Egypt has gone through major economic reforms throughout its existence. During the 199o’s it’s economy could be described as a highly centralized planned economy that focused on import substitution under the leadership of President Gamal Abdel Nasser. During the 90’s Egypt was able to improve its economic structure with help from the IMF and debt relief from the Gulf War coalition.
Moving into the 21st century, Egypt moved towards a more market-oriented company that drew in foreign investment through various economic reforms including a change to fiscal and monetary policies. Although these reforms helped to strengthen the annual growth rates by 8% from 2004-2009, the government failed to share the wealth of this growth with the people coupled with rising unemployment, thus contributing to the 2011 revolution.
After a Revolution…
So What’s Next?
According to A Political Economy of the Middle East, economic reforms were first pushed in the MENA region before political reforms took place which satisfied short term interest, but in the long run, stifled competition and innovation thus leaving the economies of countries in the region stagnant. Post the revolution Egypt needed and still needs political stability to ensure economic success.
“Economic stabilization is built on a package of measures that reduces expenditures, raises revenues, and commands some minimum level of popular support” as the country needs to spend less, raise more capital and have an endorsement from the population. The state needs to go through a period of modernization of state and needs to reinvigorate public services especially “health, education, and social protection” of which the political group The Muslim Brotherhood has provided when the government has failed to do so.
Egypt has natural resources and financial policies that were put into place to reform the economy years ago that can lead to greater economic success, but until the country becomes politically stable, their economy can only grow so much without fear from foreign investors or concern from the international community.
Cammett, I. Diwan, A. Richards and J. Waterbury, A Political Economy of the Middle East (Westview Press, 2015) Fourth Edition. ISBN: 978-081334938-1
Strategic Foresight Group report: Cost of Conflict in the Middle East 2009