Case Study Egypt the Troubled Giant
How would you describe the economic policy that Egypt implemented during 2004-2008? Do you think that this policy helped to boost Egypt’s growth rate? Why? The economic policies that Egypt implemented during the 2004-2008 time frame were made to reform economic policies that were hindering the countries ability to grow economically.
Many of the policies in place were causing more damage than good to a country that was seeking to expand economically. In order for this to occur, the prime minister of Egypt at the time Ahmed Nazif began reforming these economic policies by reducing the tariff tax, deregulation, and changes in investment regulations. Eventually, with these changes Egypt saw great economic growth. Big name companies like Oracle and Microsoft built new office buildings and construction could be seen throughout the country.
The reformed economic policies definitely helped boost Egypt’s growth rate as it provided more jobs and allowed outside businesses to operate within the country. 2. How vulnerable is the Egyptian economy to slowdown in global economic activity such as that which occurred in 2008-2009? Egypt’s economy was very vulnerable during the economic slowdown in global economic activity. Although, Egypt saw much success after reforming there economic policies it didn’t completely solve all of Egypt’s economic crises.
Inflation still remained high combined with the global economic crisis that affected all countries caused Egypt’s economic growth to slowdown. Tourism bought some money to the country but declined greatly the following year. Many workers who worked abroad and sent money back home suffered as well as jobs in the Gulf Coast were cut backed or shutdown. Also, the large gap between the rich and poor is also a major factor in there high inflation rate 3. What are the potential risks inherent in Egypt’s current political system? What is the best case scenario going forward?
What is the worst case scenario? The current political for a lack of a better word is simply “outdated”. Globally, while the rest of the world are finding ways to adapt and looking for ways to expand growth Egypt stubbornly have been stuck in the ways. Due to the fact that are being left behind in comparison to the rest of the world makes it extremely difficult to engage in any business activity with the country. There current political system has caused more damage to the economy rather than boosts it and get it moving in a more productive direction.
The best scenario going forward would be to establish a more balanced government. Appointing one person to make decisions for all aspects of the government, obviously is not working changes need to be made. The worst case scenario would be for Egypt to continue to run the country as is and not make any changes to their political structure, which will result in the same outcome they are currently experiencing now. 4. All things considered, is Egypt an attractive market for international business?
What advice would you give to a multinational enterprise considering investment in Egypt? Egypt has the potential to become an extremely attractive market for international business. The country could benefit greatly through international business by bringing much needed revenue to the country. By creating jobs and being successful in dealing with international business will quickly spread by word of mouth making other businesses interested in getting involved and willingly conduct business with them as well.
In order for that to occur Egypt must change and reform certain policies that are preventing and making it difficult for that merge to occur. My advice to a multinational enterprise considering investment in Egypt would be to conduct a thorough assessment of Egypt and compare it with what it is that the enterprise is trying to establish. Due to outdated political system, the economic uncertainty, and the high inflation rate are things that should be considered beforehand.