# What's wrong with Egypts economy? **URL:** \ **Category:** Great Debates\ **Created:** [April 30, 2014, 7:56pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387 "2014-04-30T19:56:53Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Ryan\_Liam](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ryan_liam/32/3965_2.png) [@Ryan\_Liam](https://boards.straightdope.com/u/Ryan_Liam)\ **Post date:** [April 30, 2014, 7:56pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/1 "2014-04-30T19:56:53Z")
In light of recent events, a few thoughts has bugged me throughout, how is Egypt’s economy run? Why is it so bad, will it be able to recover? How come Egypt, with 80 million or so people, cannot enjoy the economic success of say Turkey? What’s holding it back? Is there any industry in Egypt? Egypt used to be on par with other non-Muslim developing states about 40 years ago, so what went wrong? ---
**Author:** ![Alessan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alessan/32/465_2.png) [@Alessan](https://boards.straightdope.com/u/Alessan)\ **Post date:** [April 30, 2014, 8:02pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/2 "2014-04-30T20:02:18Z")
The Egyptian economy sucks because it essentially has nothing. Not enough agriculture, not enough industry, not enough of an educated workforce, and not enough foreign investment. Just millions of mouths to feed and no way to do it. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [April 30, 2014, 8:08pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/3 "2014-04-30T20:08:42Z")
I wonder[what happened](http://en.wikipedia.org/wiki/Camp_David_Accords)a little less than 40 years ago. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [April 30, 2014, 8:21pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/4 "2014-04-30T20:21:43Z")
Egypt has a quasi-command economy with mounds of corruption, and minimal rule of law. The military controls about 40% of the economy. Of course this has resulted in a poor nation. [This article hits some of the low points.](http://www.theatlantic.com/international/archive/2011/12/why-egypts-economy-matters/249718/) > [@](#): > > Such a formidable series of tasks faces large obstacles. One is overcoming a backlash against free market ideas, such as privatization of state-owned entities, and against the private sector. Successive waves of “liberalizing” economic reforms are seen as favoring rich over poor, unjustly enriching a corrupt few and worsening unemployment as efficiencies were introduced. A second, structural obstacle is addressing the creaking statist elements of the command economy which provides subsidies, government jobs (many unnecessary), and hidden wealth to the military while driving up government budgets. Yet another barrier is the pervasive corruption under both free market and statist elements of the economy, which distorts and delegitimizes daily commercial activity in Egypt and poses extraordinary difficulties in creating a durable and consistent rule of law. And [things aren’t looking good for the future](http://www.washingtonpost.com/world/middle_east/egyptian-military-expands-its-economic-control/2014/03/16/39508b52-a554-11e3-b865-38b254d92063_story.html), either. > [@TriPolar](#): > > I wonder[what happened](http://en.wikipedia.org/wiki/Camp_David_Accords)a little less than 40 years ago. You’ll have to explain that one. ---
**Author:** ![Ryan\_Liam](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ryan_liam/32/3965_2.png) [@Ryan\_Liam](https://boards.straightdope.com/u/Ryan_Liam)\ **Post date:** [April 30, 2014, 8:40pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/5 "2014-04-30T20:40:32Z")
South Korea was a terrible place once, now it’s an economic powerhouse, what’s the similarities and differences between South Koreas economic development and the way in which Egypt could get itself out of a hole like this one? ---
**Author:** ![Batistuta](https://avatars.discourse-cdn.com/v4/letter/b/58956e/32.png) [@Batistuta](https://boards.straightdope.com/u/Batistuta)\ **Post date:** [April 30, 2014, 9:02pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/6 "2014-04-30T21:02:27Z")
I did some reserach on this just after the original uprising. I recall that, until quite recently, all Egyptians who graduated from university were guaranteed a government job. That made sense back in the 50s and 60s, but more recently it meant that thousands of unnecessary jobs were created out of nowhere just to keep these recent graduates happy. I guess that kind of policy would be quite bad for a country’s productivity ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [April 30, 2014, 9:49pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/7 "2014-04-30T21:49:05Z")
> [@TriPolar](#): > > I wonder[what happened](http://en.wikipedia.org/wiki/Camp_David_Accords)a little less than 40 years ago. Not seeing how that relates to Egypt’s economy. My understanding is that Egypt transitioned from a failing state-run type economy to a “privatised” economy in the '90s, but that the process was riddled with endemic corruption - meaning that the “economy” improved, but the benefits were mostly retained by a tiny, wealthy minority. Meanwhile, the vast majority of the population remains poor, and there is a very high birth-rate, making existing problems worse. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [April 30, 2014, 10:00pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/8 "2014-04-30T22:00:52Z")
> [@Human\_Action](#): > > You’ll have to explain that one. > [@Malthus](#): > > Not seeing how that relates to Egypt’s economy. It’s nowhere near the whole story, just a changeover point in the political situation. Sorry, getting interrupted, I’ll get back to this another time. I’m not all focusing on that as Egypt’s major problem, I was just looking at the interesting coincidence in the timeline specified in the OP. ---
**Author:** ![nevadaexile](https://avatars.discourse-cdn.com/v4/letter/n/eb8c5e/32.png) [@nevadaexile](https://boards.straightdope.com/u/nevadaexile)\ **Post date:** [April 30, 2014, 10:04pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/9 "2014-04-30T22:04:15Z")
Let’s see: [ol] [li]Endemic corruption[/li][li]Limited resources[/li][li]Large population/High birth rate[/li][li]A single democratic government in its history which was recently overthrown[/li][li]Billions of dollars wasted on maintaining a vast military[/li][li]Frequent episodes of civil unrest[/li][/ol] Egypt’s future is probably grim. There are too many people in the country and most live relatively near or on the banks of the Nile River. The Sahara Desert is expanding and it may claim/reclaim portions of the country which are now being used for agriculture. Coupled with climate change and a high birthrate,Egypt will probably descend into spasms of violent uprisings within the next few decades. Unless one of the world superpowers steps in to assist them, things are probably going to get far worse before they get better. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [April 30, 2014, 10:48pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/10 "2014-04-30T22:48:07Z")
Also, tourism is a big part of Egypt’s economy…but when there is civil unrest, tourists find it preferable to go somewhere else. So there’s another “vicious circle” element to the problem. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [May 1, 2014, 12:47am UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/11 "2014-05-01T00:47:40Z")
> [@Ryan\_Liam](#): > > South Korea was a terrible place once, now it’s an economic powerhouse, what’s the similarities and differences between South Koreas economic development and the way in which Egypt could get itself out of a hole like this one? South Korea was very poor in the postwar period, but only compared to Western nations. It wasn’t especially poor compared to similar East Asian states. While the early dictatorship was fairly corrupt, it did plant strong seeds of free-market economics and a strong education system, and the peaceful transition to democracy let those seeds bloom. There was very strong growth from the 1960’s to the 1990’s. They’ve also moved away from the central planning, which helped them recover from the late 90’s crisis. Short version: Korea knew it was a small fish in a big ocean and lacked large-scale raw resources. So they more-or-less followed the Japanese pattern of encouraging manufacturing and high-tech to make up for it. I would submit the major causes of the disparity are culture and religion. ---
**Author:** ![chappachula](https://avatars.discourse-cdn.com/v4/letter/c/d2c977/32.png) [@chappachula](https://boards.straightdope.com/u/chappachula)\ **Post date:** [May 1, 2014, 6:18am UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/12 "2014-05-01T06:18:51Z")
> [@Alessan](#): > > The Egyptian economy sucks because it essentially has nothing. Not enough agriculture, not enough industry, not enough of an educated workforce, and not enough foreign investment. Just millions of mouths to feed and no way to do it. These are the sad facts. > [@smiling bandit](#): > > I would submit the major causes are culture and religion And this is the reason that those facts are so sad. ---
**Author:** ![chappachula](https://avatars.discourse-cdn.com/v4/letter/c/d2c977/32.png) [@chappachula](https://boards.straightdope.com/u/chappachula)\ **Post date:** [May 1, 2014, 6:33am UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/13 "2014-05-01T06:33:55Z")
(oops-deleted a double post) (sorry!) 🙂 mods–please erase ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [May 1, 2014, 2:36pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/14 "2014-05-01T14:36:34Z")
The way to grow a poor country’s economy is well known. Foreign direct investment teams with local labor to produce goods. This worked for South Korea, for Chile and is working for China now. In order to induce foreign investment you have to make it clear that the investment will not be stolen. You need a transparent court system where the investors will know they will get a fair hearing. You need a orderly process for approving permits where investors will know they will not be shaken down for bribes. You need a stable political situation so investors know that the their investments are not a coup away from being taken or their workers shot. Egypt has none of these things. Their court system is heavily political, they have rampant corruption and their political situation is tenuous at best. No one with money to build a factory would locate it in Egypt if they had other options. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [May 1, 2014, 3:49pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/15 "2014-05-01T15:49:14Z")
> [@puddleglum](#): > > The way to grow a poor country’s economy is well known. Foreign direct investment teams with local labor to produce goods. This worked for South Korea, for Chile and is working for China now. In order to induce foreign investment you have to make it clear that the investment will not be stolen. You need a transparent court system where the investors will know they will get a fair hearing. You need a orderly process for approving permits where investors will know they will not be shaken down for bribes. You need a stable political situation so investors know that the their investments are not a coup away from being taken or their workers shot. > Egypt has none of these things. Their court system is heavily political, they have rampant corruption and their political situation is tenuous at best. No one with money to build a factory would locate it in Egypt if they had other options. It is fairly amazing just how simple the road to (relative) prosperity is. Now if you could only convince the bureaucracy there that they are better off being only slightly corrupt in a prosperous country vs being hugely corrupt in a poor one. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [May 1, 2014, 5:42pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/16 "2014-05-01T17:42:13Z")
> [@Terr](#): > > It is fairly amazing just how simple the road to (relative) prosperity is. Now if you could only convince the bureaucracy there that they are better off being only slightly corrupt in a prosperous country vs being hugely corrupt in a poor one. If only we could convince the bureaucrats in North Korea of this. ---
**Author:** ![AK84](https://avatars.discourse-cdn.com/v4/letter/a/85e7bf/32.png) [@AK84](https://boards.straightdope.com/u/AK84)\ **Post date:** [May 1, 2014, 5:53pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/17 "2014-05-01T17:53:11Z")
> [@Malthus](#): > > Meanwhile, the vast majority of the population remains poor, and t **here is a very high birth-rate, making existing problems worse**. Egypts birthrate is 2.79, [its falling steadily since the 1960’s](https://www.google.com.pk/?gws_rd=cr&ei=wYhiU47bBovItAbAyYCwDQ#q=egypts+birth+rate). ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [May 1, 2014, 6:00pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/18 "2014-05-01T18:00:30Z")
> [@Terr](#): > > It is fairly amazing just how simple the road to (relative) prosperity is. Now if you could only convince the bureaucracy there that they are better off being only slightly corrupt in a prosperous country vs being hugely corrupt in a poor one. As long as the military chooses the government, as we just saw with the ouster of Morsi, any headway toward getting the military out of the economy or giving up any power is highly unlikely. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [May 1, 2014, 6:06pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/19 "2014-05-01T18:06:42Z")
> [@AK84](#): > > Egypts birthrate is 2.79, [its falling steadily since the 1960’s](https://www.google.com.pk/?gws_rd=cr&ei=wYhiU47bBovItAbAyYCwDQ#q=egypts+birth+rate). From your google search: > **[Egyptian population explosion worsens social unrest](https://www.theguardian.com/world/2014/feb/16/egypt-population-explosion-social-unrest)** > > 560,000 extra births in 2012, compared with 2010, in country already struggling with depleted resources and too few jobs > [@](#): > > Egypt is struggling to contain a population explosion that has surged in the past three years, exacerbating many of the social tensions that indirectly led to the 2011 uprising. > > The number of births in Egypt in 2012 was 560,000 higher than in 2010, according to the most recent statistics. It is the largest two-year increase since records began. The rise keeps Egypt on course to overtake countries such as Russia and Japan by 2050, when forecasters predict it will have more than 137.7 million people. > > “It’s the highest spike ever in all Egyptian history,” said Magued Osman, director of Egypt’s leading statistics firm, Baseera, and former head of a government thinktank. “It’s unheard of to have such a jump in a two-year period.” > > The rising population is seen as a social timebomb which, if untackled, will exhaust Egypt’s depleted resources, worsen a dire jobs market, and contribute to yet more social frustration. With 60% of Egyptians under 30 already, a bulging population will further reduce the limited opportunities for young people. > **[Egypt: the population time-bomb](https://www.euronews.com/2013/07/12/egypt-the-population-time-bomb-)** Egypt’s birth rate remains well above replacement rate, and according to the articles, it is not “falling steadily” at all, but rising - explosively, recently - from a low in the 90s. > [@](#): > > Already in 2012, Egypt’s population growth hit its highest levels since 1991, reaching 32 births per 1,000 people and bringing the country’s population to 85 million in July 2013, according to the CIA. So yes, its high (and rising) birthrate is, allegedly, a problem. Of course these articles could be wrong. Perhaps a google-bombing is a better source than, say, an Egyptian statistician. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [May 1, 2014, 6:47pm UTC](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387/20 "2014-05-01T18:47:23Z")
> [@Ryan\_Liam](#): > > In light of recent events, a few thoughts has bugged me throughout, how is Egypt’s economy run? Why is it so bad, will it be able to recover? How come Egypt, with 80 million or so people, cannot enjoy the economic success of say Turkey? What’s holding it back? > > Is there any industry in Egypt? Egypt used to be on par with other non-Muslim developing states about 40 years ago, so what went wrong? As others have said, it’s the government. Where there are free markets, economic freedom, and protection of basic human rights, there is prosperity. Where there’s government control over vast sectors of the economy and massive government corruption, there is poverty. I don’t know the numbers for Egypt, but I once read that in order to open a business in Mexico, you have to have permits from 56 government agencies. In practice, this means that in order to open a business in Mexico, you have to pay 56 bribes. And even if you do manage to get a business running, you have to continually pay bribes to scores of government officials. Most Mexicans can’t afford to pay so many bribes, so they can’t go into business and Mexico remains a poor country. Most of the world’s people live in grinding poverty so that a small portion of the population, which works for the government, can enjoy the spoils of their positions. [Next page](https://boards.straightdope.com/t/whats-wrong-with-egypts-economy/687387.md?page=2)