Economic growth in Egypt: Constraints and determinants

Type Journal Article - World Bank MENA Working Paper
Title Economic growth in Egypt: Constraints and determinants
Issue 42
Publication (Day/Month/Year) 2005
Egypt accelerated its ongoing transition from a public sector dominated economy to a private
sector led and market oriented economy after the collapse of oil prices in the mid-1980s. Some
aspects of the economy, such as trade policy, have been substantially transformed since then
whereas other aspects, such as public control of the financial sector, have experienced less change
in substance. We examine some determinants of growth in Egypt since the mid-1980s using
insights from both standard econometric techniques and a diagnostic approach proposed by
Hausmann, Rodrik and Velasco (2004). We find that trends in government consumption, credit to
the private sector and the average growth rate of OECD countries have been significant
determinants of growth in Egypt in the past. We also present evidence that suggests that
inefficiency of financial intermediation is a significant current constraint on growth.

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