Reference no: EM131066649

Revolution in Egypt

With 83 million people, Egypt is the most populous Arab state. On the face of it, Egypt made significant economic progress during the 2000s. In 2004, the government of Hosni Mubarak enacted a series of economic reforms that included trade liberalization, cuts in import tariffs, tax cuts, deregulation, and changes in investment regulations that allowed for more foreign direct investment in the Egyptian economy. As a consequence, economic growth, which had been in the 2 to 4 percent range during the early 2000s, accelerated to around 7 percent a year. Exports almost tripled, from $9 billion in 2004 to more than $25 billion by 2010. Foreign direct investment increased from $4 billion in 2004 to $11 billion in 2008, while unemployment fell from 11 percent to 8 percent.

By 2008, Egypt seemed to be displaying many of the features of other emerging economies. On Cairo's out- skirts, clusters of construction cranes could be seen where gleaming new offices were being built for companies such as Microsoft, Oracle, and Vodafone. Highways were being constructed, hypermarkets were opening their doors, and sales of private cars quadrupled between 2004 and 2008. Things seemed to be improving. But appearances can be deceiving. Underneath the surface, Egypt had major economic and political problems. Inflation, long a concern, remained high at 12.8 percent. As the global economic crisis took hold in 2008-2009, Egypt saw many of its growth drivers slow. In 2008, tourism brought some $11 billion into the country, accounting for 8.5 percent of gross domestic product, but it fell sharply in 2009 and 2010. Remittances from Egyptian expatriates working overseas, which amounted to $8.5 billion in 2008, declined sharply as construction projects in the Gulf, where many of them worked, were cut back or shut down.

Earnings from the Suez Canal, which stood at $5.2 billion in 2008, declined by 25 per- cent in 2009 as the volume of world shipping slumped in the wake of the global economic slowdown. Moreover, Egypt remained a country with a tremendous gap between the rich and the poor. Some 44 percent of Egyptians are classified as poor or extremely poor; the average wage is less than $100 a month. Some 2.6 million people are so destitute that their entire income cannot cover their basic food needs. The gap between rich and poor, when coupled with a sharp economic slowdown, became a toxic mix. Nominally a stable democracy with a secular government, Egypt was in fact an autocratic state. By 2011, President Hosni Mubarak had been in power for more than a quarter of a century. The government was highly corrupt. Mubarak and his family reportedly amassed personal fortunes amounting to billions of U.S. dollars, most of which were banked outside Egypt.

Although elections were held, they were hardly free and fair. Opposition parties were kept in check by constant police harassment, their leaders often jailed on trumped-up charges. Given all of this, it is perhaps not surprising that in January 2011 popular discontent spilled over into the streets. Led by technologically savvy young Egyptians- who harnessed the power of the Internet and social network media such as Facebook and Twitter to organize mass demonstrations-hundreds of thousands of Egyptians poured into Cairo's Tahrir Square and demanded the resignation of the Mubarak government. There they stayed, their numbers only growing over time. For weeks, Mubarak refused to step down, while the demonstrations gained momentum and Egypt's powerful military establishment stood on the sidelines. Foreign governments, including the Obama administration in the United States, long one of Egypt's most important Western allies, joined the chorus of voices calling for Mubarak to resign. In the end, his position became un- tenable, and he stepped down on February 11, 2011. The Egyptian military took the reins of power, vowing to do so for a short time while it organized a transition to democratic elections in the fall of 2011. In March 2011, Egyptians voted on a set of proposed constitutional amendments designed to pave the way for the elections in late 2011.

This was the first time in six decades that Egyptians had been offered a free choice on any public issues. Does this mean that Egypt is now on the road to be- coming a democratic state with a vibrant economy? That is still far from clear. In mid 2012 moderate Islamists from the Muslim Brotherhood won the most seats in the country's first democratic election, and the Brotherhood candidate Mohamed Morsi won the presidential election. However, the Morsi government struggled.

By early 2013 the economy was in deep trouble. Unemployment was as high as 20 percent, the Egyptian currency was steadily losing value on foreign exchange markets, and inflation was increasing again. Tourism, which used to account for 8-12 percent of GDP, evaporated. Foreign investment stalled, and the country's foreign reserves were falling fast. Meanwhile, the Morsi government failed to enact any meaningful economic reforms. It was unwilling to remove politically popular food and fuel subsidies totaling $20 billion a year, even though the country clearly cannot afford to pay for them. Government debt was increasing, and the annual budget deficit now accounted for over 12 percent of GDP. Many successful business- people have left the country, fearing reprisals for their role under the Mubarak regime. Court rulings overturned privatization deals from more than a decade ago, effectively moving several enterprises back into state hands. In June 2013 protestors again took to the streets, and with the backing of the still powerful Egyptian military, Morsi was removed from office in early July 2013. An interim government is now running the country.

Question and research-

1) Explain the level of economic development of Egypt.

2) Identify and explain the macro-political and economic changes that have occurred in Egypt.

3) Describe the economic transition Egypt is going through? Are they moving forward towards a more market-based system?

4) Explain the implications for management practices of the national difference in political economy of Egypt.

Since the case is about Revolution in Egypt; Do you think that such developments have occurred in Egypt as expected?  How do we compare these with other countries in the region?

You will need to talk historically about what had happened in Egypt to relate Political Economy and Economic Development. Now after the case was written in 2012, has anything change? What about now, are we expecting any changes? What would make Political Economy and Economic Development change in Egypt? You need to research "everything" about Egypt, its past, present and future.

Start with an overview of Egypt then explain the revolution.

What was the Egypt Revolution/ Arab Spring?

Detailed explanations:

https://www.gatestoneinstitute.org/2140/egypt-revolution-what-happened

https://www.takepart.com/feature/2014/02/06/egypt-revolution-timeline

This one is about The Muslim Brotherhood https://bostonreview.net/forum/mohammad-fadel-what-killed-egyptian-democracy

Failure of the Muslim Brotherhood

https://carnegieendowment.org/files/muslim_brotherhood_failures.pdf

- Please show us the evolution of GDP in Egypt  (use graphs)

- How can you apply the concepts of Amrtya Sen for Egypt (look at the corresponding HDI for Egypthttps://hdr.undp.org/en/countries/profiles/EGY. The Main website is https://hdr.undp.org/en/2015-report a general report is on this page)

- How is the level of innovation and entrepreneurship in Egypt? 

https://www.mei.edu/events/entrepreneurship-egypt-opportunities-and-challenges-development

https://mcit.gov.eg/Upcont/Documents/Innovation701072011.pdf (Very interesting report)

The rise of social entrepreneurs in Egypt https://www.huffingtonpost.com/alyaa-a-younis/the-rise-of-the-social-en_b_6787054.html

- It seems that Egypt is a state in transition

https://www.brookings.edu/~/media/research/files/papers/2014/01/egypt-transition-economy-ghanem/arab-econpaper1hafez-v3_mr.pdf

BUT PERHAPS Not a democratic transition....(?) https://www.washingtonpost.com/opinions/egypts-evolving-governance-is-no-democratic-transition/2014/01/23/8b7d910e-83bc-11e3-bbe5-6a2a3141e3a9_story.html

IS Egypt a Failed Transition? https://www.journalofdemocracy.org/sites/default/files/Brown-24-4.pdf

Additional bibliography

 • 2015 Index of Economic Freedom. Egypt. The Heritage Foundation. Retrieved from https://www.heritage.org/index/country/egypt

• Madrigal, Alexis. C. (2011, January 27). Egyptian Activists' Action Plan: Translated. Retrieved fromhttps://www.theatlantic.com/international/archive/2011/01/egyptian-activists-action-plan-translated/70388/
• N.a. (2011, January 27). ElBaradei back to "politically support" Egypt's change. Retrieved fromhttps://www.alarabiya.net/articles/2011/01/27/135207.html
• N.a (2011, January 27). Q&A: What's behind the unrest? Retrieved from https://www.sbs.com.au/news/article/2011/01/27/qa-whats-behind-unrest