Economies are generally judged by their size, diversity of resources, efficiency, and potential growth. More careful judgment, however, needs to address a wider and rather critical set of questions. Here are some of them: 


1. Who owns what (State; Private; Mix; Ethnic Majority/Minority; Foreign  entities; etc.)? 

2. Who are the actual movers and shakers (individual liberty and national dependency issue)?

3. How is wealth distributed, if any (equality might not be the critical issue, but social efficiency is)?

4. What type of relationship takes place between market makers, policy makers, policy executives, and the financial institutions? Is there a regulatory/judicial system to observe, regulate, and control this relationship? If there is, how that system is structured and who appoint its executives? 

5. Can contractual and Judicial matters be resolved and enforced efficiently (risk and security issues)
 

Some additional observations might worth our attention:

1. There is no real market-based economy in the modern era. 

2. For example every economic transaction in the US is regulated in one way or another, and same goes for almost all western economies. 

3. Regulated market-based economies (most of the 1st world economies) required stable and efficient political, judicial and social institutions (note that stable and efficient system could still be unjust and discriminatory). It also required skillful political and managerial leadership. Although Egypt has no shortage of skills, the other pre-requisites are not that handy.

4. Egypt has a colorful history when it comes to the ownership issue. Egypt wealth has changed strange hands over the years. For example, numerous studies (see Robert Mabro*of Cambridge Univ., and Anas Mustafa Kamel  and others on the subject) suggest that the majority of the country wealth was owned by non-Egyptians before 1952 (most of the country lands were mortgaged/in-debt to foreign banks). That history has its roots in the 19th century. So, one hope that Egypt by now as some experiences handling the influence of foreign ownership(!).

5. Egyptian economy is changing in a very fast pace, and the social fabric of the country is reacting. The structure and performance of the country political institutions are not up to such complicated fast pace dynamics. Something eventually has to give, and that is probably the only good news. The last 20 years have proven to me that radical social and political upheaval is not going to happen. The country has no taste for that. But rather, the changes in the structure of the economy (ownership/decision/distribution/etc.) and its increasing ties to the global economy will gradually force more rational political and social changes. 
 

6. Egypt political and social elite/junta (new or old) does not want to loose power (would you?). But the economy (state and private, official and non-official) is (slowly but surely) getting entangled with the global economy.  This junta then has an interesting dilemma, as they try to keep their power and privileges while competing with a world that is more efficient, faster, communicative and disciplined. It is interesting, for example,  to observe the debate about Al-Gezirah TV station, and the on-going war between Arab governments to domesticate such phenomena. The obvious inconsistency and hesitancy of the Egyptian government over many recent issues (privatization, democracy, freedom of media and press, new political parties, etc.) is not for lack of vision but for the compelling duality of conflicting interests. Again, they can't have full political control and at the same time create a prosper economy (a pre-requisite for long-term survival).

As the saying goes "You can't have the butter and have the cream".
 
 

Youssef Hegazy, Ph. D., 
Executive Consultant, 
R. W. Beck, Inc. 
Seattle, WA 98154-1004 
 
 

* Robert Mabro of Cambridge University.

Fellow of St Antony's College, a senior research officer in the economics of the Middle East at Oxford University, and a lay director on the board of the International Petroleum Exchange (IPE) in London. He is also the director of the Oxford Energy Seminar and secretary of the Oxford Energy Policy Club. He is the co-author, with Paul Horsnell of Oil Markets and Prices: The Brent Market and the Formation of World Oil Prices` and, most recently, the OIES paper `The Oil Price Crisis of 1998`.
 

 

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