by Ibrahim M. Oweiss


After the tribes of the Prophet Moses suffered from a lack of food in the desert, God sent down quail while water sprang out of the rocks, according to Surat Al-Baqara of the Holy Quran. Verse 61 relates that they still complained, "Oh Moses, we cannot endure one kind of food all the time. So beseech thy God to produce for us what the earth grows, its herbs and cucumbers, its garlic, lentils and onions." He said, "Will you exchange the better for a lesser…go land in Egypt and you shall find what you want."

While Egypt of the past was recognized as a land of plentiful variety of agricultural products and abundance of food, it is currently heavily dependent on imports of wheat, flour and other products to feed its people. This would not in itself constitute an economic problem if Egypt's exports could pay for its imports of food. However, its exports lag behind its imports and the gap between them keeps widening over time.

The complicated and interrelated sets of economic problems facing Egypt's economy go beyond inadequate agricultural production and balance of payments deficits. In spite of recent efforts to ameliorate Egypt's economy, these problems have compounded in the last twenty-five years. They include a population explosion, high rates of open and disguised unemployment, a crushing debt service burden, high rates of inflation, substantial budget deficits, widespread price-cost distortions, low productivity and acute external imbalances.

It is not the purpose of this study to examine the economics of every sector. The purpose of this study is to analyze inhibiting factors that are crippling Egypt's economic growth and are hindering its long-promised take-off stage. For a more accurate assessment of Egypt's economy, this study also estimates the country's vast informal economy on the basis of a savings function derived from a direct questionnaire survey of 500 Egyptian households conducted in December 1988. This survey found Egypt's informal economy to be even larger than the country's officially announced national income. The present study also indicates that before Egypt's open-door policy in 1974 and after 22 years of Nasser's socialism, the maldistribution of income in Egypt was worse than in three capitalist nations: the United Kingdom, Japan, and even the United States of America.

Other estimates made in this study are for the following parameters: (1) Egypt's rate of unemployment; (2) Egypt's foreign exchange earnings; (3) Egypt's housing shortage as of 1990. A new term, "rentalism," is introduced to indicate and analyze the economic consequences of government control of property rents since Nasser's regime.

Egypt's Economic Accomplishments in the 1980s

During the political campaign for the presidency of Egypt and prior to the re-election of Presdient Mubarak for another six-year term, the January 1988 issue of al-Ahram al-Iqtisadi made a detailed list of economic accomplishments and financial reforms undertaken during his firs term.

From 1981 to 1986, agricultural land increased from 5.7 to 6.3 million feddans; the number of factories more than doubled; oil production increased by 40 percent; the number of harbors increased from four to seven capable of handling 19.1 million tons of merchandise., in comparison to only 1.8 million tons in 1981; the road network increased from 26,000 to 42,000 kilometers; the number of trucks more than doubled; the number of telephone lines increased from 18 billion kilowatt/hours to 45 billion. As a result, electricity, which had been connected to 5.2 billion homes in 1981, was connected to 8.2 in 1986; and townships supplied by fresh water increased from 4200 to 4500 towns. Furthermore, to encourage tourism, hotel construction increased by 20 percent, while new modern facilities increased airport capabilities more than threefold.

Even though the above figures represented real growth in the sectors mentioned, they are by no means indicators of per capita real growth because of the substantial increase in Egypt's population. The performance of the economy should not be measured by such partial indicators as the number of bridges built or the kilowatt capacity installed. It can only be measured by macroeconomic indicators such as the growth of real per capita gross domestic product, the reduction in the rate of unemployment, the level of price stability and improvement in the external balance. In the al-Ahram al-Iqtisadi study, all figures denominated in Egyptian pounds are misleading because of the failure to adjust them to take into account the official rate of inflation. In Table 1, a comparison of the al-Ahram al-Iqtisadi statistics with statistics adjusted by myself to reflect a reasonable 20 percent annual rate of inglation reveal the opposite of what the study presented. Columns 1 and 2 were quoted from the study of al-Ahram al-Iqtisadi, while column 3 shows my adjusted figures for the year 1986. It is, therefore, apparent that al-Ahram al-Iqtisadi's monetary comparisons of Egypt's economic performance in 1986 vis-a-vis 1981 were inaccurate, misleading, and highly inflated. In fact, the performance of the Egyptian economy on all counts during the period 1981 to 1986 left much to be desired.


Even if we take into consideration the real growth of some of its infrastructure, Egypt's economy is seriously affected by a population growth outstripping many economic gains. Given the existing constraints of an inhabited area of only 34,000 square kilometers out of a total area of one million square kilometers, Egypt's high birth rate, coupled with a high but declining death rate, make it one of the most densely populated countries in the world. Based on an area of only 214.2 square miles, my estimate of Cairo's density in 1990 was 42,000 inhabitants per square mile, the highest in the world.1

It is worth noting that Egypt's population increased fourfold in the nineteenth century, from 2.5 million in 1800 to 10 million in 1900.2 By comparison, another fourfold increase materialized in the first three quarters of the twentieth century.3 While Egypt's population was in excess of 54 million inhabitants in 1990, its annual growth rate ranged between 2.8. and 3.0 percent, one of the highest in the world. In the midst of this population explosion, Egyptians are living under intolerable conditions of overcrowdedness in the narrow band of Egypt's habitable area of 3.4 percent, the remainder of its territory being predominantly desert. In spite of the existence of a Supreme Council on Population headed by the President of Egypt, no systematic policy is being adopted. In 1956, a program for a workable birth control policy likely to achieve effective results within fifteen years was presented to President Nasser, according to the unpublished memoirs of his Minister of Finance, Abdul-Galil al-Imari. Nasser refrained, however, from taking any measure to curb Egypt's high population growth because, in my opinion, he feared fighting two difficult uphill battles at the same time-income redistribution, which was then a priority, and the curbing of people's right to have children as well.

With the shrinkage of the per capita area under civilization, the need to import food increases while the ability to export agricultural products is reduced. An increase in exports is necessary for the service and payment of Egypt's foreign debt. With high rates of population growth, the same pressures apply to the production levels of industry and of other sectors in which the satisfaction of internal needs will have to be at the expense of exports. Furthermore, with an acute shortage of housing, an annual increase of one and a half million inhabitants compounds an already critical situation, as the lack of shelter could also be politically destabilizing. In addition to the problem of limited resources and a depleted infrastructure, pressures are mounting because of the high population growth rates have not been matched by either new discoveries of natural resources or an increase in marginal productivity. In spite of strenuous efforts to conquer the desert in an attempt to cultivate parts of it and in spite of the establishment of cities such as the "Sixth-of-October," "Tenth-of-Ramadan," and "Sadat," there is neither a realistic plan for the establishment of sufficient new cities, nor is there a known breakthrough in technology which could substantially increase production. Without a full commitment of the Egyptian government to the implementation of a comprehensive population program, including the form of deprivation of subsidies to which they would have been otherwise entitled, the pessimistic outlook of Thomas Malthus in his Essays on the Principles of Population (1798) may be applicable to Egypt. The intolerable population situation threatens to worsen, as more than 40 percent of the inhabitants are less than 14 years of age.4


In contrast to the more than fivefold increase in its population since the beginning of the twentieth century, Egypt's cultivated land has increased no more than one fifth during the same period. Agricultural production per capita has declined both because of a declining land-to-labor ratio, and because of a host of other factors. For example, the policy of taxing the agricultural sector by pricing export crops, such as cotton and rice, at levels well below international prices for the purposes of raising public revenue, has resulted in a serious weakening of incentives. Other factors which have adversely affected agricultural production in Egypt include: a) price/cost distortion in relative prices, such as wheat prices compared to those of clover or other such agricultural commodities which are not subject to strict government control or equally subsidized; b) the system of forced delivery of underpriced crops; c) the lack of competition among the public-sector companies which have monopolized the supply of seeds, fertilizers, pesticides, and credit; complete government monopsony in the purchase of principal crops such as cotton from farmers; and e) the monopoly of the Egyptian government of the marketing of such products.

Per capita agricultural production has, therefore, declined, while imports of food have been on the rise. As Egypt imports most of its needs of what and flour from abroad, the call for food security has arisen. The Specialized National Councils, an advisory institution to the President of Egypt which has included top experienced talents such as former ministers Abdul-Galil al-Imari, Ali al-Graitli, Ibrahim Hilmi Abdul-Rahman, Fuad Kamil Hussein, Hamid al-Sayih, Mastafa al-Gabali and others, formed a Council of Production and Economic Affairs. In its report to the President of Egypt, the Council issued its call for food security through an expansion in the areas under cultivation for food production, an increase in the productivity of the existing cultivated areas and an expansion of new arable lands. In evaluating Egypt's system of trade agreements, the Council had also called for an improvement in the existing inefficient system of exporting agricultural products. The final recommendation included the development of exports from non-agricultural sectors and an attempt to increase foreign exchange earnings from tourism and exports of processed industrial products.5 The Council's report outlined in detail the means of achieving the goals it spelled out without neglecting the theory of comparative advantage.

Unfortunately, such studies and recommendations are seldom taken into account in the Egyptian decision-making apparatus. In most cases, ministers are either too busy promoting their own political ambitions or are preoccupied with ensuring their continuation in the cabinet. They tend to be engaged in bureaucratic matters which could easily be delegated to subordinates. With a few remarkable exceptions, the majority of Egyptian ministers since the time of Nasser's regime have had no time to think of an innovative approach to problems they are facing or to plan a strategy for implementation and follow-up. In certain instances a minister may be reluctant to adopt a certain valuable idea for fear that he might be replaced by whomever recommended it in the first place.

The failure to carry out structural reform in agriculture, however, is only partly a matter of overburdened, overambitious or overcautious ministers. The main reasons are fiscal and ideological. When President Mubarak came to power in 1981, he was constantly reminded by the Prime Minister, Fuad Muhiedden, and other top officials, of the political disturbances of January 1977 (known as the food riots), which might, they argued, be repeated if any policy for a structural reform was proposed. After being commissioned by the President, two prominent Egyptian economists, Abdul-Galil al-Imari and Ali al-Graitli, made recommendations for structural reforms of the country's economy in December 1981, but Muheiddin convinced the President that the proposals were politically destabilizing and kept the report in an inactive file. Ironically, the Prime Minister did not disagree with the findings, particularly with the need to allow for gradual increases in prices of subsidized items. However, it was decided to go about it indirectly and, hopefully, in an unnoticeable manner. For example, the contents of gas containers sold to Egyptian households were reduced, while the same price was charged! From time to time, train riders are confronted with a sudden steep rise in the price of train tickets without an prior announcement. The one piaster loaf of bread was reduced in weight and worsened in quality while the two piaster loaf was introduced in the market. The same method was applied when the current five piaster loaf replaced all others.

In spite of efforts for Egypt's industrialization since the 1930s, the agricultural sector still remains important to the country's economy, as is evident from figures provided in Table 2.

In should be noted, however, that if the service sector is divided into its constituent sub-sectors-transportation, communication, and storage; Suez Canal; trade, finance, and insurance; foreign trade; housing; tourism; and other services-agricultural ranks first both in terms of contribution to gross domestic product (GDP) and in terms of employment. Furthermore, almost half of Egypt's industrial production is based on agricultural output.6 In addition, many items of the service and export sectors revolve around agricultural production. Egypt's exports of cotton still remain one of its major sources of foreign exchange, as shown below. In spite of its relative importance to Egypt's economy, agriculture has deteriorated, as has been shown in Table 1 and other studies.7 This decline in Egyptian agriculture runs counter to the historical trend. In the nineteenth century, in the time of Muhammad Ali, the cultivated area increased by 33 percent, from three million feddans in 1813 to four million in 1852, and the water resources of the River Nile were more efficiently utilized than ever. By 1900, the overall cultivated land had increased to 5.3 million feddans.8 With the near quadrupling of cotton prices resulting from shortages in the world market caused by the American Civil War, Egyptian export prices of cotton increased from 12 riyals per kantar in 1860 to 45 in 1864.9 In realizing their comparative advantage, Egyptian framers allocated the bulk of their land to the cultivation of cotton. Cotton remained the backbone of the Egyptian economy as well as the main source of Egypt's foreign exchange earnings until the 1960s.

Egypt's cultivated land has increased by no more than 19 percent in the twentieth century, in spite of the construction of the Aswan Dam in 1902 and the Aswan High Dam in 1970. Notwithstanding this, Egypt has been producing a variety of agricultural products, mainly cotton, maize, wheat, berseem, beans, barley, rice, sugar cane, and onions. Indeed, the foreign exchange earnings from the export of cotton until the 1950s were in excess of the country's needs to pay for its imports. The Egyptian balance of payments was favorable, while the Egyptian pound, whose value was freely determined in world markets, was exchanged at 1.02 pounds sterling or 5 dollars in the 1940s.

One of the major developments in Egypt's agricultural system after the Nasser revolution was the implementation of the Land Reform Law of 1952, which placed a ceiling on the size of the individual ownership, expropriated and redistributed land in excess of the statutory maximum to landless peasants (as shown in Table 3), fixed land rent at seven times the amount of land tax, and abolished the right of the landlord to terminate tenancy, making tenancy perpetual so that it would pass from one generation to the next. Finally, Egypt's land reform legislation organized all agricultural producers in so-called cooperatives which are, in effect, public sector companies with a monopoly of the marketing of the principal crops and the supply of seeds and basic inputs.

One of the favorable outcomes of the 1952 Land Reform Law was a reduction in the inequality of land distribution. It does not, however, seem to have significantly affected the inequality of income distribution, in spite of Nasser's socialism, as is shown in even more detail below. Furthermore, the Law created built-in rigidities, such as the fixing of land rents at seven times land taxes, which have been kept at the same level ever since. It also guaranteed permanent tenancy. As the real value of rent became negligible over time due to an average rate of inflation of 20 percent annually, a tenant could afford to pay rent indefinitely with a minimum amount of work. Lack of incentives and mismanagement led to the deterioration of the single most important sector of the Egyptian economy. In the early 1970s, Bent Hansen candidly summarized the situation in the following statement:

Rents on land (but not land prices) were fixed by the land reform of 1952 on the basis of tax assessments from 1949, and have not been changed since [and still had not been changed by the date this book was published]. Immediately after the breakdown of the Korean boom, the official maximum rents were probably in line with what free market rents would have been, but since then a large gap has grown between official [fixed] rents and hypothetical "market rents." Moreover, the relative rents on different lots of land are becoming increasingly out of line with relative supply marginal-value productivities because of changes in water supply, patterns of production, land improvements, and the like. As a result, absentee landowners (who still own substantial areas, albeit in smaller plots) have become increasingly uninterested in making land improvements; this may have been offset, however, by government efforts by tenants who have obtained more secure and longer-lasting terms of tenure. Probably the most serious allocation effect of the fixed rents is that there is no longer any mechanism (aside from the black market) to ensure that the most competent people cultivate the land.10

Without an overall reconsideration of the built-in rigidities that the Egyptian government has created over the years and without adoption of a program to institute structural reform, the agricultural sector is likely to stagnate further in the future. Before an expensive program of expanding agriculture in Egypt's desert is launched-given the very limited capital the country has-a priority has to be given to raising the economic efficiency of the six million feddans under cultivation. In his study of Egypt's agricultural sector, while referring to the country's productivity in agriculture measured by output per hectare. Richard Adams concluded that

The Egyptian rate of growth in output per hectare for major food crops far exceeded that of 36 other developing nations [before Nasser's revolution, in the period 1948-52]. However, after 1963-67 Egypt's rate of yield growth for major food crops dropped sharply, while that of the average of the 36 other developing countries rose considerably. Between the periods of 1963-67 and 1978-82 the 36 developing countries averaged a much higher rate of growth in output per hectare than Egypt.

No wonder Egypt is heavily dependent on food imports, especially from the United States.

Income Distribution

Due to distortions created by the worsening of income distribution in Egypt, particularly after Sadat's open-door policy, conspicuous consumption rose sharply and merchant trading increased, while investment and growth in production lagged behind. Even before Sadat's open-door policy, inequality of income distribution in Egypt had turned out to be worse than in the capitalistic nations of France, England, Israel, Japan or the United States of America. This was the case in spite of Egypt's 1952 Land Reform Law (later amended to put an upper limit of no more than 50 feddans on land ownership), and in spite of Nasser's socialism, taxation, and rent controls. While there are methodological problems with cross-country comparisons of income distribution, it may serve a purpose to compare figures for income distribution in Egypt prior to its open-door policy in 1974 with those in other nations (Table 4).

In analyzing the data, it can be observed that the households in the upper 20 percent of income brackets had almost half of Egypt's national income, while in other capitalistic nations their share was approximately 40 percent. The richest 10 percent of Egypt's households had one third of the country's income, in comparison to less than one quarter in the case of England, France, and even the United States.

While it may be argued that income maldistribution in many Third World countries is worse than that of the capitalistic nations, it would have been reasonable to expect Egypt to be different since it has adopted socialism as its economic system since the 1952 Revolution.

It is difficult to assess the maldistribution of income in Egypt during the 1980s because of the growth of an unaccountable informal economy in which earnings are neither taxable nor invested but rather lavishly spent on weddings and luxurious items, or otherwise saved or invested abroad. However, inequality in Egypt's income distribution has certainly worsened in comparison to 1974 as a result of Sadat's open-door policy.

An Estimate of Egypt's Informal Economy

Several studies have been conducted on the nature and extent of the informal economy. Henry (1978)12 called it "the hidden economy," but Portes and Sassen-Koob (1987)13 preferred the phrase "the underground economy." Gershuny (1978)14 used the term "self-service economy," and Feige (1979)15 chose the "irregular economy," while Hansen (1981)16 used yet another phrase, "the border economy." All of the above terms and other similar ones, such as "off-the-books economy," mean more or less the same phenomenon. The phrase "informal economy" has become the most widely used. Among the many definitions offered in this regard is the following by Castells and Portes: "The informal economy…a process of income generation characterized by one central feature: it is unregulated by institutions of society, in a legal and social environment in which similar activities are regulated."17 Even though such a definition may seem appropriate, the use of the word "process" may give an ambiguous meaning to the phenomenon of informal economy.

I define the informal economy as that which encompasses all economic activities unknown to established authorities-or unadmitted by them even if known-and all incomes generated thereof but not reported to the government and not included in the country's national income accounts. The total of such may be referred to as the "informal economy." Furthermore, a labor market operating without the knowledge of the authorities and without adherence to existing laws and regulations may be called "the informal labor market." Similar terms apply to capital markets and to all other informal economic activities.

It should be noted, however, that all sources of informal income are not necessarily illegal. An informal income may be lawfully earned, such as that derived from certain cash payments to physicians, lawyers, tutors, plumbers, mechanics, nightclub operators or otherwise obtained from unreported remittances. In addition to these legal sources of an informal economy, there are other illegal sources such as trading in illegal drugs and unlawful black market transactions in commodities or in foreign currencies. Whether the source of an informal income is lawful or unlawful, the act of concealing it from the authorities is itself illegal. Moreover, there may be different reasons for not reporting a legally earned income to the authorities such as an attempt to evade taxes or a fear of confiscation, sequestration and/or nationalization of an economic activity, or any other precautionary purpose.

To estimate an informal economy, Gutmann (1979), for example, [compared] the ratio of outstanding currency to demand deposits in 1978 with the average for the years 1937 to 1941, a period when underground activities were assumed to be close to zero. Increases in the ratio were imputed to growth in these activities. On the basis of this method, Gutmann estimated that the informal economy represented about 10 percent of the currently measured Gross National Product, or $177 billion, in 1978. This approach has been employed with variations by other authors. Spitznas (1981) applied Gutmann's formula to the Second Federal Reserve District, which includes New York City, and estimated the city's underground economy at $16.2 billion in 1978. He also estimated that these activities had been growing rapidly.18

Gutmann's methodology has led to a wide range of estimates of the informal economy in industrialized societies, despite the criticism by Castells and Portes that there is no assurance that the base period had no informal economy. It does not, however, appear to be appropriate for Egypt.

In my attempt to evaluate Egypt's informal economy, I did not rely on official figures for my estimation. A questionnaire was devised for a stratified random sample of five hundred households in Egypt in December 1988 in an effort to estimate first the ratio of income that Egyptians are accustomed to allocating for savings. It should be noted that the sample is indicative of aggregate savings, as a large number of Egyptian households have a zero or even negative net rate of savings.

With an estimate of a savings ratio (s), and with an estimate of total savings (S), I then estimated Egypt's Gross National Product (GNP) in 1987.

The result of the sample indicates with 95 percent statistical confidence that the savings ratio in Egypt is somewhere between 9 and 11 percent of income. This result was found to be significantly different from the 19.9 percent which was derived from applying regression analysis to a thirteen-year time series of published official data as shown in Appendix 1. It would have been inconceivable for Egypt to have a savings ratio of 19.9 percent in 1987, at a time when a country such as the United States, with a much higher per capita income than Egypt, only had a savings ratio of 12.4 percent (gross savings was $566.4 billion out of a Gross National Product of $4486.2 billion).19 Even in applying regression analysis to the case of the United States for the same period of thirteen years, the savings ratio was found not to be significantly different from that based on the figures from 1987.

The estimates are consistent with that of Robert Mabro, whose analysis of the data for the period 1952 to 1970 concluded that Egypt's savings ratio is between 9 and 14 percent.20 Such a contrast-between results obtained from primary data and those derived statistically from published official data-should not be surprisingly. Official data on Egypt's savings and national income do not reflect the actual performance of the country's economy. As total savings (S) are unknown I attempted to estimate them in spite of institutional and cultural difficulties. Since certain financial institutions, such as the Islamic capital investment companies, do not report actual deposits of savings to Egypt's Central Bank in spite of their significance, the official figures on national savings are definitely unrealistic. Furthermore, Egyptians save in many different forms, some of which cannot be fully accounted for, such as hoarding in the form of cash or else in the form of gold, jewelry, or other such objects bought with the intention of "saving" for possible future sale for investment or needed expenditures. Thus, actual total savings is undoubtedly more than any recorded or estimated figures.

The methodology I used to estimate Egypt's aggregate saving was based on the following premises. First, official figures for savings are to be avoided. I found out that these turned out to be only the sum of net sales of savings certificates21 in addition to post office savings deposits. By mid-1987, net sales of savings certificates amounted to E.P. (Egyptian Pounds) 3.1 billion,22 while post office saving deposits were half a billion Egyptian pounds,23 the total of which represented the official figure for Egypt's total saving (S)! Second, I used the published figures of time deposits in banks as a relatively more reliable base for (S) since all of those among the stratified sample of 500 who had savings defined in their time deposits as savings. Third, I estimated savings deposited with non-bank institutions, mainly the Islamic capital investment companies, since they are not a fully integrated part of Egypt's banking system. As there was no access to the accounts of the twelve major Islamic capital investment companies, I used an estimated figure of the total dividends of E.P. 2.5 billion they distributed in 1987 (d), which was given unofficially by Egypt's Central Bank, as the numerator in the following equation:

d (estimated)/total deposits (unknown) = Annual yield

Since the annual yield was advertised by the Islamic investment companies as ranging between 20 percent and 25 percent, I conservatively took the lower percentage of 20 percent to estimate the unknown total deposits made with such institutions, which turned out to be in the neighborhood of ten billion Egyptian pounds.

My estimate of the total deposits wit h the Islamic capital investment companies is conservative in comparison to other estimates. Al-Ahram al-Iqtisadi, for example, estimated deposits at the two largest of them, Al-Rayan and Al-Saad Islamic Investment Companies, at E.P. 11.7 billion in 1987.24 Muhammad Dowaidar provides two estimates of the total deposits with the Islamic capital investments companies, between E.P. 5 and 14 billion, or between E.P. 13 and 48 billion.25 Furthermore, some of those deposits wer made by Egyptians working abroad and denominated in U.S. dollars, as well as in other major European currencies. Whatever the amounts of money deposited with the Islamic capital investment companies may have been, the fact remains that they were substantial, even though such institutions were not under any banking supervision or control (as shown in Appendix 2).

Assuming that the E.P. 10 billion in total deposits with those companies were the result of accumulated savings over their period of expansion of five years, a conservative estimate of E.P. 2 billion may be regarded as annual savings deposited with those institutions.

In 1987, therefore, Egypt's total savings (S) can be estimated at E.P. 10.3 billion, representing the sum of times deposits with the country's banking system of E.P. 8.3 billion26 plus the savings deposited with the Islamic capital investment companies at E.P. 2 billion.

Using the savings ratio (s) derived above, which was found to have been in the range of 9-11 percent, and given the estimated (S) at E.P. 10.3 billion, my estimate of Egypt's national income in 1987 would be somewhere between E.P. 94 and 114 billion.

Even if the lower limit of E.P. 94 billion is to be considered, then Egypt's informal economy in 1987 may be estimated at a minimum as E.P. 50 billion, i.e., the difference between the E.P. 94 billion figure and the official one of only E.P. 44 billion. In other words, Egypt's national income in reality was at least more than double the official estimate in 1987.

Regardless of how the above estimates reflect Egypt's, my conservative approach indicates the existence of a substantial informal economy in the country, which complicates the implementation of structural economic reforms.

With an informal economy even larger than Egypt's reported national income, it can be presumed that the income maldistribution of the country is even worse than that shown in the available statistics. The wealth and most of the purchasing power are highly concentrated in the hands of a small percentage of the country's population, while the majority live under extremely tight budgetary conditions, where basic needs cannot be met among the poor and middle class alike. The dilemma of policy makers of structural reform which necessitates a rise in prices, bringing further economic hardships to the majority of Egyptians, as this could lead to frustrations, riots and political instability. Yet, in the absence of any reform, economic problems keep worsening at a compounded rate, while rates of inflation keep increasing because of a decline in productivity, an increase in the government's printing of money, the substantial purchasing power concentrated in the hands of the few, and the high rates of growth in Egypt's population.

Egypt's Contemporary Economic Problems

Apart from the complicated issue of population, Egypt's contemporary economic problems may be classified under three main headings: (1) external economic factors, (2) internal economic factors, and (3) government policies, laws, and regulations.

The exogenous, or external, economic factors which have compounded Egypt's economic problems in recent years can be attributed to the decline in the main sources of its foreign exchange earnings since 1983, when the price of oil was substantially reduced, declining to less than $10 a barrel in 1986. With the subsequent economic recession in major Arab oil-exporting nations, there was a decline in the remittances of the three million Egyptians working in those countries, which constituted the highest source of foreign exchange earnings for the country. The relative contributions of sources of Egypt's foreign exchange earnings are shown in Table 5.

There are, however, other sources of foreign exchange not listed in Table 5. They are classified as a) other food and raw materials (onions, potatoes, oranges), b) semi-finished goods, and c) finished goods (Table 6).

If the figures for a), b), and c) are added to the last column in Table 5, we get the total foreign exchange earnings in billions of dollars consecutively in the years above as follows: 6.8, 5.9, 6.9, 7.7, 7.3, 6.6, and 3.8, adding up to $45 billion for the seven-year period.

It is to be noted that, with the drop in the price of oil in 1986, the relative contributions of remittances and oil exports were significantly reduced, while the absolute amount of Egypt's total foreign exchange earnings dropped by about three billion dollars. After 1987, however, as the price of oil rose, the Egyptian government decided to increase both the production and the export of crude and refined oil.

The inability of Egypt to control external factors affecting its economy makes structural internal economics imperative. Domestic economic problems at present include the rise in both disguised and open unemployment, low productivity, high rates of inflation, government facing deficit financing, unaffordable subsidy programs, deficits in the balance of payments, accumulating public debt, the lack of adequate domestic investments, the acute shortage in housing, price disequilibria, and, in general, low rates of real economic growth, often even leading to negative per capita real growth rates.


According to official statistics, there were more than two million Egyptians unemployed in 1986 out of a labor force of 13.7 million,27 representing a rate of unemployment in the neighborhood of 15 percent. My estimates indicate, however, that there were 2.8 million unemployed while the labor force was 14.5 million, representing an unemployment rate in excess of 19 percent in 1986. Since half of Egypt's population, according to published official age distribution data, is of labor force age, I used the figure of 24.2 million Egyptians of both sexes as the basis for estimating the size of the labor force. Traditionally, however, approximately 20 percent of females are in the labor force. Thus my estimate of Egypt's labor force in 1986 was 12.1 million males plus 2.4 million females, representing a total of 14.5 million, of whom 11.7 million28 were employed, according to official statistics. The remaining 2.8 million can thus be estimated to have been employed.

This estimate represents only those who were unemployed and does not take into account underemployment. Many work places in the Egyptian government and public sector companies are staffed with people beyond work needs, and some employees on the payroll have little or no work at all. This phenomenon of disguised unemployment has increased over time because of Nasser's unemployment act, which obligated the government to provide employment to all. As labor offices assign people to vacancies on the basis of "first listed, first served," a backlist of more than five years of university graduates is still awaiting employment.


The official rates of inflation are downwardly biased because of the rigidity of prices in certain items, as in the case of subsidized goods and fixed rents which enter in the consumer basket when prices are compared from one year to another. Inflation rates as measured by consumer price indices (CPI) are shown in Table 7.

The average annual rate of inflation computed from the above statistics is approximately 16 percent. In previous research I estimated Egypt's annual rate of inflation at 23 percent,29 which is in line with most estimates of the World Bank. Even if we take a conservative estimate of 20 percent, this rate of inflation imposes an unbearable burden on the majority of Egyptians who are poor, and even those who are middle class.

While there are other economic, social, and political implications of such high rates of inflation, it is important to assess the root causes of Egypt's substantial increase in its consumer price index. One of the main sources of inflationary pressure in Egypt is the high budget deficit and the way it is financed. In the most recent estimate by the International Monetary Fund, Egypt's budget deficit was about 17 percent of the country's Gross National Product (GDP). Roughly half of this deficit is financed by borrowing from the public or from publicly owned institutions such as pension funds and social security funds. The other half, amounting to eight to ten percent of GDP, is financed by printed money. This monetized part of the budget deficit is the main cause of inflation. The government's policy of excessive printing of money is shown in Table 8.

While the monetized part of the budget deficit is the major source of the "demand-pull" inflation in Egypt, other sources include (1) imported inflation, which is becoming increasingly important following depreciations of the Egyptian pound; and (2) the raising of the price of principle commodities to reflect the increasing cost of labor and other inputs. These fuel the flame of "cost-push" inflation. The decline in marginal productivity is a further cause of inflation.

Budget Deficit

As the government has not been able to track down the vast untaxable underground economy, its total public revenues have increased modestly from E.P. 8.3 billion in 1981/81 to E.P. 13.5 in 1986/87. Its expenditures meanwhile have increased from E.P. 13.2 billion to E.P. 22.2 billion. The overall budget deficits have therefore increased from E.P. 4.9 billion to E.P. 8.7 billion in 1985/86 to E.P. 8.7 billion in 1986/87. Furthermore, the relative burden of the budget deficit as a percentage of the country's national income, even though still high, has been reduced from 23.5 percent in 1981/82 to 19.9 percent in 1986/87. Most of Egypt's budget deficit, however, was internally financed by its banking system, social security surplus, development bonds, savings certificates, postal savings, government bonds for public sector companies, and by the printing of money, the total of which covered up to 83 percent of the deficit. The remaining 17 percent was foreign-financed from credit facilities for the development plan (mainly project loans), grants for the development plan, cash and commodity loans such as the PL 480 and other U.S. loans and grants, and European and Japanese loans and grants.30

In summary, the three methods of financing the budget deficit in Egypt are (1) borrowing from public and savings institutions, which is essentially non-inflationary although it crowds out private investment; (2) borrowing from the banking system through the printing of money, which is highly inflationary; and (3) foreign borrowing, which is non-inflationary but creates external debt with far-reaching implications for the balance of payments position and the prospects of economic growth.

Two of the most prominent and internationally respected Egyptian economists, Abdul-Galil al-Imari and Ali al-Graitli, have concluded that the root cause of Egypt's economic problems is deficit financing. Having been commissioned by President Mubarak to present a study on Egypt's structural reform, they presented an important dfrom landlords to tenants. Whatever the reasons for rentalism, it led to one of the most serious economic problems that Egypt is currently facing-an acute shortage of rental housing. This shortage has been compounded over the years as the government has not had the financial ability to fill the needed gap in spite of its large construction programs.

Based on an average household of 4.9 individuals,38 and with 54 stay is only temporary because, with few exceptions, Arab countries do not allow the permanent settlement of foreign workers. With no appreciable effect so far on Egypt's birth rate or on migration from the country, the acute housing shortage remains a threat to social and political equilibrium. Overcrowdedness in apartments has created a variety of social problems and crimes39 in addition to its negative effect on the overall productivity of the country and also on hygiene and sanitary conditions. In the meanwhile, the lack of adequate housing for the majority of young Egyptians, who are also faced with an unemployment rate of at least 19 percent, leads to frustration, hopelessness, possible mass disturbances and political instability.

Obviously the current status quo is untenable. To improve the situation, there are only three possible options, in addition to an increase in housing construction by the government: (1) to encourage the private sector to increase its investments in housing construction, or (2) to pursue a less efficient system by socializing Egypt's housing sector in its entirety so that at least the existing buildings may be properly maintained so their lifetime can be extended, or (3) a combination of both. Due to the government's problem of bureaucracy and its budget deficits, and for other cultural and practical considerations, the last two options may be ruled out. The only viable solution to Egypt's acute housing shortage is, therefore, the first option, yet it cannot be achieved without a gradual elimination of rent control. The phasing out of rentalism over a specific period of time is a necessary condition for a long-term solution to one of the most pressing problems that Egypt is currently facing.

Government Bureaucracy

As in the case of the housing laws which led to the current acute housing shortage in shelter, several other laws and regulations have created myriad economic imbalances and problems. With the decision to move quickly along the road to industrialization, the Egyptian government interfered in the relationship between prices of industrial products and those of agricultural goods. Bent Hansen has candidly observed that "there has been a clear tendency to let the terms of trade of agriculture deteriorate as a means of financing industrialization….Before World War II, fertilizers were imported duty free. Although this policy was dictated by the wishes of landlords, it obviously had positive allocation effects. Since the 1950s the government has sold fertilizers to peasants at prices generally above import prices, probably as a device to tax agriculture."40 As the sole purchaser, the government of Egypt also established the rule of buying cotton from its growers at a price less than that of world markets as a means of raising public revenue.

Bureaucratic inefficiency, a characteristic of governments, especially in the Third World, has had negative effects on the country's economy. Ironically, the system of long bureaucratic procedures requiring several approvals, signatures, stamps and the like for the simplest government authorization was established by the British authorities upon their military occupation of Egypt in 1882. The system has remained in place ever since in spite of all attempts to overhaul it. In a major policy speech on November 11, 1989, President Mubarak acknowledged and bitterly criticized Egypt's suffocating bureaucracy "which seeks to make the easy difficult and the possible impossible."41

A case study of a tourist project of Arab Misr Investment Company in Cairo revealed that it required 18 different steps to obtain the final license needed to operate, as shown in Appendix 6. It is little wonder that it took five years after the full completion of the project for the license to be issued. During that period all capital and investment expenditures were frozen, as there were no returns to for a closed-down project. Meanwhile, there were financial obligations to banks on the borrowed money, in addition to the depreciation of capital assets and the payment of all financial obligations throughout the long-awaited period for the necessary final license. Financial hardships to investors, some of whom were small investors committing the savings of a lifetime, crippled the company financially, prevented it from further expansion and investment, and finally forced it to close down.

Because of the problems of bureaucracy, several other projects have not been completed after their start. A feasibility study of a project might rely heavily on certain privileges allowable under existing regulations, such as duty free imported machinery for the project allowable under the open-door policy and the issuance of Law 43 in 1974. However, during project construction in the early 1980s, companies were faced by an unmanageable situation when the government reversed its position and decided to impose a heavy duty retroactively on the imported machinery for an already approved project which had not yet been completed. Through such unexpected actions, some projects were forced to declare bankruptcy, or at least stop short of completion after having spent all of their paid capital, as well as all sums of money borrowed from banks. No estimates have actually been made of the total of such sunk capital but it is believed among the accountants whom I have interviewed to be more that ten billion Egyptian pounds.

Some Egyptian and private companies, therefore, have devoted their activities to short-term trade, reaping high cash profits that have largely been diverted to an expanding informal economy. These high cash profits have often been hoarded in the form of cash or jewelry, or spent on unnecessary luxuries, lavish consumption, or otherwise invested or saved abroad. The effects of Egypt's inefficient bureaucracy were limited when the role of the government in the economy was small. With Nasser's move towards more centralization, which meant more consolidation of government power and centralization of decision-making, the role of Egypt's government in the economy was substantially increased, particularly after the 1961 socialist laws. Under these laws private companies, such as Mahalla al-Kubra, Kafr al-Dawar Textile Companies, and others, which were efficient and able to compete in world markets with high-quality products, became public sector companies that show profits under the control and management of an inefficient bureaucracy. Even some of those public sector companies that show profits in their published annual budget are in fact operating at a loss, once an allowance is made for subsidized inputs such as energy, raw materials, and others, for which the companies do not pay the actual economic cost. As a result, in the 1980s, there has been a call for the denationalization or privatization of Egypt's public sector companies.

In fairness, there have been good managerial talents in charge of some of the public sector companies. Unfortunately, they have often been caught in the cobweb of bureaucratic procedures and an overlapping of conflicting jurisdictions among several different ministries. Their capabilities are not properly utilized. Constraints on their action and limits on their budget have prevented Egypt from taking advantage of the world's substantial technical progress since the 1950s. After almost forty years of assembling cars in Egypt, the industry has not been able thus far to produce a fully manufactured Egyptian car. In comparison, South Korea, which had almost the same economic and demographic characteristics as Egypt in 1952, has successfully been able to penetrate world markets, even those of the United States, with its inexpensive Hyundai, a fully manufactured Korean car.

The Root Cause of Egypt's Contemporary Economic Difficulties

There has been a decline in per capita real income in Egypt throughout the period 1983-87. During this period, the rate of increase of real GNP, according to the official data, was one percent per annum42 while the population rate averaged 2.9 percent.43 This meant that the annual decline in per capita income by 1.9 percent in spite of the amelioration of some of Egypt's infrastructure during the period. Some economic progress in 1989 may, however, lead to an agreement with the International Monetary Fund as a prerequisite for the possible rescheduling of Egypt's foreign debt and the continuation of US aid.

In analyzing data on the Egyptian economy I have concluded, contrary to the views of al-Imari and al-Graitli, that the financing of the budget deficit was not the root cause of Egypt's contemporary economic difficulties. Rather, it was the result of the government's mismanagement of economic problems. However, it has worsened real economic conditions, as it has been a major source of inflation.

The results of my research on the root causes of internal economic problems in Egypt indicate that the single most important factor has been a steady decline in productivity in comparison to other nations.44 With the exception of the first phase of Egypt's open-door policy in the period 1975-1980, I observed a continuous decline in the marginal productivity of Egyptian labor since the mid-1950s. A decline in the marginal productivity led to further deterioration in Egypt's balance of payments and a further deficit in the government's budget and has pushed inflation in an upward spiral.

Concluding Remarks

Egypt's economic reforms will have to be part of a long-term strategy covering ten to 15 years, during which time there should be no stop-gap measures or short-term remedies which could obstruct long-term structural reform. In addition to an implementation of new medical technologies in the field of family planning, there must be a full state commitment to a reduction of the current high birth rate. Disincentive measures may be used, such as the removal of subsidies, and other benefits after a second or third child is born. As to the root cause of internal economic problems in Egypt, namely the decline in marginal productivity, a policy for reform goes beyond what any government itself can do. In recognizing these serious problems, some recommendations have urged efforts to increase managerial abilities or to reform educational and training systems.45 Others have called for an overhauling of all emergency laws and regulations and of existing labor laws to provide more effective incentives for talented and highly productive workers. Furthermore, it has been argued that either a substantial reform of Egypt's ailing public sector be made, or else a systematic policy of privatization be implemented.46 As a start, it may be recommended that shares of ownership of public companies be given to talented and highly productive workers as a bonus and an incentive be provided by the end of every budget year to increase marginal productivity.

There exists, however, a vicious cycle of cause and effect that may have led to the deterioration of Egypt's marginal productivity. The reasons include over-crowdedness, the lack of adequate housing, hardships in public transportation, poor or crippled management and the existing labor laws which led to a system in which the inefficient is subsidized through equal earnings, treatment and opportunity while the efficient is penalized in the absence of adequate recognition, compensation and promotion.

In my opinion, a reform of the decline in marginal productivity is a national issue in which the state can only play a role by initiating a new system including incentives and disincentives for labor as well as an effective and continuous public awareness program. A change in people's attitudes toward increased marginal productivity will have to include a deepening of their sense of belonging through more active political participation and the removal of existing political impediments currently obstructing the freedom of choice of people's representatives in Egypt's Peoples' Assembly. The requirement inserted by Nasser in Egypt's constitution that no less than 50 percent of the parliament should have a working-class or peasant background should be removed. After all, Nasser himself declared that "in my opinion, this clause [the amendment providing for 50 percent] will be discontinued. This clause is temporary until we pass through the current transitional period, after which we will give up our control over elections and stop saying 'this group is workers' and 'this group is peasants, etc.' In fact, our country is the only country to have adopted such a principle."47 Overall political reforms which enable greater political participation will safeguard each individual's basic human rights. They may also have a positive effect on the people's attitude toward increased productivity by encouraging them to accept temporary hardships accompanying structural economic reforms. There is no doubt that some progress has been made in this context in recent years under Mubarak's regime.

The process of political liberalization and reinforcement of democratic institutions are necessary conditions for generating an atmosphere of confidence and long-term political stability.48 These, in turn, could encourage capital owners who have invested in Egypt's vast and expanding underground economy to invest in long-term projects in the country. As the role of an economically efficient private sector is increased in an environment of competition, marginal productivity will necessarily increase. Otherwise, a continuation of the status quo-low productivity and an increase in population-will undoubtedly make Egypt more dependent than ever before on outside sources.

While economic assistance to Egypt from Arab countries, the US and other industrialized nations is sizable, it should not be regarded as a continuous flow in the future. Even if it does, there is an economic and/or political price tag to it. Currently, Egypt is the second largest recipient of US aid after Israel, yet this aid was the consequence of the signing of the Camp David accords with Israel and the continuation of that treaty. The vulnerability of foreign economic assistance to Egypt and its possible discontinuation in the future leave no choice for Egypt other than to devise a consistent policy for self-reliance through increased productivity.

Among badly needed reforms are a restructuring of Egypt's public administration to minimize the crippling conflicts of jurisdictions and authority among different ministries, a series of continuous training and retraining programs, and an amelioration of the educational system, especially those parts of it which develop managerial capabilities. The proposal to reward highly productive and talented innovative workers with an equity share in the capital of the public sector companies in which they work could be an added incentive to increased productivity.

As a policy of liberalization of both political and economic reform, it has to be consistently pursued with vigor. Rentalism should be gradually abolished over a period of ten to 15 years. Emergency special laws for security purposes should be canceled as a means to of generating an atmosphere conducive to attracting money now circulating in Egypt's informal economy for long-term investments. Futhermore, the current costly subsidy system, which has been a failure in helping the poor,49 has to be totally eliminated and replaced with another that is less costly but more directly geared to helping the poor through such means as food stamps or direct cash payment according to need. With a reduction in subsidy expenditures and with a comprehensive overhaul of Egypt's tax system, the government's budget deficit could be substantially reduced. Every attempt should be made to rest public revenue on a solid base of progressive income tax, which would also serve as a means of reducing the current and eventually unsustainable degree of income maldistribution.

Export-oriented industrialization should be encouraged as a means of identifying the country's comparative advantage, as well as a way to reduce its balance-of-payments deficits. An analysis of a subset of import-competing industries in Egypt found them to be mainly operating at an economic loss or producing at a far lower level than their capacity. While such losses may in some cases be justified on the basis of non-quantifiable national security considerations, in others there is no justification for the continued depletion of the country's limited economic resources, which could be better utilized and more efficiently allocated. Other than their generally known economic advantages, such as efficiency in allocating limited resources, export-oriented industries would also be attractive because of the increase in the size of export markets resulting from recent moves towards regional economic integration. For example, Egypt, Iraq, Jordan and Yemen formed the Arab Cooperation Council on February 16, 1989.50 Historically, the benefits of Egypt's integration with other Arab countries were analyzed by Charles Issawi as far back as 1954.51

Egypt can overcome most of its economic problems in the long run if it can identify its comparative advantages not only in its reservoir of special human talents but also in such fields as tourism, which has been barely utilized in spite of the country's world-wide unique features, and agriculture. Tourism, for example, had witnessed substantial progress by the end of the 1980s because of a strong policy against red tape and inefficiency. The Ministry of Tourism established direct links to several inland airports in Egypt for foreign carriers at a time when the only tow international airports were in Cairo and in Alexandria. In the agricultural sector, a removal of rent and price controls while retaining the 1952 law of land reform is a necessary but not sufficient condition for expanding the agricultural output from the existing six million cultivated feddans. Special emphasis should be placed on sound pricing policies, while there should be no bias against agriculture in favor of industrialization. In the meanwhile, a scientific utilization of underground water reservoirs in Egypt's vast deserts to expand the area under cultivation should be pursued on the basis of cost-benefit economic principles.

In spite of the multiplicity and complexity of economic problems that Egypt is currently facing, there is room for optimism so long as there are possible solutions. Benign neglect of problems will only complicate them more. Solutions become much more difficult with the passage of time. If there is no firm commitment by the state to a reduction of the current high birth rates, and if the pace of economic reforms is too slow to be fundamentally corrective of the accumulated problems of the past, pessimism and alarm will be justified.


  1. Even though outdated, an excellent description of Cairo was presented by John Waterbury in Egypt, Burdens of the Past/Options for the Future (Bloomington, Indiana University Press, 1978), pp. 125-44. The problems of overcrowding and pollution in metropolitan Cairo that are presented in that book have compounded as the city's population has nearly doubled in the since 1977. In 1990, Cairo's population was in excess of 13 million inhabitants. On December 28, 1984, at the conference on "Egypt: The Year 2000," held at the Arab League in Cairo by the Association of Egyptian-American Scholars, it was revealed that lead pollution had reached one of the highest and most critical levels in the world in downtown Cairo. Lead pollution, which does not usually rise above four feet from the ground, could cause cancer and mental retardation among children. In his article in The New York Times (March 26, 1990), Alan Cowell reported that noise pollution in Cairo is "ten times higher than recommended by international health organizations and safety regulations" and that close to two thirds of the city's inhabitants "use pills or other sedatives to get to sleep." Such factors have undoubtedly led to external diseconomies and have adversely affected productivity.
  2. A. E. Crouchley, The Economic Development of Modern Egypt (London: Longman Green, 1938), p. 256.
  3. Central Agency for Public Motivation and Statistics (CAPMAS), Statistical Yearbook (Cairo, 1988), p. 24.
  4. Ibid., p. 18.
  5. The Presidency of the Republic, The Report of the Council of Production and Economic Affairs, Magazine of the Specialized National Councils, No. 6, Cairo (January 1979, in Arabic).
  6. Alan Richards, "The Agricultural Crisis in Egypt," Journal of Development Studies, Vol. 22 (1986), p. 303.
  7. See Elias H. Tuma, Economic and Political Change in the Middle East (Palo Alto: Pacific Books, 1987), p. 109; and John Waterbury, Egypt under Nasser and Sadat (Princeton: Princeton University Press, 1986), p. 203.
  8. Ibid.
  9. Ibid., p. 263.
  10. Bent Hansen, "Economic Development in Egypt," in Charles A. Cooper and Sidney A. Alexander, editors, Economic Development and Population Growth in the Middle East (New York: American Elsevier Publishing Co., 1972), pp. 82-83.
  11. Richard H. Adams, Jr., Development and Social Change in Rural Egypt (Syracuse: Syracuse University Press, 1986), p. 21.
  12. S. Henry, The Hidden Economy (London: Martin Robertson, 1978).
  13. A. Portes and S. Sassen-Koob, "Making It Underground: Comparative Material on the Urban Informal Sector in Western Market Economies," American Journal of Sociology, No. 93 (1987), p. 21.
  14. J. I. Gershuny, After Industrial Society? The Emerging Self-Service Economy (Atlantic Highlands, New Jersey: Humanities Press, 1978).
  15. E. L. Feige, "How Big Is the Irregular Economy?" Challenge, No. 22 (1979), pp. 5-13.
  16. N. Hansen, The Border Economy (Austin: University of Texas Press, 1981).
  17. Manuel Castells and Alejandro Portes, "World Underneath: The Origins, Dynamics, and Effects of the Informal Economy," in A. Portes, M. Castells and L. Benton (editors), The Informal Economy: Studies in Advanced and Less Developed Countries (Baltimore: The Johns Hopkins University Press, 1979), p. 12.
  18. Ibid., p. 20.
  19. Council of Economic Advisors, Economic Report of the President (Washington, DC: US Printing Office, 1988), p. 280.
  20. Robert Mabro, The Egyptian Economy 1952-1972 (Oxford: Clarendon Press, 1974), p. 182.
  21. For the different forms of Egypt's savings certificates, which started in 1965, see Mona Issa al-Ayouti, "Financial Flows and the Role of Financial Intermediaries in the Egyptian Economy in the Period 1975-81," Ph.D. Dissertation, Faculty of Economics and Political Science, Cairo University, 1985, p. 177.
  22. National Bank of Egypt, Economic Bulletin, Vol. XXXX, No. 3 (Cairo, 1987), p. 188.
  23. Ibid., p. 201.
  24. David Butter, "Egyptian Banking and Finance," Middle East Economic Digest, June 3, 1988, p. 92.
  25. Muhammad Dowaider, "Capital Investment Companies in the Egyptian Economy," L'Egypte Contemporaine, Vol. 80, No. 415-16 (January and April 1989), p. 12.
  26. National Bank of Egypt, op. cit., p. 193.
  27. CAPMAS, op. cit., p. 23.
  28. Ibid.
  29. Ibrahim Oweiss, "Egypt: Strategic, Economic, and Political Assessment," in Robert A. Kilmarx and Yonah Alexander (editors), Business and the Middle East: Threats and Prospects (New York: Pergamon Press, 1982), p. 63.
  30. Data were obtained directly from Egypt's Ministry of Finance in Cairo.
  31. Data were obtained directly from Egypt's Central Bank in Cairo.
  32. Ibrahim Oweiss, op. cit., p. 71.
  33. Arab Fund for Economic and Social Development, Coordination Secretariat, Financing Operations as of 31/12/1986 (Kuwait, 1987).
  34. "A different opinion was voiced during a seminar on Egypt sponsored by the National Foreign Trade Council on September 29, 1978. In a luncheon conversation, Dr. Ibrahim Oweiss, Director of the Egyptian Economic Mission, asked the eight representatives of multinational firms present at the table whether foreign investors will be much more disposed to invest in Egypt now that the political uncertainties had largely been settled with the Camp David accords. The business representatives each stated that he thought not; while the political factor is important, foreign investors might not more forward eagerly until the other serious environmental obstacles are taken care of. I concur in the latter view. The resolution of the regional political differences is a necessary but not sufficient condition for attracting much more foreign investment to Egypt." See David William Carr, Foreign Investment and Development in Egypt (New York: Praeger Publishers, 1979), pp. 93-94.
  35. Ibrahim M. Oweiss, "Egypt's Open Door Policy: An Economic Assessment," The Columbia Journal of World Business, vo. XXIII, No. 1 (Spring 1988).
  36. National Bank of Egypt, op. cit., p. 153.
  37. Data were obtained from the Ministry of Finance in Cairo.
  38. CAPMAS, Population, Housing and Establishment Census, 1986 (Cairo, 1987), p. 9.
  39. It is not surprising that one of Egypt's most prestigious research institutions, the National Center for Social and Criminology Studies, devoted its lengthy seventh volume to the subject of housing under the supervision of Dr. Mustafa al-Hifnawi. The volume was published in Arabic in Cairo in 1985.
  40. Bent Hansen, op. cit., p. 83.
  41. American Mideast Business Association (New York), Bulletin of American Mideast Business, Vol. XX, No. 10 (December 1, 1989), p. 1.
  42. The annual rate of increase in Egypt's Gross National Product has been calculated from the source for statistics provided in Appendix 3.
  43. The annual rate of increase in Egypt's population was calculated from Table 1-15 in CAPMAS, Statistical Yearbook 1952-1987 (Cairo, 1987), p. 24.
  44. Charles Issawi, Egypt in Revolution: An Economic Analysis (London: Oxford University Press, 1963), pp. 180-83.
  45. Ibrahim Shihata, A Program for Tomorrow: Challenges to and Prospects of the Egyptian Economy in a Dynamic World (Cairo: Dar al-Shuruq, 1987), pp. 38, 40-43, 59-62 (in Arabic).
  46. Said El-Naggar (editor), Privatization and Structural Adjustment in the Arab Countries (Washington, DC: International Monetary Fund, 1989). See in particular Said El-Naggar, "Privatization and Structural Adjustment: The Basic Issues," pp. 1-17; Ibrahim Hilmi, Abdul-Rahman and Muhammad Sultan Abu Ali, "Role of the Private Sectors with Special reference to Privatization: The Case of Egypt," pp. 141-81; Abdul-Aziz higazi, "Comment," pp. 182-88.
  47. Nasser's statement was made on March 20, 1967, and quoted in al-Ahram on March 21, 1967. It was quoted again in an article written by Ambassador Issam al-Din Hawwas, "The Forgotten Dimension in the Case of the Restructuring of the Egyptian Individual,' al-Ahram, June 5, 1987.
  48. Issam al-Din Hawwas, A Strategy for the Restructuring of the Egyptian Human Being (Cairo: General Egyptian Book Publisher's Authority, 1980) (in Arabic).
  49. The Presidency of Egypt, op. cit., pp. 221-33. See also another point of view in Karima Korayem, "Distributing Disposable Income and the Impact of Eliminating Food Subsidies in Egypt," Cairo Papers in Social Science, Vol. 5, Monograph 2 (April 1982). See also the same author's The Impact of Economic Adjustment Policies on the Vulnerable Families and Children in Egypt, A Report Prepared for The Third World Forum, Middle East Office, and the United Nations Children's Fund (UNICEF), Cairo 1987. In the two studies there are estimates based on field work and econometric modeling.
  50. Muhammad Wahby, "The Arab Cooperation Council," American-Arab Affairs, No. 28 (Spring 1989), pp. 60-67.
  51. Charles Issawi, op. cit., pp. 255-57.