FINAL REPORT

Impact of Trade and Economic Policy Reforms on Key Sectors of the Egyptian Economy

PREPARED BY

ATR Project

SUBMITTED TO

USAID/Cairo Ministry of Foreign Trade
SUBMITTED BY

Nathan Associates

UNDER CONTRACT NO.

PCE-I-00-98-00016-00 Task Order 827

2 April 2004

Contents
Executive Summary Egypt’s Economy in Relation to the Global Marketplace Trade Policy and the International Trade Regime Impact of Trade Regime Changes on Subsectors Conclusions Next Steps 1. Introduction 2. Egypt’s Economy and Its Place in the Global Arena Egyptian Economy Today Structure of the Economy Labor force, Employment and Unemployment Macroeconomy and Balance of Payments Trade Patterns Macroeconomic and Trade Policy Reform Current Challenges Distinguishing Characteristics of Egypt’s Economy Water Resources and Growing Population Pressure Oil and Natural Gas Geographical Location Egyptian Culture Higher Education Socialism and Its Aftermath Egypt’s Comparative Advantage in the Global Economy Changing Global Economy Egypt’s Economy in Relation to Three Waves of Globalization Revealed Competitive Advantage Analysis v vi viii xi xiv xvi 1 5 5 5 7 8 10 12 13 14 14 16 16 16 17 18 19 19 22 25

II

3. Trade Policy and the International Trade Regime Current Trade Regime in Egypt Tariff Structure Non-tariff Barriers to Trade Multilateral, Regional, and Bilateral Agreements Multilateral Agreements Regional Agreements Bilateral Agreements Trade Regimes of Major Trading Partners Economic Impacts of Trade Agreements Anticipated Economic Effects of Trade Agreements Developing Country Trade Agreements with the United States and the European Union Impacts of Egypt’s Trade Agreements Observed Economic Impacts of Trade Agreements 4. Impact of Trade Regime Changes on Subsectors Purpose of Subsector Analysis Summary of Subsector Analysis Fresh Flowers, Fruits, and