Economy

At the beginning of this century, Egypt was the richest of the Arab nations. However, Egypt’s population growth and shortage of arable land have greatly inhibited its economic development. All but 4% of Egypt is desert, and what is fertile is overcrowded. Nonetheless, Nasser’s land reform greatly altered the economy’s complexion; in 1952 3% of the population owned more than half of the land, while now no one may own more than 50 acres.

About half of the Egyptian labor force works in the agricultural sector, growing primarily cotton, corn, rice, and grain. A growing proportion of workers are involved in manufacturing, which now accounts for as much income as agriculture. The government employs almost all the rest of the work force in its colossal bureaucracy. As the population grows at nearly 2.3% per year (in 1992, down from a high of 3% in 1985), many educated Egyptians leave to find work in wealthy, neighboring oil states (there may be as many as 3 million expatriated workers). Illiteracy remains high (over 50% of the population over 10 years old), poverty is widespread, and the typical diet is inadequate.

Seeking to alleviate these problems, Egypt solicits and accepts vast sums of foreign aid. Through the 1970s Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates supplied Egypt with tens of billions in aid, and in 1977 formed the Gulf Organization for the Development of Egypt (GODE). But after the Camp David Accords in 1979, angry Arab states cut off financial support (not GODE). Under the Carter Plan, the U.S., Western Europe, and Japan agreed to provide Egypt with US$12,25 billion over five years.

During the 1980s, with Egypt’s gradual return to acceptability in the Arab world, aid from Arab states rose. Meanwhile the U.S. provides more than US$2 billion in aid to Egypt annually, an incentive first offered to Cairo for making peace with Israel. For its support in the Gulf War, Egypt received further assistance from the West (including the forgiving of US$6.7 billion of military debt to the U.S.) and renewed aid from the Gulf states. Revenue from the Suez Canal has consistently been about US$1 billion per year during the last decade.

President Hosni Mubarak has tried to diversify the Egyptian economy, encouraging development in the private sector. Foreign investment has grown steadily in recent years, and Arab capital has more than doubled since 1982. In 1987 foreign projects represented 35% of the total investment, while a privatization program has been creeping forward (with the pound becoming convertible and being floated on the market in 1991). In March 1993, for the first time ever, Egypt successfully completed a two-year IMF program of economic reconstruction.