Trade Policies, Wage Level and Profitability in the Manufacturing Sector in Jordan (1976-1998)

The impact of trade liberalization on the manufacturing sector in the developing countries has long been debated. The most important issues have been efficiency and enhancing competitiveness. Welfare implications received less attention, in particular income distribution and the impact on wage level and profitability. This study focuses on the relationship between trade liberalization, as part of the structural adjustment program, and profitability and wages and salaries in the manufacturing sector in Jordan over the period 1976-1998. The study makes no claim regarding the direction of causality, it has never the less shows that wages and salaries have declined in real terms during the period of “trade liberalization” while in the meantime manufacturers achieved almost the same level of profit margin suggesting that wage earners became worse off during the period under investigation.