Reality of the Industrial Sector in Jordan

The study aims to examine Jordan's industrial sector by using descriptive statistical and econometric methods. For the purposes of analysis, we used a time series data for the Jordanian industrial sector (Mining, manufacturing, and electricity) from 1990 to 2017. The study came out of the importance of the Jordanian industrial sector. During the study period, the industrial sector ranked first among the sectors in terms of relative importance in its contribution to GDP at an annual average rate of 16% . Comparing the industry's contribution to Jordan's GDP with other countries, Jordan is still relatively late compared to semi-industrialized developing countries, like Singapore, Indonesia, South Korea, Thailand, Malaysia, and Egypt. In addition, there was a fluctuating rise in labor productivity in the industrial sector, this may be due to the increase in the amount of fixed capital, as expressed by high capital intensity technology, or to the development of labor’s skills and competencies. The study recommended the need to work to improve the output of the educational system in line with the requirements of revitalization of the industrial sector, and work to increase the efficiency of vocational training institutions in order to raise the productive efficiency of local labor because of the impact of the revitalization of the industrial sector.


Introduction
The 1960s witnessed an increasing expansion of the industrialization movement in many developing countries. It has become clear to many economists and politicians in the developing world the importance of the role of industry in economic and social development, prompting some to argue that the industrial sector should be given priority as the main engine of growth and the essence of economic development.
The Jordanian industrial sector continued to develop and expand as a result of the government's interest on the one hand and the interest of the private sector on the other hand. The total industrial production in 2017 amounted to about (16.678) million, the total added value (7.582) million, and the number of industrial establishments and industrial services operating up to 95 thousand institutions with 160 thousand employees.
The industrial sector, which includes the extractive, electricity, and manufacturing industries, is one of the most important economic sectors as an indicator of the development of countries. It is the engine of growth and the essence of the economic development process, by increasing the growth rates of national income, and developing the production structure of the national economy (United Nation, 1955).

The Value added for the industry sector
The development of industry value added figures directly reflects the essence of the manufacturing process. This expression is based on the fact that increasing the added value of industry means increasing the share of industrial surplus in the national economy and increasing the linkages of the industrial sector with other sectors of the economy. In other words, the growth of industrial value added reflects the evolution of the role of industry in the overall development process, especially in the field of national market formation and the development of selfresources and their exploitation in productive activities. However, the added value of industry in the national economy increased from JD (345.3) million in 1990 to JD (7581) million in 2017, thus achieving an annual growth rate of about (12%) during the period.
It is worth mentioning that the statistical data on the development of value added of the industrial sector at current prices do not reflect the real increase in value added due to high prices and the spread of manifestations of inflation, which leads to an increase in value added without accompanied by an increase in the quantity of industrial output. And to know the real increase in value added GDP Deflator was used.
Excluding the impact of the high level of prices on the value added as shown in Table (1), it was found that the real value added increased from JD (224) million in 1990 to JD (712.2) million in 2017 with an annual growth rate of (4.4%). Excluding the impact of high prices on value added as shown in Table (1), the real value added increased from JD (224) million in 1990 to JD (712.2) million in 2017 with an annual growth rate of (4.4%). Although the impact of the rise in prices on value added is excluded, there is still a general trend of increasing value added in real terms, which indicates that there are still other factors for the growth of industrial output. The expansion of domestic demand contributes to increased manufacturing industrial output, Therefore, the impact of per capita income and population on the value added of the industrial sector was measured using the following statistical formula: Ln V= b0 + b1 Ln Y + b2 Ln P + U…….(1) Where: V: value added of the industry sector at constant prices. Y: real per capita income where b1 is assumed to be positive. P: population where b2 signal is assumed to be positive. U: Random error limit After estimating the previous equation by the least squares method (OLS) for the period (1990-2017, The results of the estimate are shown that the value added elasticity of income (b1) is about 1.05, In other words, if we assume that the population is constant, the rate of increase in the value added of the industrial sector exceeds the rate of increase in per capita income by 5%. And The value added elasticity for the population (b2) is about 1.49, ie, if we assume the per capita income stability, the rate of increase in value added for the industrial sector exceeds the rate of population increase by 49%. Thus, it is clear to us that the importance of domestic demand in the growth of value added for the industrial sector through increasing per capita income and population.

Per capita output of industry:
The per capita output of industry is an important indicator to highlight the industry's ability to cope with population growth and contribute to the development of living standards.
According to the estimation of per capita output of the industry, it was found that this share has registered remarkable increases. It increased at current prices from (130) dinars in 1995 to (651.3) dinars in 2017 at a compound annual growth rate of (7.6%) during the study period. This reflects the ability of the industrial sector to achieve high growth rates at current prices that exceed the population growth rates.

Contributions of the industrial sector in the employment of labor:
It is not enough to rely on the index of the contribution of the industrial sector to the GDP to determine the extent of the development of this sector, but it should also be referred to the workers in industrial activity relative to the total labor force. In the study of Table (3), it is noticeable on the one hand that the percentage of employed in agriculture sector decreased, where the percentage decreased from (12.3%) in 1990 to (4.7%) in 2018. On the other hand, the percentage of employed in the industrial sector increased from (9.7%) in 1990 to (13%) in 2017. The number of employees increased from (54.3) thousand workers in 1990 to (156.56) thousand workers in 2017 with an annual growth rate of (4%).
This pattern suggests, at first glance, a change in the structure of labor employment and shifting from agricultural to industrial activity as expected by development theories, but it should be noted that the proportion of workers in manufacturing and mining did not exceed more than (11%) of the total workers in the economy Despite the great efforts made in the industrial sector.
Although the industrial sector in recent years has been ranked second among the economic sectors after the service sectors in terms of its contribution to the total number of employees, its contribution to the total number of employees is still low compared to the service sectors. This may be attributed to the shortage of qualified and trained technical cadres as a result of the migration of Jordanian labor to foreign markets, which led the industrial sector to rely on production methods with extensive use of capital because of the lack of qualified and trained hands.

Worker productivity in the industrial sector
The factor productivity index is one of the qualitative indicators that can identify the development of industry in this study, where the productivity is a scale which to measure the degree of exploitation of productive resources, as it means "the contribution of one worker in the generation of value added in industry", i.e., it reflects the relationship Between the output and the number of employees.
Labor productivity per worker in a given period can be identified by the relationship between output (value added) divided by the number of workers during the specified time period. Labor productivity is organically linked and depends on a workforce equipped with a certain technical level operating within a specific management system. In general, there are a number of factors affecting the productivity of labor, including mainly: the amount of machinery available, the nature of the equipment used, the level of knowledge, technical qualification of the worker, and the system of wages and bonuses.
It is noted from table (4), that the productivity of workers in the industrial sector (including manufacturing and mining) rose from (4186.9) dinars in 1990 to (5786.9) dinars in 2010 and decreased to (4243.6) dinars in 2017.
In general, there is an increase in labor productivity in the industrial sector during the period 1990-2010; this may be due to the increase in the amount of fixed capital, or expressed as a technique with high capital density, or to the development of human capital and skills of workers.
It should be noted that the ratio of workers in the industrial sector to the total number of workers in the economy cannot continue to grow much. This is because the professional distribution of workers is actually a dependent variable of consumption on the one hand and progress on the other hand. This can be illustrated as follows: Labor productivity= The output/ Number of employees We can also say: Number of employees= The output/ productivity Because output Parallels consumption, where the demand for labor is a derived demand from the demand for products, and here demand affect and determine the demand for labor: Number of employees= Consumption/ productivity Consequently, the number of workers in a particular sector depends on the increase in both consumption and productivity, and it is known that in the advanced stages of economic development, the elasticity of demand for the products of the industrial sector is less than the elasticity of demand for services. Productivity in the industrial sector continues to rise due to continued technological advances. Indeed, continued technical advances will make labor productivity growth higher than consumption growth. Whereas, because of the difficulty of introducing a sophisticated machine into the service sector, demand for services exceeds the rate of labor productivity. Therefore, the number of workers in the industrial sector tends to decrease for the benefit of the services sector. The ratio of employees in this sector to the total number of employees will decrease in favor of the ratio of employees in the services sector to total employees. and development of the industrial sector during the period 2010-2017.
5.An estimate of per capita output of industry found that this share has registered remarkable increases, as it increased at current prices from (130) dinars in 1995 to (400) dinars in 2018 at a compound annual growth rate of (7.6%) during the study period. This reflects the ability of the industrial sector to achieve high growth rates at current prices that exceed the population growth rates. 6-The percentage of employed in the industrial sector has increased from 9.7% in 1990 to 13% in 2017, and the number of employees increased from 54.3 thousand in 1990 to 95.4 thousand in 2017 with an annual growth rate of 4%. 7-Overall, there is a fluctuating rise in worker productivity in the industrial sector this is due to the increase in the amount of fixed capital, or expressed as a technique with high capital density, or to the development of skills and competencies in productive work.
In light of the study results, the study recommends the following : 1. Both the current and subsequent governments should pay attention to the industrial sector and make plans to achieve the highest possible growth rates in order to achieve growth as a welfare indicator. 2 -The need to work to improve the outputs of the educational system in line with the requirements of revitalization of the industrial sector.
3 -Work to increase the efficiency of vocational training institutions and increase the absorptive capacity in order to raise the productive efficiency of local labor because of the impact of the revitalization of the industrial sector. 4. Reviewing government policies related to the provision of permanent job opportunities as they lead to increase economic growth rates in the long term.