Egypt - Economic analysis of government's policies, investment climate and political risk.

THE

McKEEVER INSTITUTE

OF

ECONOMIC POLICY

ANALYSIS

EGYPT: Economic Policy Analysis

This site presents an analysis of the Egyptian government's economic policies compared to a revised list of 34 economic policies as prepared by student Aleson with the McKeever Institute of Economic Policy Analysis (MIEPA) in May of 2004. To read the analysis scroll through this site. To learn more about the background policies, click here Introduction and Policy Recommendations

To learn more about MIEPA, click here Return to MIEPA's Home Page

Aleson, an Egyptian citizen who currently [May 2004] lives in California, has completed a study of the home country government's economic policies as compared to the MIEPA list of policies as outlined above. The study on Egypt is shown below. The ratings herein are based on the following rating scale:

RATING SCALE

5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

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EGYPT:

Comparison of Egypt's economic policies to MIEPA criteria as prepared by native student of Egypt, Aleson, studying in the US in May of 2004.

RATING SUMMARY

POLICY NUMBER      RAW SCORE   ADJUSTED SCORE    POSSIBLE   PERCENTAGE

        1               5.0          15.0             15.0       100%

        2               0.0           0.0             15.0        0

        3               2.0           6.0             15.0        40

        4               5.0          15.0             15.0       100

        5               4.0          12.0             15.0        80

        6               5.0          15.0             15.0       100

        7               5.0          15.0             15.0       100

        8               4.0          12.0             15.0        80

        9               4.0          12.0             15.0        80

        10              3.0           9.0             15.0        60

        11              5.0          15.0             15.0       100

        12              4.0           8.0             10.0        80

        13              5.0          10.0             10.0       100

        14              5.0          10.0             10.0       100

        15              4.0           8.0             10.0        80

        16              3.0           6.0             10.0        60

        17              3.0           6.0             10.0        60

        18              5.0          10.0             10.0       100

        19              2.0           4.0             10.0        40

        20              2.0           4.0             10.0        40

        21              3.0           6.0             10.0        60

        22              0.0           0.0             10.0        0

        23              1.0           2.0             10.0        20

        24              5.0          10.0             10.0       100

        25              3.0           6.0             10.0        60

        26              5.0          10.0             10.0       100

        27              3.0           6.0             10.0        60

        28              5.0          10.0             10.0       100

        29              4.5           4.5              5.0        90 

        30              1.0           1.0              5.0        20

        31              5.0           5.0              5.0       100

        32              3.0           3.0              5.0        60

        33              5.0           5.0              5.0       100

        34              2.5           2.5              5.0        50

   TOTAL             121.0          263.0            375.0        70.1%
                      =====        ======            =====        =====

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INDIVIDUAL POLICIES

1. Freedom of Internal control: 5.0


People could live anywhere in the country they want to, also people Could buy land anywhere in the country and build a house to live there. People could live in any area in the country because there is no separation Between any Egyptians anywhere in the country as long as you have documents That proves that you own this property.


( Personal )


2. Freedom of Speech: 0.0


Egypt is one of the countries where no one can say any thing about anyone in The government, president, or anyone in a high position in the country. Freedom of speech is not in my country even people protesting might get Arrested, also if someone say anything about the president he or she might Be taken away to jail.


(Personal)


3. Effective and Fair Police: 2.0


The police is not that fair because they might arrest people because they might be seen as terrorist. However the police does it job in arresting Criminals and look for the bad people in the country who steal, kill, or Destroy any thing important for no reason such as bombing.


(Personal)


4. Private Property: 5.0


People who own things like land or house does have papers and document That proves they own this house or land. Also there is another copy of that Document in the government buildings.


(Personal)


5. Commercial Banks: 4.0


The commercial banks people invest in there and make deposit which they Invest by it, also they borrow money from the commercial banks to invest and They buy it back with interest but low interest, but the Islamic banks do The same thing but without interest because they do not deal with Interest.


(Personal); http://www.arabbank.com/arabic/default.asp


6. Communication System: 5.0


The communication system is in a very high stander that goes through all around the country. The telephone is been used all over the country even In the rural areas. In villages, phones have been used for a long time since 1992 , Also now days computer is all over around the country even in the villages And small places and the rural areas. Communication is one of the best skills That Egypt has for every one.


(Personal)


7.Transportation: 5.0


The transportation in Egypt is very good because it is available even in The urbanize and going inside to the villages. Transportation in the country Is been fixed and it is improving day after another. The transportation is not only improving inside the country and between each city but also Between the country and other countries. The transportation goes every Where around the country which make it easier to get any where in the Country.


http://www.traveljournals.net/explore/egypt/transportation.html http://www.goegypt.org/aboutegy/trans.htm http://www.phatnav.com/wiki/wiki.phtml?title=Transportation_in_Egypt


8. Education: 4.0


The education is partly fairly in Egypt until high school. Students have To pay for their tuition since 1st grade until the last year of high School. About 33% off college student quit college because they can not Offer to pay the college tuition which is consider a high percentage to many Poor people. In education there is no difference between poor and rich, boy Or girl they both get equal education at the same school.


http://www.aii-t.org/a/arabic/5.ht


9. Social mobility: 4.0


There is a chance for every one to become wealthy and to be rich or Improve their life condition. If a person have experience and enough Knowledge then he or she might be able to help himself out to improve his Living condition and become wealthy by how much knowledge that person have And what skills that person has.


(Personal); http://www2.pfeiffer.edu/~lridener/DSS/Sorokin/SOCMOBLT.HTML


10. Freedom from outside control: 3.0


The police even the highest police department in the country does not have The power to go even cross the boarders to arrest someone even if he is Danger and wanted. In 1995 one of the wanted people in the country 9 sameer Ahmed who was consider as a terrorist) he went through the boarders to Saudi Arabia and the government could not do anything about him but all they Did was that they reported to the Saudi Arabia government.


http://www.amanjordan.org/arabic_news/wmview.php?ArtID=3840


11. Foreign Currency Transaction: 5.0


The is one other currency is been used in the country beside the Egyptian Pound, which is dollar. However, people can't pay any thing with dollars But they have to change it to Egyptian pound first. People can not go to a Store or a restaurant and use any currency but the Egyptian pound, and Anything else is not accepted.


(Personal). http://www.egypt.de/www2/country.htm1


12. Border Control: 4.0


The Egyptian boarders are safe and secure that no one could cross that Boarders with out a visa, also the boarders between Egypt and Israel is safe And secure because of the peace agreement process between the two countries. There might be some unsecured that people might help the Palestine's from the Israel's boarders by giving them weapons and food.


http://customwire.ap.org/Israel/border/E/Egypt_GAZA_PULLOUT?SITE=CARIE&SECTION+HOME&TEMPLATE+ICE2-WORLDDNEWS.htm1


13. Currency: 5.0


The main currency that is being used in Egypt is the Egyptian Pound. (Which I 6.20 pound = $1 US dollar). The only currency that is been used in the Nation is the Egyptian pound and nothing else.


(Personal)... http://www.wgypt.de/www2/country.html


14. Cultural and Language Homogeneity: 5.0


In Egypt there are many different people living in the country from different Parts of the world. From Palestine it said that there are about 4% of the population. More over there are 2% Sudanese, 5% of Syrians, and there are Jews from all over the world. Business owners do not make any difference Between Egyptians and others, and they are being treaded equally.


(Personal) (Egyptian Citizen); http:www.tobunken.go.jp/~kokusen/DATA/cultural?HTML/egypt/egypt01j.html


15. Politically Effective: 4.0


The government does its job in providing safety living condition for the people. In every city there is a police station and even in the small Villages in case of emergency. The government is providing all safety for The people and it is taking care of business and economics improvement.


(Personal)


16. Institutional Stability: 3.0


The government changes whenever their is a change in the president, and In Egypt there is no vote. The Government buildings which been rebuild more Than one time a year and they always renew the police buildings and equipment To help the country which is not true. The government does stay the same but The places change every once in a while.


(Personal); http://www.presidency.gov.eg/


17. Honest government: 3.0


The Egyptian government is not honest with it's people because they always want to make people that everything is going fine and noting is wrong with It. In the economy government never tell the people what is going on but all They say is that the economy is in a high position and doing very good at That time. Also the government laws is part of what the government does in order to make people feel happy, but the reality is they make laws for people but many people do not agree which they can not do anything about it or even care on what people say or think.


( PERSONAL)


18. Common laws: 5.0


The laws that is regulated in Egypt is partly fair because they do not make a difference between rich or poor person . the law is for every one in the country rich or poor because they follow in the court the sharia ( which is the Islamic laws ) that makes no difference between any one in the country. However the reality is that if a person is rich nigh go over the laws by paying some judges money for his or her case, but poor can not offered.


(Personal); http://www.hrw.org/arabic/reports/2004/eg-intime3.htm; http://www.freedomhouse.org/research/freeworld/2003/countryratings/egypt.htm


19. Central Bank : 2.0


The central bank control all the banks investments and tell the banks what to do and not to do . however there is two different kind of banks the ones under the central banks and the ones under the Islamic banks. The president could tell the banks how much money to print and how much they could invest, the government not only the president control and is taking over the banks but no the Islamic banks which are independent.


( Personal); http://www.nbe.com.eg/Arabic/index.htm


20. Domestic Budget Management: 2.0


Major taxes imposed in Egypt are the corporate income tax, personal income tax, real estate tax, sales tax, customs tax, stamp duty, inheritance tax and social insurance contributions. The standard rate of corporate income tax is 40 percent. The rate is 32 percent on profits arising from industrial and export activities. Given the very generous deductions and allowances made in calculating taxable profit, the effective tax rate on net income is considered very low by international standards. Which means that the government collect less tax then it spends it collect about 25 % of the tax less then what it was spending.


http://www.sis.gov.eg/egyptinf/economy/html/eep/html/text50.htm_


21. Government Debt: 3.0


The estimation of the amount of the payment on the government debt was estimated by $30.5 billion (2002 est.) which is a large amount of money that it ha to be paid back but the export covers most of it. It is 46 % of the tax rate.


http://www.ncbuy.com/reference/country/economy.html?code=eg .


22. Economic Statistics: 0.0


The government provide welfare and insurance for the people in the country. Moreover they provide health care insurance for pregnant ladies and their children while birth. However I think it is not true because no one have insurance tat could even go to the hospital or even offered to go to a hospital. People does not have welfare or any insurance until they buy a large amount of money to buy insurance. Even animals have kind of health care but not humans or workers.


( Personal); http://reference.allrefer.com/country-guide-study/egypt/egypt84.html; http://perso.wanadoo.fr/sanctuaire.felin/OrigineAnglais.html; http://www.dams.org/report/reaction/icold_egypt.htm


23. Protection of Public Health and Safety: 1.0


Maternal mortality rate measures the number of women that died from causes related to pregnancy and delivery per 100,000. Worldwide, more than one women dies every minute from complications of pregnancy and childbirth. Southern Egypt, especially rural Egypt, has certain circumstances which make pregnancy more risky for these women. That happen because of birth at home that people can not a offer to pay the hospital fees, so there is a women who help give birth at home and that could lead to infection or the babies wont be as well as if they where born at a hospital. Also If the birth has complications, it may be difficult for the woman giving birth to get to a hospital because there is not good transportation. Also the TOT organization who work with our country to provide the medical care program for cancer disease in Egypt but with high prices.


http://www.arches.uga.edu/~haneydaw/twwh/egypt.html; http://www.stoptb.org/world.tb.day/WTBD_2001/Egypt.WTBDCampaign.htm; (Personal)


24. High wage policy: 5.0


Egyptians wages is good enough to support a family to live. People around the country own their houses and they do not pay any rent. People's wages depend on where they work and they only worry about family support and not the rent of the apartment by the end of every month.


( Personal)


25. Environment Protection: 3.0


Egypt is 97% desert and is therefore dependent on the Nile River for its existence. The Nile River is the lifeblood of Egypt. The river is the main source of freshwater for household use and irrigation, a source of power from the hydroelectric facility at Aswan, and a means of transportation for people and goods. Also In Egypt, everything is quite safe...except sometimes the tap water, which you may choose not to drink as the water in Egypt is highly chlorinated. It is only safe to drink if you get used to it and you are willing to live in Egypt for a long time. The government provide the safe water pipes through out the whole country and they try it to make it as clean as possible.


Air Pollution: 2 The main energy-related environmental issues facing Egypt are air pollution, carbon emissions, energy consumption, and preservation of coastal areas. The greater Cairo area, home to 15 million people, has the worst air pollution in Egypt, and the government is not doing or passing out any regulation against that danger.


http://www.eia.doe.gov/emeu/cabs/egypenv.html; http://www.ask-aladdin.com/health.htm


26. Strong Army: 5.0


Egypt is one of the Middle Eastern countries that has a strong military. Egypt's military is divided into four parts, Army, Navy, Air Force, and Air Defense Command. Egypt has males: 743,305 military manpower available who is been in the military for over 20 years. the military is strong enough and has the power to be ready in case of war or invading any of the middle eastern country. The military spending is dollars figure is about $4.04 billion dollars.


Personal; http//www.cia.gov/cia/publications/factbook/geos/eg.html


27. Foreign trade impact: 3.0


Egypt trade impact is not as good as other countries in the Middle East because Egypt import more than it export. The import was estimate as $15.2 billion f.o.b. however, the export to other countries was estimated as 7 billion f.o.b. which is much less than the import. The imports +the exports is $22 billion f.o.b. so its 22% of the GDP.


http//www.cia.gov/cia/publications/factbook/geos/eg.html, Personal


28. Protection of foreign currency earning enterprises: 5.0


Egypt look so careful into the exports products and try to make it as good as possible. The country help farmers who grow cotton to make the cotton as the best product in the export things. For example, in the Middle East Egyptian cotton is the best around the whole nations. The government acutely work on improving their export products.


Personal


29. Export: 4.5


The total value of Egyptian's external trade (imports and exports ) of the year 2000 amounted as 22 billion f.o.b., while the same for 1998 had been 19 billion and 250.320 thousand f.o.b. The increase in value of Egyptian external trade brought about annually, on comparing the years 1998 and 2000, amounted to 3 billion 320 f.o.b. in terms of exports and re-exports only. In both of such categories, the value of exports increased in 2000 from its amount in 1998. Egypt was placed as one of the highest category in the middle east as the export moved up in two years so high.


http://www.ec21.com/co/a/ayman171/comp_info.html


30. Layers of collective action: 1.0


Egyptians boards such as, the school boards, city councils and volunteer groups are not dependent groups from the government. Which means that they are being elected by people but they are controlled and funded by the government. The Egyptian government is in control of the every group board of the country privet or public. They have some freedom of making decision but it has to be approved by the government. so it is no freedom.


Personal


31. Pro-business Climate: 5.0


Egypt is a country where business is open for people who has money and support from the government. business people are a very nice people to deal with and communicate with. If a business person moves to our village where I live he or she is very trusted because they are Egyptians like us and could be trusted.


Personal. Egyptian citizen


32. Government Enterprises: 3.0


The government encourages foreign investment, but the same barriers, which cripple domestic investment. Egypt where the same visa binds foreign and domestic investors and works permit requirements for foreign workers. Foreign exchange restriction have been removed and payment reforms introduced. The financial sector has been exposed to market forces. Private sector has been allowed to invest in airlines, shipping and telecommunication. Disinvestment of public sector enterprises has moved rapidly. The reforms have focused specially on the following principal areas : Trade liberalization through the reduction of tariff and non-tariff barriers. Encouraging foreign and domestic private investment through deregulation.


CIA- the Egyptian Investment


33. International Security Agreements: 5.0


Egypt is very secure country from all the countries country around it. Egypt and Israel for example who is one of the Middle Eastern enemy has an agreement with Egypt that no war or threat should be mad to both countries since the agreement in 1972 till now.. Egyptian boarders are secure from all it is side because of the agreement that is having with all the countries around it such as, Sudan, Saudi Arabia, and the agreement is that in a case of war those countries will be ready to help and support Egypt.


Personal, Egyptian citizen.


34. Protection of Domestic Enterprisesfrom Government Mandated Costs: 2.5


The Egyptian economy is managed by the government, which not only controlled companies but also imposed strict rules on the capital markets, trade, land development and labor relations. All commercial enterprises must have business permits in order to operate. Permits are usually issued by the municipalities after it's been approval by other government departments and must be renewed every year. The progressive system of taxation makes maintaining stable income of the small businesses quite hard. The highest rate of income tax is 40%.


http://www.egyptenterprise.de/manegment/egypt/egy2.htm1



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CONTENTS OF SITE

Return to MIEPA's Home Page list of country studies

Introduction and Policy Recommendations

Winning Essays: There Are Alternatives Project (TAA)

Essay: Balanced Trade: Toward the Future of Economics

Moral Economics

McKEEVER INSTITUTE of ECONOMIC POLICY ANALYSIS

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