Egypt, Social Outcomes, and Economic Performances

anicent egypt
Photo Courtesy of Anicentegyptianfacts.com

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…

Even after a revolution that called for social justice, and political reform, Egyptians have to find the balance between the government meeting their legitimate demands to fix the accumulated effect of years of social injustice, and the treasury’s ability to meet these demands as years of corruption does not make for a stable economy or one that could be easily rectified.
On 25th January 2011 Egypt erupted in a massive social uprising, demanding social, political and economic changes. Almost four years and two rejected governments later, the country continues to struggle presently. “Before 2011 GDP was growing at an impressive average of  5% a quarter, but the standard of living remained poor for the average Egyptian, income inequality widened and politicians did little to meet the demands of the people. “
Since the start of the revolution, Egypt suffered a recession and a major drop in its growth rate. There are signs of a sluggish recovery, but which policies are needed to further stimulate the economy meaning that only with political stability can economic stability be achieved. Foreign investors pulled out of the economy and there was a great opportunity cost of this conflict meaning that ” had there been peace since 1991, an average Egyptian citizen would be earning over $3000 instead of $1700 he or she may earn next year.

 

gdp grwoth rate

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.

 

economy
Photo courtesy of Politico.com

 

Sources:

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

Economic Effects of the Arab Spring on Egypt & Policy Recommendations for Recovery

Arab Spring & the Political Economy of MENA

 

Time-Person-of-the-Year
Courtesy of Time Magazine 

 

In 2011, readers of Time magazine decided that “the protestor” would be the person of the year.There were worldwide protests from the Occupy Wallstreet, to the Umbrella revolution in Hongkong, to an economic outcry in Athens, to hundreds of others throughout the world. The Arab spring illustrated the common frustrations of a population who received that they were experiencing great inequality.

What was the match that ignited the flame to regional and furthermore worldwide protests? Although the Arab spring began in Tunisia, with a vegetable seller setting himself on fire after poor treatment from a police officer sparking state-wide outrage, the uprisings against the Mubarak regime in Egypt acted as a catalyst in sparking protests that spread throughout the MENA region, especially in Libya, demonstrating that actual political change is possible when demanded by citizens. However, there is much debate on what were the actual causes that led to the Arab Spring, and how the political economy of countries within the region played a direct role in the social and civil unrest that followed.

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Egypt Revolution 

One theory is that political discontent ignited the protests which stemmed from outrage over a dictatorial rule, repression, and restrictions on basic liberties. Economic issues were seen just as important as social issues, and socioeconomic concerns were seen as greater than the concern of civic in political rights which may surprise some. However, how did the political economy of MENA play a role in the causes of the Arab spring?

“The economic factors behind the Arab Spring were unfair income distribution, widespread poverty, unemployment of the young and educated, corruption and cronyism. For years, autocratic governments either totally rejected demands for reform or took only temporary and insufficient measures. Rising food inflation forced millions of the poor to live at or below subsistence levels.2” The populations of these countries had experienced repression, a lack of civil liberties,  and “perceived inequality” meaning that through cronyism and corruption, there was  a strong consensus that things were unequal more than they actually were. In some countries in the Middle East, basic needs were being fulfilled, mostly just the oil or gulf countries who could afford to do so, but in others just having the basic needs met of the population that needed or are expected to be provided by the government. Many did not just perceive inequality, but also felt it as corrupted politicians and the crony style government put the country’s wealth in the hands of thew few rather than the hands of most of the population.

Post the Arab Spring the current political economy of Egypt  can be described as “afflicted with daunting problems: overpopulation, high unemployment and inflation, a crushing debt service burden, budget deficits, price-cost distortions, low productivity and acute external imbalances; and these problems have worsened under the impact of the Gulf War.1” Still recovering from the removal of Mubarak and the ousting of his undemocratically elected successor Morsi, Egypt’s politics are still controlled by the military and western influence.

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