50
Countries which are Bucking the Trend
The reduction of internal trade barriers is a matter of institutional strength and capability. Action on that
front is also dependent on raising education standards on the one hand and promoting intra-regional trade
together with a higher level of alignment in trade with Asian tigers. Where such action has been taken we
find countries such as Egypt and Tunisia bucking the trend. While Tunisia has emerged as an outsourcing
hub for textile production, car assembly and food processing in the region, Egypt is fast becoming an
important player in IT. Both countries have been able to attract high levels of foreign direct investment.
Egypt
Egypt is the second largest economy of the continent and is ranked 25th globally. The Egyptian economy
is well-diversified and driven by the tourism industry, the oil and gas industry, trade services and
agriculture. Egypt has begun to attract global ICT investment from giants such as Microsoft, Vodaphone,
Oracle and IBM, and her IT exports have gone up from US$ 250m in 2005 to approximately US$ 1bn in
2010. The ‘Smart Village’ in Cairo accommodates most of Egypt’s IT industry employing around 22,000
people. This success is attributable to recent structural reforms, improvements in the business
environment, and public investment in infrastructure and language skills.
Despite the relatively high levels of economic growth in recent years, living conditions for the average
Egyptian remained poor and contributed to public discontent. The estimated GDP for 2012 is about 537.8
billion US$. The growth has been declining since 2010 from 5.1% to 1.8% in 2011. For 2012, a slight
rebound has been noticed around 2% .The GDP per capita is 6600 US. Between 1980 and 2012 Egypt's
HDI rose by 2.1% annually from 0.407 to 0.662 today, which gives the country a rank of 112 out of 187
countries with comparable data. The HDI of Arab States as a region increased from 0.443 in 1980 to
0.652 today, placing Egypt above the regional average.
Egypt is a major actor in terms of exports and imports among the OIC. In 2011, it was ranked at the 7th
position of export (3.69%) and at the 10th position for import with a share of 3.49%. The trade deficit
remained on the rise, to record US$ 31.7 billion in FY 2011/2012 (against US$ 27.1 billion a year
earlier), reflecting the surge in merchandise imports by 8.5% to record US$ 58.7 billion in FY 2011/2012,
while merchandise exports remained unchanged at US$ 27.0 billion during the same period.
Egypt is implementing its WTO commitments and has been a leading negotiator in the Doha Round. It
has cut custom duties as well as a multitude of different charges and levies and numerous tariff schedules.
It has reduced its tariff rates on several imported items, including capital goods, which brought down the
average weighted tariff rate from 21% in 1997 to 5.5% in 2009, with an average tariff rate of 5% on
capital goods Egypt has considerably liberalised its economy and opened it up to foreign trade. It has
expanded its network of regional and bilateral trade agreements and protocols with its main trading
partners, the EU and the US. Foreign trade (exports and imports) has increased from just over 30% of
GDP in 2003-4 to 56.9% in 2008-9. The signing of regional trade agreements has led to rising trade with
neighbouring Arab countries in the last decade. Indeed, in 2008-9, Arab countries represented an 11.4%
share of Egypt’s total trade, up from 8.9% in 2003-4 and 5.3% in 2000-1.
The most recent figures, from February 2013 to March 2013, indicate that Egypt’s exports have increased
to 2763m US$ from 2621m US$. These figures are close to the historic high of 2991m US$ reached in
June, 2008 and a far cry from the record low of 12.63m USS in July of 1959. Exports account for one
quarter of Egypt’s GDP, with oil and other mineral products taking a 32% share of total exports. Non-oil
products such as chemical products (12%), agricultural products, livestock and others fats (11%) and
textiles (10.5%, mainly cotton) account for another 33.5%. The rest of Egypt’s exports include, among
others, base metals (5.5%), machinery and electrical appliances (4.5%) and foodstuff, beverages and
tobacco (4%). Egypt’s major export partners are Italy, Spain, France, Saudi Arabia, India, Turkey, the
United States, Brazil and Argentina.