Columbia International Affairs Online
CIAO DATE: 12/5/2007
The Political Economy of Reform in Egypt: Understanding the Role of Institutions
October 2007
Carnegie Endowment for International Peace
Abstract
Egypt’s economic reform was initiated in 1991 within the context of stabilization and structural adjustment programs. And since the appointment of Prime Minster Ahmed Nazif and his ministerial economic team in 2004, reform has been pursued more intensely, apparently taking new directions. The government has implemented a number of reform measures and has announced concrete plans to restructure the fi nancial sector, adjust regulations, enhance trade liberalization, and privatize most state-owned enterprises.
As a result of reform efforts, and over the past three years, Egypt has managed to stabilize the economy, increase foreign currency reserves, and achieve steady growth. Reform programs have introduced effective amendments in the social contract between the state, market, and society. Yet little if any progress has been made in the fi ght against corruption and in creating an enabling and competitive business environment. The current institutional environment poses critical questions about the capability of the Egyptian economy to sustain growth; to create decent jobs for the unemployed, the underemployed, and new entrants into the labor market; and to alleviate massive poverty. These failures to address socioeconomic problems and curb the side effects of economic reform are proving key impediments to accelerating the reform process in Egypt.
