Decomposing Economic Growth in Jordan Using the Growth Accounting Method

Despite a growing body of research on economic growth, updated empirical evidence on the relative contributions of factor accumulation and productivity to Jordan’s long-run growth remains limited. This study investigates the sources of economic growth in Jordan over the period 1980–2024 by integrating production function estimation with a long-run growth accounting methodology. Annual macroeconomic data are used to estimate the production function through the ordinary least squares (OLS) method. The estimated parameters are then applied in a growth accounting methodology to decompose output growth into the contributions of labor, physical capital, and total factor productivity (TFP). The estimation results indicate that capital per worker has a positive and statistically significant impact on real output per worker. The growth accounting analysis shows that labor has been the primary driver of economic growth, contributing an average of 48.94% of total growth over the study period. Physical capital follows with a contribution of 40.16%, while total factor productivity (TFP) accounts for only 11.13%. These results suggest that Jordan’s long-run economic growth has been driven mainly by the accumulation of labor and capital rather than by sustained improvements in productivity. By integrating production function estimation with long-term growth accounting over more than four decades, this study provides updated empirical evidence on the evolution of Jordan’s growth drivers and offers a comprehensive country-specific assessment. The findings also underscore the importance of policies that foster innovation, improve resource allocation and production efficiency, accelerate digital transformation, strengthen the business environment, and encourage investment in high-value-added activities to support more sustainable long-run economic growth.