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Egypt Mubarak's Gradualism?
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Whereas Nasser followed a statist approach to economics and Sadat, at least in theory, tried to break away from that model through infitah, analysts found it harder to label Mubarak's policy. It has variously been called "gradualism," "reform by stealth," and even "indecisiveness." The president himself seemed to indicate his commitment to privatization and at the same time to the public sector, which he once described as the only cushion for the poor. Analysts attributed this state of affairs to such reasons as the personality of the president, vested public and private interests, fragmentation of the elite, the government's longstanding commitment to providing a safety net for the broad mass of the population that was its main source of legitimacy, the questionable success of the infitah, and the sheer weight of the bureaucracy.

    Available information seemed to indicate perceptible, albeit slow, changes in the relative weights of the state and private sectors in the economy that favored the latter. For example, between FY 1983 and FY 1986 the ratio of public investment to gross investment dropped from 83 percent to 70 percent. The FY 1987-91 Five-Year Plan envisioned private sector investment to rise to 37 percent of all investment compared with 24 percent in the previous plan. In September 1982, Mubarak introduced a new investment law that offered Egyptian investors most of the privileges foreign investors had enjoyed. The draft of another new investment law was being debated in early 1989 in the People's Assembly (Majlis ash Shaab, formerly the National Assembly), but as of early 1990 no action had been taken (see Direct Foreign Investment , this ch.). This latest proposal aimed at combining and amending all the investment laws passed in the preceding fifteen years to provide more incentives for the private sector.

    Private-sector investment was largely confined to the service areas and agriculture, where land was privately owned, although the state retained considerable influence through a web of price and other controls. At the end of the FY 1982-86 Five-Year Plan, 57 percent of private investment was in housing and about 11 percent in agriculture. The private sector made some inroads into the tourist industry after the mid-1980s, when privatization was actively encouraged by the minister of tourism. As of 1990, private investment had not yet become a major player in the commodityproducing sectors, apart from agriculture. Foreign direct investment was not forthcoming, and what little there was went mainly into the oil industry.

    The government's control of the economy was reinforced by various financial and administrative mechanisms. Prominent among these were price controls, setting the exchange rate of the Egyptian pound, collection of public revenues and allocation of expenditures, and development planning. Since 1987, reforms loosened the government's control over these areas.

    Data as of December 1990

    NOTE: The information regarding Egypt on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Egypt Mubarak's Gradualism? information contained here. All suggestions for corrections of any errors about Egypt Mubarak's Gradualism? should be addressed to the Library of Congress and the CIA.

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Revised 10-Nov-04
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