Article Outline
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Government Role in the Economy
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The Egyptian economy was dominated by private capital until the revolution of 1952, which replaced the monarchy with a republic. The new government began to reorganize the economy along socialist lines in the late 1950s. The state played an increasing role in economic development through its management of the agricultural sector after the land reforms of 1952 and 1961. These reforms limited the amount of land an individual or family could own. In the early 1960s the government nationalized much of the industrial, financial, and commercial sectors of the economy.
In the 1970s poor performance by much of the state sector and growing shortages of investment capital persuaded the country’s leadership to introduce more liberal economic policies. However, not until 1990 did the government become committed to fundamental economic reforms involving the reduction of subsidies, the removal of price controls, and the privatization of some state-owned industries. These policies were successful in reducing inflation from 20 percent in 1991 to 5 percent in 1997 and in allowing the economy to recover partly from a recession in the early 1990s. Progress toward a purely market economy was slow, however, and huge problems remained. Exports remained sluggish, and in 2003 unemployment stood at 11 percent.
Egypt’s labor force of 22.9 million is 78 percent male and 22 percent female. The largest proportion of the labor force works in agriculture or fishing, which employ 28 percent of all workers. The services sector employs 52 percent, and industry (including manufacturing and construction) employs the remaining 21 percent. There are few skilled workers, since training is usually rudimentary and one-third of the adult population is illiterate. Workers in the state sector are represented by the Egyptian Trade Union Federation, which was established by the regime in 1961 and remains under government control.
In 2005 the agricultural sector (including fishing) contributed 15 percent of the GDP. Before industrialization, agriculture provided most of Egypt’s exports, but by 2002 it contributed less than one percent of the exports. The most important crops include cotton, cereal grains, fruits and vegetables, and animal fodder. Egypt’s area of cultivable land is small but highly fertile. It is located for the most part along the Nile and in the Nile Delta. Yields are high, and almost every piece of land grows at least two crops a year. The country ceased to be self-sufficient in cereals at the beginning of the 20th century, although it still exports some poultry, fruits, vegetables, sugar, and rice. It now imports about a quarter of the cereals it needs and a much higher proportion of the meat and dairy products.
Fishing is a significant industry in Egypt. Large quantities of fish live in the Nile, the Mediterranean Sea, and the Red Sea.
Industry, including manufacturing, mining, and construction, contributed 36 percent of the GDP in 2005. The main manufactured goods are textiles, chemicals, metals, and petroleum products. More liberal economic policies have led to the establishment of a number of private companies involved in automobile assembly, electronics, consumer durable goods such as refrigerators and other appliances, and pharmaceuticals. The majority of factories are concentrated around the two major cities of Cairo and Alexandria and in industrial zones along the Suez Canal.
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