual and reciprocal approach, which will benefit all our people.

The Euro-Mediterranean trade and industry and foreign ministers have recently decided in principle to extend the system of pan-European commutation of origin to Mediterranean partners, once the technical problems are solved. With political will and hard work, in the future, a fabric could be produced in France or Egypt, dyed in Hungary and made into a dress in Jordan for export to Ireland without paying any duty. Such opening would bring about tremendous new trade and investment opportunities in Jordan, for regional and European business partners. To make the change operational, the "origin protocol" of the EU-Jordan Agreement must be amended, and Jordan must conclude free trade agreements with harmonised rules of origin with other Mediterranean partners.

This is an ambitious long-haul agenda to be implemented by the EU and Mediterranean partners over time. Now it is important that Jordan take advantage of the agreement. Only around 3 per cent of Jordan's exports go to the EU, and the trade deficit with Europe is rising. This is unsustainable in the long run. Therefore: the private sector should take advantage of a huge, open and enlarging European market. Given Jordan's volatile external environment, i.e., the Kingdom's exposure to economic and political shocks in the Middle East and the Gulf countries, it would be better if exports were more diversified to alternative export destinations and not concentrated in the region. Jordan's industries have to continue to work towards improved variety, quality and marketing of products to become competitive in the EU, and elsewhere. Moreover, the modest level of domestic and south-south investment and trade-in the Mediterranean is worrying. Investors looking at this region will see compartmentalised small and separate markets, with conflicting standards and regulations. Drawing from the experience of the candidate countries of Eastern Europe, we know that regional integration and alignment to the single market can induce a massive increase in investment, which has a knock-on effect on job creation, trade increase and economic stabilisation. Jordanís authorities have proven their commitment to regional trade liberalisation, and we can see the Kingdom as a motor for enhanced regional free trade with Morocco, Tunisia and Egypt within the"Agadir" initiative. The EU has been supporting Jordan financially; while the EU is already the largest single source of foreign direct investment in Jordan, the Kingdom must continue to try to increase this assistance, and attract FDI.

In conclusion the economy did pick up in 2000 and 2001, mainly on the back of economic reforms, improved economic conditions in the region, especially the Gulf, and accelerated privatization. The momentum could continue through 2002 as long as the Middle East crisis continues. On the right track to trade liberalization, Jordan has now acceded to the WTO, has seen the Association Agreement with the EU entered into force in the late May 2002, and is in the process of concluding a free trade agreement with US. It has also signed bilateral and multilateral agreements with its Arab neighbors. These are critical issues for future sustained economic growth and social stability, and are recognised as such by the Jordanian governments.

Trade Flow Model (gravity equation)

With the exception of [Balassa: 1967], in the study of trade creation (TC) and trade diversion (TD) in the EEC and the EFTA, the common approach to quantifying the effects of integration on trade flows has utilized the so-called gravity equation. The gravity equation has proven popular for several reasons:

First, it provides an empirically tractable general equilibrium framework for modeling bilateral trade flows.

Second, it has a sound theoretical basis.

Finally, it has proved useful in a variety of applications [Brada and Mendez: 1985,p.541].

The basic model of trade flow by[Tinbergen: 1962] is written as:

[1]

†† Value of export from country to country

Constant

, Y: income in the exporting and importing countries

N, N: population in the exporting and importing countries

D:†† distance between countries and

e:log normal term error.

[Aitken: 1973], using the gravity equation trade flow model developed by [Tinbergen: 1962] and [Linnemann: 1966], attempted to isolate empirically the major forces which have shaped the European trade relations over the period 1951-67. He estimated via the use of dummy variables the impact of the European Economic Community (EEC) and the European Free Trade Association (EFTA) on member trade. Depending on the definition by Balassa for gross trade creation, GTC will refer to the total increase in trade among members of a trading community brought about through integration, regardless of whether the additional trade policies replace domestic production, or whether they replace non-member exports. The substitution of imports from member countries (higher cost of import) for imports from member countries (lower cost imports) will constitute trade diversion (TD). External trade creation (ETC) will refer to integration Ėcaused increases in trade between a trading community and countries outside the trading community [Balassa: 1967,p.5].

Aitken has indicated that, all the empirical studies which have attempted to measure integration effects have been faced with the common problem of isolating the effects of integration on trade from the effect of income growth, and changes in other variables, which normally affect international trade pattern. Aitkinís study has attempted to deal with these problems by estimating through Least Squares Regression Method, the following variant of the Linnemann trade flow model for each year of the 17-year period 1951-1967. The equation [1] is rewritten as:

[2]

Where, is the dollar value of export from country to country

, Y:is the GDP of countries

N, N: population in the exporting and importing countries

D: distance between countries and

e:log normal term error

A: Are the dummy variables for neighboring countries

P and P are dummy variables for trade between partners of EEC and EFTA respectively, and log refers to common logarithm.Noting that the neighboring countries A expect to have an additional stimulus to trade between them refers to the similarity of the tastes, and an awareness of common interest. Using this model permitted Aitken to incorporate into analysis as independent variables the preferences area effects through the dummy variables, which are used to represent in an approximate way phenomena which are difficult to measure [Aitken: 1973, pp. 881-883].

[Aitken: 1976] has also attempted to study the effect of the association agreement on trade between the African Associate countries (AAC), and the (EEC), by using the dummy variables to represent the trade preferences between the AAC and EEC members, and by calculating the cross-sectional equations for African trade with developed countries for each year of the period 1958-71. The study was able to trace the cumulative effect of the agreement on exports both of AAC and EEC members. The following cross -sectional trade flow equations are employed to measure the trade impact of the EEC Ė AAC preferential agreements:

LX =b + b LD+ bLY+ b LY

+bLP+†† b LP [3]

+ b LP+ bLP +e

 
 


†††

LX = b + b LD+ bLY+ b LY

+bLP+bLP†† †††††††††††††††††††††††††††

+ b LP+ bLP +bLA ††+e†††††††† †††††[4]

 

†††

†††††

 

 
 

 

 


†††

 

Where for equation (3)

L: represent log,

X: is the dollar value of African country exports to developed country

D: is the distance between the commercial centers of the two countries

Y and Y: are the nominal GDPs of countries and

P, P, P, P: are dummy variables for the British preferences for exports of African Commonwealth countries, the preferences of the EEC countries other than France for the exports of the African Association countries, the France preferences for Tunisian Ė Moroccan exports, and the French preference for the export of the African Associate countries who are former French colonies .

e: is the random error in log value

And where the equation(4) represents that

X: the dollar value of developed country exports to African country.

The independent variables are essentially the same in equation (3), except that the dummy variables, which represent the African countryís preference for the exports of the respective, developed countries with which has a trade preferences agreement.

A : represent the dollar value of aid from developed country to African country .

Y: is a measure of economic capacity, which determines potential export supply for the exporting nation, and potential import demand by the importing country [Aitken: 1967,pp.425-433].

[Pelzman: 1977] starts from the premise that, although economic integration for the former USSR is for the purpose of increasing its dominance, both economic and political, over the rest of the CMEA, for the remaining developed member countries it is seen as a natural development and maximizes the economic gains from trade and cooperation. He then points out that the CMEA differs from customs Unions in free market economies in one important respect: it does not have a clearly defined common external tariff (CET). However, he is quick to add that proxy bilateral negotiations were carried out between member countries of the CMEA; hence, one should be in a position to estimate trade creation (TC) and trade diversion (TD).

The model used is a variant of the cross Ėsectional [Linnemann: 1966] trade flow model that differs slightly from the one utilized by [Aitken: 1973]. The main difference is that the measurement of effects of the CMEA on trade flows requires the use of the gravity trade flow model, modified to allow for the fact that prices are not directly incorporated into the model. Hence the trade flow model becomes:

Log x = g +glog Y+glog Y+glog N

+ loglog N+glog D*+glog p

+ log e†††††††††††††††††††††††††††††††††† [5]††††††††††††††††

 
 

 

 


Where,

†††††††† Is the dollar value of export from country to country?

, Y:represent the GNP of countries

N, N: population in the exporting and importing countries

D: distance between countries and

P: is the dummy preferences variable reflecting CMEA membership with the value 2 given to intra-CMEA trade, while the value 1 is assigned to intra ĖCMEA flows, and log refers to natural logs. This is obviously derived from the general framework equilibrium model. It specifies that (a) the mutual trade of countries and is determined by the relative size of their foreign trade sector; (b) country potential foreign supply depends on its national product (Y) and on the ratio between production for the domestic market and the production for the foreign markets, which is due to differences in population; (c) given economies of scale, the larger N is, the larger is the ratio of the domestic market to the foreign market , and the smaller is the potential export supply of the country ; (d) thevariables Yand Ntogether determine the potential import demand for country ††; (e) D is a proxy for trade resistance , henceD together withNand N is hypothesized to have a negative effect on (f ) the dummy variable (DV) Preflects membership of the CMEA ; and (g ) the estimated coefficient on the dummy variable (DV) measures the extent to which intra-CMEA trade flows are augmented [Pelzman: 1977,pp.714-715].

Brada and Mendez, through their study about the economic integration among developing, developed countries, indicated that the effects of intra Ėmember trade are influenced by three sets of factors:

First, the environmental characteristic, which they took to mean the physical and economic integration countries.

Second, influence on the effectiveness of the integration is the economic system of the integration countries.

Finally, there is the element of policy; some integration schemes lower barriers against inter-member trade to a greater degree than others do, and thus are more effective in increasing inter-member exchange.

In order to overcome these difficulties they modified the basic gravity equation [1] to take into account the environmental effects on the effectiveness of integration. The environmental variables they modeled are: the distance between integration countries, and their level of development. They considered that, the level of development should have appositive impact on the effects of integration largely because less developed countries have a structural bias against trade, and thus benefits less from integration. Their production is concentrated in subsistence agriculture and in services, neither of which enter into international trade. The bulk of their trade is thus with countries of differing level of development, and consists of exchanges of agricultural products, and raw material for manufactures. Developed countriesí production, concentrated in manufactures, permits both complementary trade as well as a large measure of intra Ė industry exchanges generally not available to developing country.

Log x = A +log Y+ log Y+log N

+ log N + log D+ log Q

+ Plog ( Y/N) ( Y/N) †††

†††††††††††††††††††††††††††††††† +PlogD+loge††††††††††††††††††††††††

 

 
To measure these environmental influences on trade flows they rewrote equation [1] to be as:

 

 

 

 

[6]

Where:

Q = 2 and P = 2 if countries and belong to the same preferences area and 1 and 0, respectively, when countries and belong to different or no preferences areas. The coefficient measures the effect of per capita income on the effectiveness of integration. If the coefficient is positive, then the effect of integration on inter-member trade increases with the level of development of the integration countries, reflecting the higher proportion of tradables in their output. The coefficient measures the effect of distance on the trade augmenting power of customs union. The greater the distance among members, the smaller ceteris paribus, is the augmentation of their trade with each other [Brada and Mendez: 1985,pp.551-552].

Based on the above we can present the following general mathematical equation, which implies all the economic factors, and variables that could affect the trade flow between two different countries or between two different communities. These factors include income in the exporting and importing countries, population in the exporting and importing countries, distance between the two countries or communities, difference of cultures, levels and similarities in development, and financial aids.

[7]

Jordan-EU Trade Flow Configuration:

To configure the previous general mathematical equation to measure the trade flow between Jordan and the EU, we need to determine the value†††††††††††††††† of mutual income between Jordan and each country of the EU members , Population size of Jordan and all the EU members , distance between Jordan and each of the EU members also must be known in advance - that will be used as indication factors for the market size and the transportation problems among the different countries. Financial aids, and technical transfer from the EU countries to Jordan ; the difference of economic development level between Jordan and each country of the EU should be an important factor that improves the trade flow analysis. We can get the differences in GDP for Jordan and each of the EU countries by ( - ) ≤, we can name this variable by so ††= ( - ) ≤.

The instability of the political situation in the Middle East has significant effects on Jordanís economic growth, where political and economic variables have played an important effect in Jordan, which could have negative impact on . So the political and economic variables should be added in our model to be as Dummy variables . At the same time the Jordan Dinar crisis of 1988 - which resulted in about 50% devaluation - has had negative effects on Jordanís economy. We suppose that the Jordan Dinar exchange rate could have negative effects on . So the exchange rate should also be added to the model. Rearranging and renaming the different coefficients of the equation [7], we get the trade flow between Jordan and the country member among the EU countries for a general item of commercial interest as follows:

††††††††††† [8]

The income and the population variables represent the trading countries endowments and tastes. Since greater productive capacity and income promote trade, is expected to be positive, while is expected to be negative. Large countries have more diversified production and thus satisfy a greater proportion of domestic demand, while small countries tend to be more specialized and thus more dependent on trade, suggesting that could be negative. The population of the importing country should have a positive effect on the volume of trade, since a larger population permits a greater division of labor and diversity of production, enabling imports to compete with domestic goods at more stages of the production process. Moreover, a large market better compensates exporters for the cost of acquiring information and establishing a sales and distribution network. Thus should be positive. Is a proxy variable for natural trade resistance, consequently, along with and is hypothesized to have negative effect on . The financial aids and technological transfer from the EU countries to Jordan should be positive, we suppose thatis positive.

To analyze the data collected according to the period to show the impact of the Euro-Jordan association agreement on trade flows, we will use the statistical package of Econometric Views (time series regression) for the period 1985-2001. In this case, the distance variable will be canceled, for two reasons: first, the value of the distance in time series regression will be insufficient; second, because Jordan has signed two agreements with EU countries, the preferential agreement in 1977 and the association agreement in 1997, which means the distance variable could not have a very important effect in the trade flow between Jordan and each EU country.

Rearranging and renaming the different coefficients of the equation, we can get the trade flow between and the country member among the EU countries for a general item of commercial interest.

 

[9]

We can use the same independent variables to estimate its impact on Jordan imports from each EU country; rewriting the same equation at follows:

[10]

The dependent variable , in equation [9] represents the Jordanian export value for each EU country, and the dependent variable in equation [10] represents the Jordanian import value from each EU country. And where the independent variables are;

:††† Is constant

:††† Is the logarithm of the dollar value of Jordan GDP

†††† :Is the logarithm of the dollar value of each EU countryís GDP

:Is the logarithm of the population in Jordan

:†††††† Is the logarithm of the population in each EU country

: Is the logarithm of the politics and economic situations

(dummy variable)

: is the logarithm of the financial assistance from each EU country

: is the logarithm of the Jordanian Dinar exchange rate by $.

:†† is the differences in GDP between Jordan and each EU country

:is the logarithm of the†† term error

We suppose that, in the short run, the effect of integration on Jordanís economy could be negative, since the integration will create trade diversion; while in the long run it could be positive due to trade creation. We also suppose that these variables have vital effects on Jordanís exports-imports with the EU countries. However, the regression will illustrate that by single country for each of total exports-imports, and by item products such as; Agricultures, Chemicals, Manufactures, Machinery and Others.

The data of the variables and the GDP of the EU countries and the GDP of Jordan for the period 1985-2001 have been collected from, (IMF; International Financial Statistics Yearbook: 2001). The data of the has also been collected from the same source at the same year. The data of the variable has been collected from (Hashimety Kingdom of Jordan; Statistical Yearbook, 2001). The evaluation of the variable has been estimated by the researcher depending on the late IMF resources. We depended on the data from Central Bank of Jordan to evaluate the Jordan Dinar exchange rate variable. The data of the financial assistance from EU countries for Jordan have been collected from (The EU Delegation in Amman, Annual Reports, many issues). The dummy variable has been evaluated by the researcher point of view. We supposed that, the economic and political situations have vital effect on Jordanís trade balance. For the period 1985-2001, we will set value of (0) for the year which has no important economic-political events, while the value of (1) will set to the year which has important events that may affect Jordanís trade balance. Table four will illustrate our estimate. The Jordan-EU exports-imports data have been collected from (Hashimety Kingdom of Jordan; Amman, Statistical Department, Center of Computerized Data)*. We must stress that the period is not long enough in econometrical point of view, and unfortunately the lack of data has some effects on the regression results. The data before 1985 is not available, and it is not computerized in the Jordanian statistical department, or in any Jordanian governmental departments.

Table Four. The Distribution of the Dummy Variable

Year

Value

Vital Events

85

0

Nothing

86

0

Nothing

87

0

Nothing

88

1

Jordan Dinar Crises 50% Devaluation

89

1

The First Intifada

90

1

The Gulf Crises

91

1

The Gulf War

92

0

Nothing

93

1

Oslo Initiatives For Peace in Middle East

94

1

Nothing

95

1

Barcelona Conference EU-Med initiative

96

0

Nothing

97

1

Jordan- Israel Peace Treaty

98

0

Nothing

99

0

Nothing

2000

1

The second Intifada and instability of Middle East

2001

1

The second Intifada and instability of Middle East

* Note that this data is not published and it is available on CDs in this Center.

The Main Findings and Results of the Regression

The main findings of the regression have been confirmed in the appendixes of this chapter; the regression shows the impact of the previous variables on Jordan (aggregate Ė disaggregate exports) and (aggregate Ėdisaggregate imports) for the EU by single country.

A.Aggregate Findings:

The regression has revealed that, the independent variables have some important effects on Jordanís total exports to the EU markets. We can note from the appendix that, the differences in GPD - variable- between Jordan and each of EU countries has a considerable relation in Jordanís exports to Denmark, Finland, Italy, Luxembourg, and UK, because the coefficients of this variable are significant at levels of(0.0787), (0.0776), (0.0729), (0.0001), and (0.0543) for these countries respectively.

The GDP of Jordan has also momentous impact on Jordanian exports to Italy, Luxembourg, and UK; the logarithm of this variable is significant at the standard level of the regression at levels of(0.0494), (0.0001), and (0.0199) for these countries respectively. At the same time, the GDP of the partners country -- has noteworthy sound effects on Jordanís export to Luxembourg, where the coefficient is remarkable at (0.0655) level. The Jordanian population variable -- has exaggerated Jordanís exports to Denmark, and Finland, because the coefficients of this variable are considerable at levels of (0.0429), (0.0980) for both two countries respectively. On the other hand, the partners population variable -- has impacted Jordanís exports to Denmark, Italy, and UK, that appears clearly from the regression, where the coefficients are significant at the standard level of the regression at (0.0332), (0.0140), and (0.0236) levels for these countries respectively.

The dummy variables -- which present the instability of politics, and economics situations in Jordan have shown that, they have important impact on Jordanís exports to each of Finland and Italy, the coefficients of these variables have become momentous at the level of (0.0835), (0.0367) respectively. The financial assistance and technology transfer variable -- have also positive impact on Jordan exports to Italy, the coefficient is significant at level of the regression at(0.0556) level. The Jordanian Dinar exchange rate- - has positive impact on Jordanís export to Finland and UK, the coefficients are considerable at the level of (0.0583), and (0.0334) respectively for the both countries.

We can note that, all the previous variables have no impact on Jordanís exports to Austria, Belgium, France, Ireland, Germany, Greece, Netherlands, Portugal, Spain and Sweden in aggregate case.

The impact of the previous independent variables on Jordanís imports from EU countries, the regression has exposed that, there are some important coefficients at the standard level of the regression for some variables such as; the GDP variable of the partners -- has exaggerated Jordanís imports from Finland and Portugal, at significant level of (0.0506), (0.0015) for the both countries respectively; The Jordanís GDP variable -- has affected Jordanís imports from Austria, Finland, Portugal, and Spain at standard levels of(0.0059),(0.0458),(0.0232),and (0.0556) for these countries respectively.

The populations variable - - of Portugal, and Spain has conceited Jordanís imports from both countries, the coefficients of this variable are significant at (0.0384) (0.0675) levels for the both countries respectively. On the other hand, the impact of Jordanís population -- on its imports from EU countries, is recognized in case of Italy at(0.0690) level, Portugal at (0.0008) level, Spain at (0.0444) level, and Sweden at(0.0470) level.

The Jordanian Dinar exchange rate -- is noteworthy in case of Jordanís imports from Finland, and Portugal, where the coefficients are also significant at levels of(0.0583), (0.0314) for the pervious two countries respectively. The level of economics development is also noteworthy in case of Jordanís imports from Finland, because the set level of regression is recognized at (0.0776) level. At the same time, the financial assistance variable-- has affected†† Jordanís imports from Portugal at (0.0011) level. The dummy variables - - have not any special effects on Jordanís imports form EU countries. We can also note from the appendices that, Finland is the main country that has been affected by the previous variables on its export to Jordan. The previous independent variables have no special effects on Jordanís import from Belgium, Denmark, France, Ireland, Germany, Greece, Netherlands, Luxembourg, and UK, because the coefficients of these variables are not significant at the typical level of the regression. These aggregate results in Jordanís exports-imports into the EU countries bear out our hypothesis.

B.Disaggregate Findings:

The regression results of Jordanís exports Ė imports into EU marketsin disaggregate- which means by specific product such as; Agriculture, Chemicals, Manufactures, Machinery and Transport Equipments, and Others for single country - have revealed that, the previous variables have affected Jordanís exports Ėimports into EU markets.

The Impact of the independent variables on Jordanís EU Export- Import in Agriculture.

The agricultural sector has such critical value to a countryís export Ė import -important for the economyís GDP- that most countries donít allow to this sector to be completely free in international trade; the European Union Agricultural Common Policy (ACP) quite obviously illustrates this fact. The appendices of this chapter demonstrate the force of the previous variables on Jordanís EU exports Ė imports in this sector by signal country.

We may remind that, Jordanís exports in agricultural have been affected by constant variable, which appears clearly in Jordanís exports to Austria, the standard level of the regression is significant at (0.0422) level, and also in Jordanís exports to Belgium, Denmark, and Luxembourg, the standard level of the regression is significant at levels of (0.0452), (0.0917), and (0.007) for these countries respectively. In the import side, the agricultural sector has not been affected by the constant variable. But we can find that, Germany has exception, because the constant coefficient is considerable at (0,0640) level.

The impact of variable show that, it has some effects on Jordanís exports in this sector, the regression results have permitted that, this variable is well-organized in Jordanís exports to Luxembourg, Denmark, Sweden, and Greece, the coefficients of this variable are significant at(0.0655), (0.0795), (0.0833), and (0.0310) levels for these countries respectively, this variable has no effects in Jordanís agricultural imports from EU countries, and it is not considerable. However, Germany has also an exclusion, which appears from the regression, it is clearly that, the coefficient is significant at (0.0822) level.

The regression has also publicized that, the GDP of Jordan- - has some major results in Jordanís agricultural exports to EU countries, these significant results have appeared in case of Austria, Belgium, Denmark, Luxembourg, and Sweden; the coefficients of this variable are remarkable at (0.0507), (0.0507), (0.0871), (0.0001) and (0.0997) levels for these countries respectively. In the import side, we discover that, this variable has not affected Jordanís agricultural imports form EU countries. But Jordanís- Greece agricultural imports has un exception, because the coefficient of this variable is significant at (0.0994) level.

The partnerís population -- variable has positive effects on Jordanís agricultural exports to Austria, and Belgium, the coefficients of this variable for the two countries are considerable at (0.0387) and (0.0387) levels respectively. But this variable has not any effects on the imports side, because the coefficients of the previous variables are not considerable at the standard level of the regression.

The impact of -, Jordanís population variable on Jordanís agricultural exports has revealed that, the coefficient of this variable is significant in Jordanís exports to some EU countries such as; Denmark at (0.0343) level, Germany at (0.0690) level, and Greece at (0.0217) level. At the same, the coefficients of this variable are also significant on the import side, as confirmed in Finland, Germany, and Greece, at (0.0557), (0.0693) and (0.0217) levels for these countries respectively. Jordanís Dinar exchange rate has not great effects on Jordanís exports Ė imports into EU markets in the agricultural sector; the regression has approved that, Jordanís Dinar exchange rate has noteworthy results in Jordanís agricultural exports to Greece, and Jordanís imports from Luxembourg, the coefficients of this variable are considerable at (0.0604) and, (0.0087) levels for both countries respectively.

We can note down from the regression that, --the financial assistance and technology transfer have not a remarkable relations on Jordanís exports- imports in agricultural sector into EU markets. The unique momentous result has been exposed in case of Greece, where the coefficient is significant at (0.0857) level. We also can note down that, variable has affected Jordanís agricultural exports to Denmark and Luxembourg, because the coefficients of this variable are considerable at (0.0523), and (0.0010) levels for both two countries respectively. On the other side, this variable has no large effects on Jordanís agricultural imports from EU countries. At the same time, the Dummy variable has not any effects on Jordanís agricultural exports-imports into EU markets, the exception has been found in Jordanís imports from Greece, because the coefficient is momentous at (0.0782) level.

The general conclusion of the regression in agricultural sector have exemplified that; on the export side, the previous independent variables have affected Jordanís agricultural exports to Austria, Belgium, Denmark, Luxembourg, and Sweden.Jordanís agricultural exports to the other EU countries have not been exaggerated by the previous independent variables.On the import side, the previous independent variables have affected Jordanís agricultural imports from Finland, Germany, Greece, and Luxembourg. At the same time, all the previous independent variables have no effects on Jordanís exports- imports in agricultural sector in case of some EU countries, such as France, Italy, Ireland, Netherlands, Spain, Portugal, and UK.

The Impact of the independent variables on Jordanís Export- Import in†† Chemicals.

The regression results have verified that, all the previous variables have no important effects on Jordanís chemical exports to EU countries, because we donít find any significant coefficient in the standard level of the regression. Maybe these results are related with the size of Jordanís exports in this sector to EU countries. The figures of Jordanís exports to some EU countries such as Denmark, Finland, France, Netherlands, Luxembourg, Portugal, Spain, and Sweden are insufficient in econometric views. On the other hand, Jordanís imports from EU countries in this sector have been affected by some variables. We may memorandum from the regression that, some variables have major impact on Jordanís imports in this sector such as; the Constant variable has momentous impact on Jordanís chemicals imports from each of Italy, Ireland, Netherlands, and Portugal, because the coefficients of this variable are considerable at(0.0133), (0.0337), (0.0041), (0.0791) levels for these countries respectively.

The - - variable has not any special effects on Jordanís chemical imports from EU countries, but the exception has found in case of Jordanís ĖNetherlands, where the coefficient is significant at (0.0204) level. While, variable has some effects on Jordanís imports from EU countries in this sector, this variable has affected Jordanís imports from UK, Finland, and Netherlands. We can locate that, the coefficients of this variable are imperative at(0.0540), (0.0911), and (0.0999) levels for these countries respectively.

Jordanís exports Ė imports in chemical trading sector have not been affected by - -variable, the exclusion of that in Jordanís chemical exports to UK, the coefficient is significant at (0.0564) level. In the other side, variable has not affected Jordanís chemical exports. In the imports side, we may observe from the regression that, this variable has impacted Jordanís imports from each of UK, Ireland, Portugal, Netherlands, and Italy. Because the coefficients of this variable are considerable at (0.0764), (0.0164), (0.0637), (0.0030) and (0.0402) for these countries respectively.

The regression findings have indicated that, Jordanís Dinar exchange rate has no effects on Jordanís exports- imports into EU markets in chemical sector; the exclusion has been found in Jordanís export to UK, because the coefficient is significant at (0.0519) level. At the same time, the- -the economics development gap between Jordan and each of EU countries has also no sound effects on Jordanís exports- imports in this sector, the exception has found in Jordanís- Austria imports, the coefficient is considerable at (0.0336) level, and also in Jordanís- Netherlands imports it is considerable at (0.0293) level.

The variable has some effects on Jordanís exports in this sector to each of Austria, UK, and Sweden, the coefficients of this variable is noteworthy at (0.0469), (0.0390) and (0.0590) levels for these countries respectively. The regression has exemplified that, the Dummy variable has also no effects on this sector, the exemption is that in Jordanís Ė Austria imports, where the coefficient is significant at (0.0425) level. The general termination about this sector is that, the previous variables are not significant in Jordanís exports- imports into some EU markets like; Belgium, France, Germany, Greece, Luxembourg, and Spain.

The Impact of the independent variables on Jordanís Export- Import in Manufactures.

The regression has explained that, Jordanís exports- imports have been affected by the previous variables, these details appear clearly in the appendices. The appendices explain that, the coefficients of the constant variable are momentous in Jordanís manufactures exports to Belgium, Italy, Germany, Portugal, and UK, at levels of (0.0259), (0.0285), (0.0214), (0.0346) and (0.0839) for these countries respectively. At the same time, the constant variable has affected Jordanís manufactures imports from†† France, Ireland, Greece, Netherlands, and Luxembourg, the coefficients are also momentous at (0.0123), (0.0610), (0.0978), (0.0885) and (0.0039) levels for these countries respectively.

The - - variable has no essential sound effects on Jordanís manufactures exports into EU markets. Jordanís-Portugal has an exception, where the coefficient is significant at (0.0364) level. In import side, this variable also has no important effects on Jordanís imports from EU countries, some exceptions appear in Jordanís imports from France and Germany, where the coefficients are significant at (0.0123) and (0.0798) levels for both countries respectively.

We can note down from the regression that, the -- variable has not important impacts on Jordanís exports to EU markets, with the exception of Jordanís imports from Portugal, where the coefficient of this variable is considerable at(0.0452) level. On the import side, we can locate that; this variable has noteworthy effects on Jordanís Austria manufactures imports, because the coefficient is considerable at (0.0063) level.

The regression has also approved that, -- variable has no vital effects on Jordanís manufactures export, the exclusion is in Germany case, where the coefficient is considerable at (0.0563) level. But this variable has some effects on manufactures imports, we can find this impact on Jordanís imports form Luxembourg and Germany, because the coefficients of these variables are significant at (0.0000) and (0.0222) levels for these countries respectively.

The regression results have shown that, the -- variable has affected Jordanís manufactures exports to Belgium at(0.0259) level and Portugal at(0.0354) level. At the same time, the coefficients of this variable are momentous in Jordanís imports from Italy at (0.0564) level, Greece at (0.0160) level, and Netherlands at (0.0378) level.

We may note that -- variable has no crucial impact on Jordanís exports Ė imports in this sector into the EU markets, the exception is that in Jordanís exports to Austria, where the coefficient is significant at (0.0983) level, and in Jordanís exports to Portugal, where the coefficient is also significant at (0.0311) level. In the imports side, this variable has affected Jordanís imports from France at (0.0017) level.

The --variable has not major effects in Jordanís manufactures imports from EU. But France has an exception because the coefficient is considerable at(0.0247) level.

From the results of the regression, we may locate that, the - -variable, which means the differences in economic development levels, has no sound effects on Jordanís manufactures exports Ė imports. The main exception is that, Jordanís exports to Germany, the coefficient is noteworthy at (0.0656) level. On the imports side, Jordanís imports from France, where the coefficient is also noteworthy at (0.0017) level.

The Dummy variables are also have some momentous special effects on manufactures exports- imports into EU markets, these effects have appeared in Jordanís exports to Germany, the coefficient is considerable at (0.0763) level, and to Portugal at (0.0630) level. While on the import side, the main significant result has been found in Jordanís imports from France in this sector, where the coefficient is significant at (0.0258) level.

The main general conclusion of the regression in manufactures sector explain that, the previous variables have vital impact on Jordanís exports to Germany and Portugal. In the imports side, the main country has been affected by the previous variables is France. But these variables have no impact on Jordanís exports to France, Netherlands and Spain. At the same time, they also have no impact on Jordanís imports from Denmark, Finland, Germany, Portugal, Spain and Sweden.Some insufficient figures in econometric views (statistical package) have appeared in Jordanís manufactures exports to Austria, Denmark, Finland, Ireland, Greece, Luxembourg, and Sweden, because Jordanís exports to these countries is not significant. We have mentioned above that, Jordanís export to EU countries is not more than 3.5% of Jordanís total exports.

The Impact of the independent variables on Jordanís Export- Import in Machinery and Equipment.

The regression has permitted that, all the previous variables have affected Jordanís machinery-equipment exports to EU, the most important effects of these variables have found in Jordanís exports to Belgium, the regression show that, the coefficients of these variables are significant in each of; the Constant variable at (0.0172) level, the variable at (0.0211) level, the variable at(0.0145) level, the variable at(0.0171) level, the variable at (0.0123) level, the variable at (0.0110) level, the variable at ( 0.0131) level, and the Dummyat (0.0293) level.

The coefficients of the previous independent variables are also significant in Jordanís exports to Finland, because variable is significant at (0.0371) level; at(0.0462) level; at (0.0763) level; at (0.0342) level, and at (0.0357) level. The same results can be found in imports side, the coefficients of the previous independent variables are considerable in Jordanís machinery and equipments imports from Denmark; where the Constant is significant at (0.0192) level, the at (0.0296) level, the at (0.0229) level, at (0.0736) level, and at (0.0420) level. The previous variables have also affected Jordanís imports from Germany; the coefficients are noteworthy in each of variable at (0.0798) level, at (0.0022) level, and the Dummy†† at (0.0820) level.

The coefficients of the Constant, and variables are considerable in Jordanís machinery imports from Ireland at (0.0917) and, (0.0634) levels for the both variables respectively. The has affected Jordanís machinery and equipment imports from Luxemburg, and Portugal, the coefficients of this variable are considerable at (0.0343) and (0.0581) levels for both countries respectively.The previous independent variables have a vital effects on Jordanís imports from Netherlands Ė the regression results show that, the coefficient of the Constant variable is momentous at (0.0277) level, the at (0.0436) level, the at (0.0354) level, the at (0.0384) level, the at(0.0471) level, the at (0.0710) level, the at (0.0499) level and the Dummy at (0.0377) level.

The main general conclusion of the regression in machinery and equipment sector show that, the previous variables have no effects on Jordanís exports to Ireland and Germany.The figures are insufficient in case of most EU countries such as; Austria, Denmark, France, Italy, Greece, Netherlands, Luxembourg, Portugal, Spain, Sweden and UK.

The figures are also insufficient in case of Jordanís imports from Belgium and France. And also the previous variables have no effects on Jordanís machinery and equipment exports to Ireland and Germany. The previous variables have also no effects on imports from Austria, Finland, Italy, Spain, Sweden, and UK.

The Impact of the independent variables on Jordanís Export- Import in Others.

The regression results have exposed that; the independent variables have no sound effects on Jordanís exports to EU countries in others, because the coefficients of these variables are not noteworthy at the typical level of the regression. We are able to find that, JordanísĖAustria imports in this sector has been affected by the Constant at (0.0322) level, and by at (0.0591) level, and by at (0.0685) level. At the same time, the Dummy, the Constant, and the variables have affected Jordanís imports from Finland, because the coefficients of these variables are considerable at levels of (0.0510), (0.0680), and (0.0401) respectively.

This sector has also been affected by the previous variables in Jordanís imports from Ireland, we find that, the Constant variable is significant at (0.0350) level, the at (0.0226), the at (0.0023) and the at (0.0443) level. Some results have also exposed that, Jordanís imports from UK have been affected by the Constant, and by , which appears clearly from the considerable coefficients of these variables at (0.0634) and, (0.0567) levels.†††

Finally has affected Jordanís imports in this sector from Italy, where the coefficient is considerable at (0.0495) level.

Conclusion

Depending on the definition by Balassa for gross trade creation, GTC will refer to the total increase in trade among members of a trading community brought about through integration, regardless of whether the additional trade policies replace domestic production, or whether they replace non-member export. We may note that, the effect of integration on Jordanís economy has been negative, since the integration has created trade diversion; while in the long run it could be positive due to trade creation. We can also conclude that, all the previous independent variables have affected Jordanís exports-imports into EU countries or markets. The regression has approved that; Finland is the main country that has been affected by the previous variables on its export to Jordan. The previous independent variables have no special effects on Jordanís import from Belgium, Denmark, France, Ireland, Germany, Greece, Netherlands, Luxembourg, and UK, because the coefficients of these variables are not significant at the standard level of the regression. These aggregate results in Jordanís exports-imports into the EU countries bear out our hypothesis.

References

Aitkin, N. (1973): The Effect of the EEC and EFTA on the European Trade: a Temporal Cross-Section Analysis. The American Economic Review, December 1973, pp.881-892.

Aitken, N. (1976): A Cross Sectional Study of EEC Trade with the Association of African Countries. The Review of Economics and Statistics, Vol.5, November, No.4, 1976, Pp.425-433.

Balassa, B (1965): The Theory of Economic Integration. Second Edition, Watford, Herts. London.

Brada, J and Mendez, J (1985): Economic Integration Among Developed, Developing Countries and Centrally Planned Economies: Comparative Analysis .The Review of Economic and Statistics, Vol.67. 1985.pp.549-560.

Delegation of the European Commission in Jordan. (1999): Annual Report, 1999, Pp.17-30.

Delegation of the European Commission in Jordan. (2000): Annual Report, 2000, Pp.10-17.

Delegation of the European Commission in Jordan. (2001): Annual Report, 2001, Pp.12-20.

Hashimety Kingdom of Jordan. (2002): Jordan Central Bank, Annual Report, 2002. p.18.

Hashimety Kingdom of Jordan. (1999): Department of Statistics; Statistical Year Book, Issue No.50, 1999.Pp.509-550.

Hashimety Kingdom of Jordan. (2000): Department of Statistics; Statistical Year Book, Issue No.51, 2000.Pp.505-508.

Hashimety Kingdom of Jordan. (2001): Department of Statistics; Statistical Year Book, Issue No.52, 53, 2001.Pp.500-530.

Hashimety Kingdom of Jordan; Amman, Statistical Department, Center of Computerized Data. (CDs)

International Monterey Fund:(2000). International Financial Statistics Yearbook, 2000.

International Monterey Fund:(2001). International Financial Statistics Yearbook, 2001.

Pelzman, Joseph.(1977): Trade Creation and Trade Diversion in the Counocel of Matual Econmoic Assistance . American Economic Review , Septmebr , Vo.67,No.4,1977, Pp.721.

Index

1. Jordan Export to Austria

Independent

Variables

Total Export

Agricultural

Chemicals

Manufactures

Machinery

Others

Constant

0.1850

0.0422*

0.7736

-

-

-

0.2098

0.2171

0.4981

-

-

-

0.2009

0.0507*

0.5894

-

-

-

0.7050

0.0387*

0.9364

-

-

-

0.1763

0.1126

0.5112

-

-

-

0.4163

0.4242

0.5400

-

-

-

0.5845

0.7598

0.3499

-

-

-

0.4284

0.8378

0.5248

-

-

-

Dummy

0.4022

0.7691

0.8909

-

-

-

Note: The * sign indicates that the coefficient of the variable is significant at (0.01)

Level and the(-) indicates that the figures are insufficient in Econometric Views.

2. Jordan Import from Austria

Independent

Variables

Total Import

Agricultural

Chemicals

Manufactures

Machinery

Others

Constant

0.8891

0.7377

0.4427

0.4929

0.2556

0.0322*

0.7856

0.7029

0.1602

0.2316

0.4223

0.0591*

0.0059*

0.7619

0.4525

0.0063*

0.8241

0.7332

0.5826

0.7046

0.1040

0.3211

0.3231

0.0685*

0.5211

0.8002

0.3201

0.1158

0.4490

0.7836

0.3121

0.6108

0.8776

0.0938*

0.7877

0.2507

0.2388

0.9985

0.0649*

0.6652

0.1361

0.4516

0.6799

0.6970

0.0336*

0.6619

0.1042

0.6849

Dummy

0.1543

0.3671

0.0425*

0.1793

0.1269

0.8725

Note that, the independent variables are;

†††††††††††††††††††††††††††††††††††††††††††† :††† is constant

††††††††††††††††† :††† is the logarithm of the dollar value of Jordan GDP.

††††††††††††††††† †††††:is the logarithm of the dollar value of each EU countryís GDP.

†††††††††††††††††† :is the logarithm of the population in Jordan.

†††††††††††††††††† ††††††††††††††††† :†††††† is the logarithm of the population in each EU country

††††††††††††††††† : is the logarithm of the politics and economic situations

(dummy variable).

††††††††††††††††† : is the logarithm of the financial assistance from each EU country.

†††††††††††††††† : is the logarithm of the Jordanian Dinar exchange rate by $.

†††††††††††††††† ††:†† is the differences in GDP between Jordan and each EU country.

3. Jordan Export to Belgium

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.3487

0.0452*

0.7854

0.0259*

0.0172*

-

0.8579

0.2171

0.2845

0.1470

0.0211*

-

0.9476

0.0507*

0.1072

0.9323

0.0145*

-

0.6096

0.0387*

0.7866

0.6379

0.0171*

-

0.6403

0.1126

0.8931

0.0834*

0.0123*

-

0.7521

0.4242

0.4583

0.7917

0.0131*

-

0.5230

0.7598

0.6119

0.4332

0.0110*

-

0.4028

0.5378

-

-

-

-

Dummy

0.5863

0.7691

0.2603

0.8494

0.0293*

-

 

4.Jordan Import from Belgium

Independent

Variables

Total Import

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.2554

0.4346

0.5994

-

0.1180

-

0.4644

0.3399

0.7155

-

0.3386

-

0.6629

0.9874

0.8185

-

0.2445

-

0.3496

0.3662

0.5905

-

0.2841

-

0.3347

0.2900

0.9369

-

0.1801

-

0.7862

0.6274

0.5907

-

0.6804

-

0.2859

0.5967

0.3701

-

0.1310

-

0.4033

0.6236

0.6284

-

0.2929

-

Dummy

0.4105

0.3831

0.5132

-

0.2229

-

 

5.Jordan Export to Denmark

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.1520

0.0917*

-

-

-

0.8210

0.1088

0.0795*

-

-

-

0.6003

0.1479

0.0871*

-

-

-

0.7677

0.0332*

0.5253

-

-

-

0.6582

0.0429*

0.0343*

-

-

-

0.6151

0.1680

0.1003

-

-

-

0.7834

0.7033

0.5043

-

-

-

0.5916

0.0787*

0.0523*

-

-

-

0.6163

Dummy

0.4702

0.4497

-

-

-

0.8229

6.Jordan Import from Denmark

Independent

Variables

Total Import

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.8694

0.9069

0.1672

0.6896

0.0192*

0.6476

0.6640

0.6729

0.5600

0.6835

0.0296*

0.4130

0.6514

0.2936

0.6574

0.9291

0.3229

0.5029

0.5493

0.6929

0.9685

0.6021

0.8878

0.8629

0.3136

0.9102

0.0230*

0.3120

0.0229*

0.2771

0.3811

0.2703

0.5622

0.8872

0.7768

0.3418

0.9469

0.4831

0.5594

0.8184

0.0736*

09451

0.8352

0.8782

0.6449

0.7330

0.0420*

0.8062

Dummy

0.5228

0.6891

0.6563

0.9420

0.4671

0.8042

 

7.Jordan Export to Finland

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.0381*

0.1225

-

-

0.2296

-

0.1203

0.8798

-

-

0.0371*

-

0.1305

0.6026

-

-

0.0462*

-

0.1833

0.2205

-

-

0.0763*

-

0.0980*

0.1818

-

-

0.1865

-

0.0583*

0.9862

-

-

0.0342*

-

-

-

-

-

-

-

0.0776*

0.8498

-

-

0.0357*

-

Dummy

0.0835*

0.3189

-

-

0.1002

-

 

8.Jordan Import from Finland

Independent

Variables

Total Import

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.1283

0.3402

0.1163

0.1162

0.4374

0.0510*

0.0506*

0.4855

0.2524

0.1365

0.9964

0.9190

0.0458*

0.5493

0.0911*

0.3654

0.8716

0.6306

0.1394

0.7972

0.0463*

0.3216

0.8620

0.3395

0.6456

0.0557*

0.3304

0.2221

0.3445

0.7390

0.0415*

0.7246

0.6165

0.2361

0.7436

0.0680*

0.0224*

0.9378

0.1617

0.6317

0.9985

0.2839

-

-

-

-

-

-

Dummy

0.2201

0.3783

0.4997

0.3201

0.8928

0.0401*

 

9. Jordan Export to France

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.1073

-

--

0.1140

-

-

0.4938

-

-

0.3169

-

-

0.9201

-

-

0.6045

-

-

0.8040

-

-

0.6808

-

-

0.6705

-

-

0.2266

-

-

0.3803

-

-

0.4244

-

-

0.4979

-

-

0.2989

-

-

0.3424

-

-

0.3004

-

-

Dummy

0.5566

-

-

0.4473

-

 

 

 

10. Jordan Import from France

Independent

Variables

Total Import

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.4962

0.8130

0.1176

0.0123*

-

-

0.9737

0.4854

0.5840

0.0123*

-

-

0.8242

0.8114

0.5059

0.2368

-

-

0.6428

0.3937

0.9504

0.3145

-

-

0.7537

0.4981

0.5728

0.1235

-

-

0.8225

0.2855

0.2837

0.0125*

-

-

0.3893

0.4580

0.4895

0.0247*

-

-

0.4184

0.3440

0.7206

0.0017*

-

-

Dummy

0.5456

0.2957

0.5123

0.0258*

-

-

 

11. Jordan Export to Italy

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.7512

0.1893

0.1322

0.0285*

-

-

0.4335

0.1317

0.3367

0.4230

-

-

0.0494*

0.4100

0.5393

0.9110

-

-

0.0140*

0.1328

0.3346

0.3863

-

-

0.7042

0.2136

0.2657

0.8434

-

-

0.3033

0.2602

0.6557

0.1531

-

-

0.0556*

0.7912

0.4875

0.7065

-

-

0.0729*

0.3626

0.8430

0.3586

-

-

Dummy

0.0367*

0.1946

0.7159

0.1345

-

-

 

12. Jordan Import from Italy

Independent

Variables

Total Import

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.6416

0.3071

0.0133*

0.8494

0.1676

0.6176

0.1613

0.3417

0.2263

0.1198

0.2760

0.7378

0.8922

0.4497

0.6400

0.9626

0.0877

0.9554

0.9437

0.2669

0.5784

0.6564

0.7051

0.9675

0.0692*

0.5128

0.0402*

0.0564*

0.6525

0.7487

0.6506

0.6817

0.1288

0.8324

0.8967

0.7872

0.6511

0.7961

0.1841

0.5724

0.2316

0.7009

-

0.9807

0.5033

-

0.1068

0.0495*

Dummy

0.8772

0.2459

0.4012

0.8806

0.4333

0.8818

 

13. Jordan Export to Ireland

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.8330

-

-

-

-

-

0.8358

-

-

-

-

-

0.5041

-

-

-

-

-

0.7396

-

-

-

-

-

0.8657

-

-

-

-

-

0.9796

-

-

-

-

-

-

-

-

--

-

-

-

-

-

--

--

-

Dummy

0.6390

-

-

-

-

-

 

14. Jordan Import from Ireland

Independent

Variables

Total Import

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.5777

0.8329

0.0337*

0.0610*

0.0917*

0.0350*

0.9132

0.7178

0.2138

0.3366

0.5333

0.0226*

0.5626

0.4330

0.3253

0.3571

0.3756

0.3002

0.2908

0.9720

0.8596

0.2548

0.2828

0.0023*

0.3072

0.7569

0.0164*

0.0426*

0.0634*

0.0443*

0.3392

0.5785

0.4724

0.5136

0.1146

0.8771

0.2283

-

-

-

-

-

-

-

-

-

-

-

Dummy

0.1997

0.8612

0.3254

0.7475

0.1083

0.0004*

 

15. Jordan Export to Germany

Independent

Variables

Total Export

Agricultural

Chemical

Manufactures

Machinery

Others

Constant

0.3779

0.8558

0.8140

0.0214*

0.1291

-

0.2919

0.7509

0.8503

0.1111

0.1480

-

0.2185

0.5031

0.3202

0.5324

0.3172

-

0.1286

0.6677

0.1151

0.0563*

0.2457

-

0.2945

0.4534

0.6908

0.2363

0.1546

-

0.3248

0.7015

0.5183

0.2222