Egypt - Development Policy Review

This development policy review finds
ample evidence that Egypt has prospered as a consequence of
giving the economy a greater market orientation. While
favorable global conditions have helped, the structural
changes over the last two decades have been an essential
ingredient for Egypt's success. Productivity has risen
more in segments of the economy where the private sector s
share in investment and output grew most. Empirical
estimates done for this report suggest that each dollar of
private investment contributed four times more to output
than a dollar of public investment, reflecting in part the
poor choice and maintenance of public investment.
Consequently, further increases in output, incomes and
productivity may be expected from the recently rising share
of private investment in the total. Public sector
productivity has also increased in recent years, reflecting
in part the increased importance of state owned firms in
petroleum and natural gas. Egypt's economic growth is
also now more closely correlated with that of the
Organization for Economic Co-operation and Development
countries magnified by a factor of 1.25, and volatility has
declined. This results from many links, not just the direct
effect of oil and gas.