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A Government Role in the Economy
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 1998 unemployment stood at 8 percent.
B Labor
Egypt’s labor force of 24.4 million is 70 percent male and 30 percent female. The largest proportion of the labor force works in agriculture or fishing, which employ 30 percent of all workers. The services sector employs 48 percent, and industry (including manufacturing and construction) employs the remaining 22 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.
C Agriculture
In 2000 the agricultural sector (including fishing) contributed 17 percent of the GDP. Before industrialization, agriculture provided most of Egypt's exports, but by 1999 it contributed only 8 percent of the exports. The most important crops include cotton, cereals, 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.
D Fishing
Fishing is a significant industry in Egypt. Large quantities of fish live in the Nile, the Mediterranean Sea, and the Red Sea.
E Manufacturing
Industry, including manufacturing, mining, and construction, contributed 34 percent of the GDP in 2000. 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.
F Mining
Petroleum is Egypt’s most important mineral product. It is a major source of export earnings. In the 1980s the government developed the production of natural gas to supply domestic energy needs. It began exporting natural gas in the 1990s. The main oil and gas fields are located along the Red Sea coast and in the Libyan Desert. Other minerals produced in Egypt include phosphate rock (a source of fertilizer), iron ore, and salt.
G Services
Services contributed 49 percent of the GDP in 2000. Important services include government social services such as health and education, financial services, and personal services.
H Tourism
In 2000, 5.1 million tourists visited Egypt, providing $4.3 billion in revenues. The majority of visitors make a simple tour that includes Cairo, the great pyramids nearby, and the sites of other ruins and artifacts of ancient Egypt up the Nile. In the late 1980s and the 1990s many tourists visited Egypt's Red Sea resorts to take advantage of the warm winter weather. In 1992 attacks on foreigners by Islamic extremists scared off most tourists, but the industry soon recovered. The tourism industry is made up entirely of privately owned businesses.
I Energy
Egypt is self-sufficient in energy. Its main sources of electricity are hydroelectric power plants at the Aswan High Dam and steam-driven power plants that burn natural gas. Egypt's own oil and natural gas provide almost all of the country’s fuel needs. Pipelines supply gas to all major urban centers.
J Transportation
Egypt has 5,026 km (3,123 mi) of railroads, all of which are owned by the state. The principal line links Aswan and towns north of it in the Nile Valley to Alexandria on the Mediterranean coast. The inland waterways of Egypt are used extensively for transportation. These waterways include the Nile, which is navigable throughout its course in the country; about 1,600 km (about 1,000 mi) of shipping canals; and more than 17,700 km (11,000 mi) of irrigation canals in the Nile Delta.
Two highways connect Cairo with Alexandria. Other highways connect Cairo to Port Said, Suez, and Al Fayyum. The total length of highways and roads in Egypt is 64,000 km (40,000 mi). International airlines provide regular service between Cairo and Alexandria and major world centers. EgyptAir, the government-owned airline, also provides domestic and foreign service. The country has about 80 airports and airfields. The major seaport is Alexandria, followed by Port Said and Suez, all of which are served by numerous shipping companies. The Suez Canal, which was closed from 1967 until mid-1975 as a result of the Arab-Israeli wars of 1967 and 1973, produces substantial annual toll revenues. In the early 1990s about 16,600 vessels used the canal each year.
K Communications
Egypt’s press, publishing, and media facilities are the largest and most developed in the Arab world. Much of the press was taken over by the government soon after the revolution of 1952, when the daily newspaper Al Ahram became the regime's principal mouthpiece. Party and private newspapers are permitted but are subject to censorship. The government controls the national radio and television services, as well as the basic telephone system. Foreign companies have begun to install cellular telephone networks and to operate private payphone systems. In 1997 there were 317 radios, 119 television sets, and 86 telephones for every 1,000 people. As of 2000 there were just 0.85 Internet hosts for every 10,000 people.
L Foreign Trade
Before the revolution of 1952, Egypt's foreign trade consisted mainly of exports of raw materials, particularly long-staple cotton, and imports of manufactured goods. After the revolution, the regime pursued a policy of discouraging imports by using high tariff barriers to protect its growing industries. It also brought most of the country's commerce under government control. More liberal policies were introduced in the 1970s. However, it was only in the 1990s that steps were taken to open up parts of the Egyptian market to foreign competition. There was also a new emphasis on exports. Apart from exports of crude petroleum and refined petroleum products, this policy has not alleviated trade imbalances. In 2000 exports were sold for $4.7 billion while imports cost $14 billion. As a result, the country runs a trade deficit. Part of this deficit is offset by the money Egypt earns from tourism, Suez Canal tolls, and remittances from Egyptians working abroad.
Petroleum and petroleum products contributed just over half of Egypt’s export earnings in the late 1990s. Other exports include textile yarn and fabrics, fruits and vegetables, clothing and accessories, and aluminum products. The principal imports are machinery and transportation equipment; basic manufactures, particularly iron, steel, and paper; food products, primarily cereals; and chemicals. The United States is Egypt's main trading partner, followed by Italy, Germany, and France.
M Currency and Banking
Egypt's currency is the Egyptian pound, consisting of 100 piastres (3.47 Egyptian pounds equal U.S.$1; 2000 average). The Central Bank was created in 1961, when all the country's private banks were nationalized. Several specialized state-owned banks were also set up. Foreign banks were allowed to reenter the county as joint ventures with Egyptian investors in 1974 after having been forced to leave during the nationalization period. In the late 1990s the government planned to privatize one of Egypt's four giant state banks, which account for about 70 percent of total deposits. More than 80 domestic and foreign banks operate in the country.
Roger Owen contributed the Economy section of this article.
ECONOMY
For most of Egypt’s history, its economy was based almost entirely on farming, despite the fact that more than 95 percent of the country’s land area is infertile desert. Long an exporter of cereals, in the 19th century Egypt began to specialize in growing cotton, which is still an important cash crop. The first significant industries were set up only in the 1930s. Industrialization increased in the 1960s after much of the industrial sector was brought under state control. In the late 20th century other important sources of revenue included tourism, oil production, and remittances from the 3 million Egyptians working in the Persian Gulf states. Despite its economic and social development in the 20th century, Egypt was a relatively poor country in world terms, with a gross domestic product (GDP) in 2000 of $98.7 billion, or $1,540 per capita.A Government Role in the Economy
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 1998 unemployment stood at 8 percent.
B Labor
Egypt’s labor force of 24.4 million is 70 percent male and 30 percent female. The largest proportion of the labor force works in agriculture or fishing, which employ 30 percent of all workers. The services sector employs 48 percent, and industry (including manufacturing and construction) employs the remaining 22 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.
C Agriculture
In 2000 the agricultural sector (including fishing) contributed 17 percent of the GDP. Before industrialization, agriculture provided most of Egypt's exports, but by 1999 it contributed only 8 percent of the exports. The most important crops include cotton, cereals, 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.
D Fishing
Fishing is a significant industry in Egypt. Large quantities of fish live in the Nile, the Mediterranean Sea, and the Red Sea.
E Manufacturing
Industry, including manufacturing, mining, and construction, contributed 34 percent of the GDP in 2000. 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.
F Mining
Petroleum is Egypt’s most important mineral product. It is a major source of export earnings. In the 1980s the government developed the production of natural gas to supply domestic energy needs. It began exporting natural gas in the 1990s. The main oil and gas fields are located along the Red Sea coast and in the Libyan Desert. Other minerals produced in Egypt include phosphate rock (a source of fertilizer), iron ore, and salt.
G Services
Services contributed 49 percent of the GDP in 2000. Important services include government social services such as health and education, financial services, and personal services.
H Tourism
In 2000, 5.1 million tourists visited Egypt, providing $4.3 billion in revenues. The majority of visitors make a simple tour that includes Cairo, the great pyramids nearby, and the sites of other ruins and artifacts of ancient Egypt up the Nile. In the late 1980s and the 1990s many tourists visited Egypt's Red Sea resorts to take advantage of the warm winter weather. In 1992 attacks on foreigners by Islamic extremists scared off most tourists, but the industry soon recovered. The tourism industry is made up entirely of privately owned businesses.
I Energy
Egypt is self-sufficient in energy. Its main sources of electricity are hydroelectric power plants at the Aswan High Dam and steam-driven power plants that burn natural gas. Egypt's own oil and natural gas provide almost all of the country’s fuel needs. Pipelines supply gas to all major urban centers.
J Transportation
Egypt has 5,026 km (3,123 mi) of railroads, all of which are owned by the state. The principal line links Aswan and towns north of it in the Nile Valley to Alexandria on the Mediterranean coast. The inland waterways of Egypt are used extensively for transportation. These waterways include the Nile, which is navigable throughout its course in the country; about 1,600 km (about 1,000 mi) of shipping canals; and more than 17,700 km (11,000 mi) of irrigation canals in the Nile Delta.
Two highways connect Cairo with Alexandria. Other highways connect Cairo to Port Said, Suez, and Al Fayyum. The total length of highways and roads in Egypt is 64,000 km (40,000 mi). International airlines provide regular service between Cairo and Alexandria and major world centers. EgyptAir, the government-owned airline, also provides domestic and foreign service. The country has about 80 airports and airfields. The major seaport is Alexandria, followed by Port Said and Suez, all of which are served by numerous shipping companies. The Suez Canal, which was closed from 1967 until mid-1975 as a result of the Arab-Israeli wars of 1967 and 1973, produces substantial annual toll revenues. In the early 1990s about 16,600 vessels used the canal each year.
K Communications
Egypt’s press, publishing, and media facilities are the largest and most developed in the Arab world. Much of the press was taken over by the government soon after the revolution of 1952, when the daily newspaper Al Ahram became the regime's principal mouthpiece. Party and private newspapers are permitted but are subject to censorship. The government controls the national radio and television services, as well as the basic telephone system. Foreign companies have begun to install cellular telephone networks and to operate private payphone systems. In 1997 there were 317 radios, 119 television sets, and 86 telephones for every 1,000 people. As of 2000 there were just 0.85 Internet hosts for every 10,000 people.
L Foreign Trade
Before the revolution of 1952, Egypt's foreign trade consisted mainly of exports of raw materials, particularly long-staple cotton, and imports of manufactured goods. After the revolution, the regime pursued a policy of discouraging imports by using high tariff barriers to protect its growing industries. It also brought most of the country's commerce under government control. More liberal policies were introduced in the 1970s. However, it was only in the 1990s that steps were taken to open up parts of the Egyptian market to foreign competition. There was also a new emphasis on exports. Apart from exports of crude petroleum and refined petroleum products, this policy has not alleviated trade imbalances. In 2000 exports were sold for $4.7 billion while imports cost $14 billion. As a result, the country runs a trade deficit. Part of this deficit is offset by the money Egypt earns from tourism, Suez Canal tolls, and remittances from Egyptians working abroad.
Petroleum and petroleum products contributed just over half of Egypt’s export earnings in the late 1990s. Other exports include textile yarn and fabrics, fruits and vegetables, clothing and accessories, and aluminum products. The principal imports are machinery and transportation equipment; basic manufactures, particularly iron, steel, and paper; food products, primarily cereals; and chemicals. The United States is Egypt's main trading partner, followed by Italy, Germany, and France.
M Currency and Banking
Egypt's currency is the Egyptian pound, consisting of 100 piastres (3.47 Egyptian pounds equal U.S.$1; 2000 average). The Central Bank was created in 1961, when all the country's private banks were nationalized. Several specialized state-owned banks were also set up. Foreign banks were allowed to reenter the county as joint ventures with Egyptian investors in 1974 after having been forced to leave during the nationalization period. In the late 1990s the government planned to privatize one of Egypt's four giant state banks, which account for about 70 percent of total deposits. More than 80 domestic and foreign banks operate in the country.
Roger Owen contributed the Economy section of this article.