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MARCH 1997 • VOLUME IV: NUMBER 1

Private Sector Development in Egypt

Edited by Marcelo Giugale and Hamed Mobarak. Cairo: American University in Cairo Press (distrib. in the United States by Columbia University Press), 1996. 175 pp. $39.50.

Reviewed by Patrick Clawson

Middle East Quarterly
March 1997

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During 1973-74, Anwar as-Sadat announced with great fanfare that, after twenty years of socialism and state direction of the economy, Egypt was open to private capital. More than twenty years later, Egypt's economy remains tightly state-controlled; its growth record has not surprisingly been mediocre. This collection of ten essays, written for an October 1994 Cairo conference, documents well the government bureaucracy's stubborn resistance to relax its tight grip. Three essays are by Egyptians and six are from Egyptian business groups, such as the Federation of Egyptian Chambers of Commerce, the Federation of Egyptian Industries, and the Egyptian Businessmen's Association. Work of this sort shows at their finest the World Bank, U.S. aid, and the United Nations, all of which co-financed the conference.

The essays explain how intrusive regulations make for monopolies that, even if nominally private, are effectively under the government's thumb. The Port of Alexandria and the shipping trade are cases in point: government-sponsored monopolies drive up costs to the detriment of the entire economy. Other essays examine how the tax and financial systems are hostile to businesses except those that cultivate political ties, leading businessmen to spend more effort on securing special breaks from the government than on producing a good product at low cost.

The focus on improving the regulatory environment is a healthy change from previous development strategies. Too much attention and money has gone into improving the physical infrastructure, from electricity to roads. And the enthusiasm for privatization overlooked the problem that, deprived of special privileges, many state enterprises could never compete. Vast sums were poured into modernizing such enterprises with little result. By contrast with these money-intensive approaches, regulatory reform can produce good results at low cost.

Related Topics: Egypt

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MARCH 1997 • VOLUME IV: NUMBER 1

Private Sector Development in Egypt

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