Challenges of Economic Reform in Egypt

The paper takes its foundation from a previous version presented in Cairo at a June 2004 conference entitled "Revisiting Egypt's Competitiveness: The Road Ahead for Building Leading Sectors." The conference was sponsored by the Center for Economic & Financial Research & Studies (CEFRS), Faculty of Economics and Political Sciences (FEPS) of Cairo University in collaboration with the United States Agency for International Development and the Egyptian Competitiveness Council. Heba Nassar, mentioned in the introduction, was Director of CEFRS, FEPS at the time of the conference and Heba Handoussa was fellow presenter. In this followup study, Srinivasan cites his 2004 analysis of the Egyptian economy and discusses positive progress since. However, he warns that total factor productivity (TFP) gains due solely to improved capacity utilization (without physical capital investment) are unsustainable, and stresses the importance of consistent and reliable collection of relevant economic data. He advises the consideration of fiscal reform and budget management laws modeled after past enactments in India. Srinivasan praises Egypt’s recent tariff cuts and comments on the challenges posed by poverty elimination in the coming decade.