Revisiting Economic Growth in Jordan: Labor, Capital, and the Role of Technological Progress

Abstract

This study investigates the role of technological progress in shaping economic growth in Jordan over the period 1991–2024, while also considering the contributions of labor and physical capital. The analysis is grounded in the neoclassical growth framework and relies on a Cobb–Douglas production function combined with time-series econometric techniques to uncover both long-run relationships and short-run dynamics. The results reveal a stable long-run relationship between real GDP, labor, and capital, confirming that these factors move together over time. The growth decomposition shows that labor has been the main driver of economic growth in Jordan, reflecting the labor-intensive nature of the economy. In contrast, the contribution of physical capital has been relatively limited. Technological progress has played a supportive role in growth, but its contribution has been modest and uneven, with negative effects observed in several years. These fluctuations highlight structural challenges related to the efficiency of investment and the economy’s ability to absorb and effectively use new technologies. Overall, the findings suggest that while labor has sustained growth, long-term economic performance in Jordan will increasingly depend on improving productivity through better-quality investment and more effective use of technological progress.