Notes

Foreword

1. H. H. Stevenson, “A Perspective on Entrepreneurship,” Harvard Business School Working Paper 9–384–131 (1983).

1 State and Entrepreneurs: Theory and Development

1. John M. Keynes, The General Theory of Employment, Interest and Money, London: Macmillan (1936)

2. US Council of Economic Advisors, Economic Report of the President, Annual, Washington DC: Government Printing Office (1939–46).

3. Michael J. Hogan, The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952, New York: Cambridge University Press (1987); Alan S. Milward, The Reconstruction of Western Europe 1945–51, Berkeley: University of California Press (2006).

4. In a personal communication, the first author learned from the late Jan Tinbergen that when he visited Egypt in the mid-1950s he met with President Nasser who was keen to learn about economic planning. Impressed by Nasser’s interest and mind-set, Tinbergen returned later with his close col-laborator, Professor Ragnar Frisch, when the two became planning advisors to Egypt’s president. They were instrumental in establishing the National Planning Institute to carry out development research and empirical studies on Egypt; they also helped establish the Ministry of Planning to prepare, coordinate, and monitor the implementation of the national and sector plans, introduced for the first time in 1960. Less than a decade later the two pio-neering economists were awarded the first Nobel Prize in Economic Sciences. Among their contributions: Jan Tinbergen, Economic Policy: Principles and Design, Amsterdam: North Holland (1956); and Ragnar Frisch, “Propagation Problems and Impulse Problems in Dynamic Economics” Economic Essays in Honour of Gustav Cassel, London: George Allen 69’ Unwin Ltd (1933), pp. 171–205.

5. Amartya K. Sen, Choice of Techniques: An Aspect of the Theory of Planned Economic Development, Oxford: Blackwell (1962); H. B. Chenery, and

166 Notes

C. Bowls, Studies in Development Planning, Cambridge, MA: Harvard University Press (1971).

6. To demonstrate this point, we used International Financial Statistics to calculate the ratio of public expenditures to gross national expenditures in a group of randomly selected industrial countries (France, Japan, United States) and another group of randomly selected emerging countries (Egypt, India, Thailand) on a comparative basis in three points of time: in 1950/51, in 1970/71, and in 1990/91. Results show no discernable patterns between the developed countries as a group and the developing countries as a group. Individual countries, however, did show some notable differences, for exam-ple, during the 1950s France had the highest ratio, while India the lowest. During the 1970s Egypt and the United States showed the highest ratios, while Japan and India were the lowest. Finally, during the 1990s, France and the United States had the highest ratios, while Japan and Thailand the lowest.

7. A. O. Krueger, “Virtuous and Vicious Circles in Economic Development,” American Economic Review 83 (2) (1993): pp. 351–355.

8. Abram Bergson, The Economics of Soviet Planning, New Haven, CT, and London: Yale University Press (1964).

9. United Nations Development Program (UNDP), Human Development Report, several issues, Oxford.

10. Steve Crawshaw, Goodbye to the USSR: The Collapse of Soviet Power, London: Bloomsbury (1992).

11. In fact, the World Bank dedicated its 1997 issue of its annual World Development Report to examine the role of the state in a changing world.

12. Regional and international development institutions held annual meetings to coordinate their programs.

13. Western media has tracked the export-led Chinese economic growth and China’s expanding role in the global economy since the 1980s; c.f. The Economist magazine and Financial Times newspapers. Economist: China Special Reports: Oct, 22, 1998; May 26, 2005; Feb 14, 2009; Aug 25, 2041. The Financial Times: “Supply Shortages and China’s Appetite Keep Correction at Bay,” Dec 30, 2005; “Oil Price Slump Shot in the Arm for Global Economy, Says IMF,” Dec 22, 2014.

14. Richard Cantillon, Essaisur la nature du commerce en general, London: Frank Cass and Co., Ltd. 1959 (1730). For years, Cantillon’s work circu-lated widely in a manuscript form before it was first published in 1755. Subsequently, it was largely forgotten until William Stanley Jevons rediscov-ered it in the late nineteenth century. Jevons hailed the work as the “cradle of political economy.” The Essay was translated into English and published in 2010 as An Essay on Economic Theory, Auburn, AL: Ludwig von Mises Institute.

15. Jean-Baptiste Say A Treatise on Political Economy, Philadelphia, PA: Lippincott, Grambo & Co., Pub. Date. 1850 (1803).

16. I. M. Kirzner, “Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach,” Journal of Economic Literature 35 (1997): pp. 60–85, and Perception, Opportunity, and Profit: Studies in

Notes 167

the Theory of Entrepreneurship Chicago: University of Chicago Press (1979); W. B. Gartner, “A Framework for Describing and Classifying the Phenomenon of New Venture Creation,” Academy of Management Review 10 (4) (1985): pp. 696–706, and Who Is an entrepreneur Is the Wrong Question?” Entrepreneurship Theory and Practice 13(4) (1989): pp. 47–68; S. Shane and S. Venkataraman, “Entrepreneurship as a Field of Research,” Academy of Management Review 25 (1) (2000): pp. 217–226; J. Covin and D. Slevin, “Conceptual Model of Entrepreneurship as Firm Behaviour,” Entrepreneurship Theory and Practice 6(1) (1991): pp. 7–25; J. Wiklund, “Sustainability of the Entrepreneurial Orientation,” Entrepreneurship Theory and Practice 24 (1) (1999): pp. 37–48; and A. Bhide, “How Entrepreneurs Craft Strategies That Work,” Harvard Business Review 72 (2) (1994): pp. 150–161.

17. C. W. Cobb and P. H. Douglas, “A Theory of Production,” American Economic Review 18 (1928 Supplement): pp. 139–165; P. H. Douglas, “The Cobb-Douglas Production Function Once Again: Its History, Its Testing, and Some New Empirical Values,” Journal of Political Economy 84 (5) (1976 October): pp. 903–916.

18. Robert M. Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39 (3) (1957): pp. 312–320.

19. In a seminar to faculty and graduate students at Berkeley’s department of eco-nomics, spring 1966. In a later personal communication to the first author, Sen intimated that his remark was initially intended as a light-hearted com-ment, but it turned out to reflect a more profound thought.

20. Dale Jorgensen and Zvi Griliches, “Explanation of Productivity Change,” Review of Economic Studies (1967 July).

21. Albert O. Hirschman, Development Projects Observed, Washington, DC: Brookings (1967).

22. W. J. Baumol “Entrepreneurship in Economic Theory,” American Economic Review 56 (2) (1968): pp. 64–71.

23. Harvey Leibenstein, “Allocative Efficiency vs. X-Efficiency,” American Economic Review 56 (3) (1966): pp. 392–415.; see also his book General X-Efficiency Theory & Economic Development, New York: Oxford University Press (1978).

24. B. H. Higgins, Economic Development: Principles, Problems, and Policies, New York: Norton (1959); W. A. Lewis, Some Aspects of Economic Development, Accra: University of Ghana (1969); A. O. Hirschman, The Strategy of Economic Development, New Haven, CT: Yale University Press (1958).

25. Gustav Ranis and P. T. Schultz, The State of Development Economics, Oxford: Basil Blackwell (1988).

26. Ali A. Soliman, Rowwad al Sina’a [Industry Pioneers, in Arabic], Cairo: A’alam al Kotob (1991).

27. Joseph A. Schumpeter, “The Theory of Economic Development,” Harvard Economic Studies 46 (1934 Series).

28. A. Szirmai, N. Wim, and G. Micheline, “Entrepreneurship, Innovation, and Economic Development: An Overview,” In Entrepreneurship, Innovation,

168 Notes

and Economic Development, pp. 10–11. New York: Oxford University Press (2011).

29. W. J. Baumol, “Entrepreneurship: Productive, Unproductive and Destructive,” Journal of Political Economy 98 (5) (1990): pp. 893–921; W. A. Naude (ed.), Entrepreneurship and Economic Development, Basingstoke: Palgrave Macmillan (2010).

30. E. Helpman, The Mystery of Economic Growth, Cambridge, MA: Harvard University Press (2004).

31. R. G., Lipsey, K. Carlaw, and C. T. Bekar Economic Transformations: General Purpose Technologies and Long-Term Economic Growth Oxford: Oxford University Press (2005).

32. P. Romer, “Endogenous Technological Change,” Journal of Political Economy 98 (1990): S 71–S102.

33. Published works on other developing countries suffer from the same limi-tation; cf. Irma Adelman and H. B. Chenery, Foreign Aid and Economic Development: the Case of Greece, Los Angeles: Economics Research Center, Occidental College (1966); and H. B. Chenery and P. Eckstein, “Development Alternatives in Latin America,” Journal of Political Economy 78 (4) (1970): pp. 966–1006.

34. For a good list of earlier references (1930s to 1950s) see Donald Mead, Growth and Structural Change in the Egyptian Economy, Homewood, IL: Richard D. Irwin (1967). For a more recent list (1960s to 1990s), see Khalid Ikram, The Egyptian Economy, 1952–2000, London: Routledge (2006).

35. Ali A. Soliman, Rowwad al Sina’a.

2 State Policies: The Great Pasha’s Dynasty (1805–1952)

1. Henry Dodwell, The Founder of Modern Egypt: A Study of Muhammad ‘Ali, Cambridge: Cambridge University Press (1967), pp. 60–68.

2. Helen Rivlin, A. The Agricultural Policy of Muhammad Ali in Egypt, Cambridge, MA: Harvard University Press (1961).

3. Ali El-Gritli, Tarikh al-Sina’a fi Misr [The History of Industry in Egypt], Cairo: Dar Al Ma’arif Press (1952), pp. 40–51, 97–104, 141–150.

4. Muhammad Ali invited the Mamluk leaders to a celebration at the Cairo Citadel in honor of his son, Tusun, who was to lead a military expedition into Arabia. The event was held on March 1, 1811. When the Mamluks had gathered at the Citadel, and were surrounded by Muhammad Ali’s troops, he had his troops kill them. Reports vary about how many died, some say as few as 74 were killed, while others claim nearly 500. Whatever the actual number, it is clear that the event dealt a serious blow to the Mamluks.

5. Afaf Lutfi al-Sayyid Marsot, Egypt in the Reign of Muhammad Ali, Cambridge: Cambridge University Press (1983); William L Cleveland, A History of the Modern Middle East, Boulder, CO: Westview Press, (2000), p. 67.

Notes 169

6. Henry Dodwell, The Founder of Modern Egypt: A Study of Muhammad ‘Ali, Cambridge: Cambridge University Press (1967), p. 71.

7. The work comprised 9 volumes of text and 14 of plates, published sequen-tially in Paris during 1809 to 1828, long after the campaign had folded. Nearly two centuries later, the work was preserved and digitally copied on CD by the Bibliotheca Alexandrina, October 2004.

8. In the second-half of the twentieth century, we find several examples in the same vein from more than one country. In the United States, Ross Perot mounted an unsuccessful presidential campaign in 1992; so did Mitt Romney in 2012. And Michael Bloomberg was elected governor of New York for unprecedented three terms. In Lebanon, Rafik Hariri and Najib Mikati have successfully run for the prime minister’s office. In Italy, Silvio Berlusconi has been a prime minister more than once. And in Australia, Rupert Murdoch has built a large media empire with wide impact on British politics.

9. P. J. Vatikiotis, The History of Egypt: From Muhammad Ali to Sadat, Chapter 4, Baltimore, MD: Johns Hopkins University Press (1980).

10. Georges Douin (ed.), Une Mission militaire francaise aupres de Mohamed Aly, correspondance des Generaux Belliardet Boyer, Cairo: Societe Royale de Geographie d’Egypte (1923), pp. 118–122.

11. Charles Issawi, “Egypt since 1800: A Study in Lop-sided Development,” Journal of Economic History (March 1961).

12. There is striking resemblance here with the army factories that Nasser built 140 years later, with similar spill-over effects to benefit the civilian popula-tion; see chapter 3, section titled “Nassers Brutal Command.”

13. Even before the French Campaign, Egypt had few outstanding entrepreneurs who engaged in international commerce on a large scale. One such figure was Hassan Toubar of Damietta, who owned a sizeable fleet active in local fishing and trade with Turkey and the Fertile Crescent. Another such figure, significantly a female, was Nafisa al Bidha’a, who operated an economic empire from her base in Fatimid Cairo, trading on a large scale with Turkey, the Fertile Crescent, and Morocco. The third notable local entrepreneur of the time was Omar Makram, a leading merchant of Fatimid Cairo with substan-tial trading interests in Palestine and the Fertile Crescent. The one common denominator among all three notables was their avowed nationalist senti-ments and later activism in Egyptian politics, especially in the civil resistance to the French Campaign during the years 1798–1801. See, Abdelrahman al Jabarti, Tarikh Aja’eb al Aathar fil Trajem wal Akhbar (Arabic), parts 1 and 2, Cairo same volumes were published in 1879 by Al Amiriya Press at Bulak, Cairo (1798); and Abdelrahman al Rafe’i, A’sr Mohammad Ali (Arabic) re-issued by the Public Book Authority, Cairo (2000).

14. Charles Issawi, “The Entrepreneur Class,” in Social Forces in the Middle East, ed. S. N. Fisher, Chapter 7, pp. 116–136, New York: Oxford University Press (1955).

15. Joseph Schumpeter, The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle, Cambridge, MA: Harvard University Press (1934).

170 Notes

16. Many Jewish families made their homes in Egypt for generations and con-tributed significantly to its business expansion and to improving general economic conditions for at least 100 years after the Pasha’s reign. However, middle- and lower-middle-class Jews were mostly self-employed shop own-ers, commercial agents, and brokers. They were clever craftsmen, especially in textiles, gold, and silver. Some worked as private creditors and small-scale financiers “Sarraff,” where they managed small loans. They enjoyed good reputations as merchants; cf. Gudrun Krämer, The Jews in Modern Egypt: 1914–1952, Seattle: University of Washington Press (1989), pp. 46–52.

17. Based on the first author’s 20 years’ experience as a World Bank staff (1978–1998).

18. The Suez Canal was Sa’id Pasha’s original pet project, for which he commis-sioned his friend the French engineer Ferdinand de Lesseps to start technical feasibility studies at the ruler’s own expense; cf. Editors of Horizon Magazine Building the Suez Canal, New York: Cassell Caravel Books (1967); and Bibliotheca Alexandrina (Library of Alexandria), The Manuscript Museum for authentication of the construction of the Suez Canal (1869) and its nationalization (1956).

19. John A. Marlowe, A History of Modern Egypt and Anglo-Egyptian Relations, 1800–1956, Hamden, CT: Archon Books (1965).

20. Tom Little, Modern Egypt, New York: Praeger (1958), pp. 86–88.21. Issawi, “The Entrepreneur Class.”22. Editors of Horizon Magazine, “Building the Suez Canal,” pp. 118–134; Ervan

G. Garrison, A History of Engineering and Technology: Artful Methods, vol. 15, 2nd ed., Boca Raton, FL.; London: CRC Press (1999), p. 1064.

23. Issawi, “The Entrepreneur Class,” pp. 95–96; G. Douin, Histoire du rèegne du khédive Ismail, Roma: Istituto Poligrafico dello Stato (1933), 2: pp. 436–438.

24. Edward Said, “The Imperial Spectacle,” Grand Street (Winter 1987): pp.82–104.

25. William L. Cleveland, A History of the Modern Middle East, Boulder, CO: Westview Press (2000), p. 67,

26. Douin, Une Mission militaire francaise, p. 440.27. David Landes, Wealth and Poverty of Nations, London: Norton (1998),

Chapters 13 and 14.28. Some of the urban public works and utility projects were established by

leading entrepreneurial families. For example, the Saures family established the Tanta Water Company and the Alexandria Saures Transport Company. Together with the Qattawi family, Saures established a railway company in the Nile Delta. With smaller investors, Qattawi led joint ventures to form transport companies to serve Upper Egypt and Cairo; see Krämer, Jews in Modern Egypt, pp. 39–41.

29. Much of the preparatory work was done for the fourth bank by the Saures family (the Real Estate Bank) but it opened for business in 1880, one year after the Khedive was removed. Saures and Silfago families teamed up with Sir Ernest Castle to establish the National Bank of Egypt in 1898; Jack Saures established the Egyptian Commercial Bank in 1905; and Saures and Rolo

Notes 171

families established the Saures Bank much later. See Anis Mustafa Kamel, “Al—Ra’smaliyya al-yahudiyya fi Misr” [Jewish Capitalism in Egypt], Al Ahram Al- Iqtisadi (March 23–May 4 1981): pp. 636–642.

30. Dar al Watha’ek al Masryia; The Official Website of Egypt’s Stock Exchange; see especially the History section. Egyptian National Library and Archives; Cairo: 1905; accessed December 2012.

31. Douin, Une Mission militaire francaise, p. 440.32. Marlowe, History of Modern Egypt, p. 88.33. The National Archives UK; description: Suez Canal Dues (with printed cor-

respondence, 1874–1875) Reference: FO a95/1112Subjects: Middle East, Canals and river transport, International, Europe and Russia. Date: 1876. Held by: The National Archives, Kew Legal status: Public Record. Foreign Office: Embassy and Consulates, Turkey (formerly Ottoman Empire): General Correspondence. Suez Canal Dues (with printed correspondence, 1874–1875). Collection: Records created and inherited by the Foreign Office. Date range: January 01, 1876 to December 31, 1876.

34. Douin, Une Mission militaire francaise, p. 442.35. Marlowe, History of Modern Egypt, p. 102.36. Abdelrahman El Rafei, Asr Ismail [Ismail’s Reign], 2nd ed., Cairo: El Nahda

El Masryia Press (1948).37. Those icons impart the unmistakable impression of being in a civilized part

of the world. They include the Cairo Opera House, the Cairo Museum of Antiquities, the Islamic Museum, Royal palaces in Cairo and Alexandria, predecessors’ statutes in public squares, Dar al Watha’ek (National Archives Depository), and Nile Promenades, among others.

38. Robert Tignor, State, Private Enterprise, and Economic Change in Egypt: 1918–52, Princeton, NJ: Princeton University Press (1984), p. 22.

39. Ibid., p. 28.40. In this regard, Issawi’s statement is telling: “Foreign domination, however

efficient, is no adequate substitute for self-government.” Charles Issawi, Egypt: An Economic and Social Analysis, New York: Oxford University Press (1947), p. 24.

41. Ibid., p. 25.42. In 30 years, the cultivated area increased by nearly 20 percent and the crop

area by 60 percent (converting farm land from basin to perennial irriga-tion). Most of this increase was taken up by expanded cotton and maize cultivation.

43. Calculated from Issawi, Egypt: An Economic and Social Analysis, Table I.44. Ibid., p. 24. Due to improved health conditions, the population expanded

from 6.8 M in 1882 to 12.7 M in 1917. Reform of land ownership increased the number of registered owners from 0.74 M in 1895 to 1.56 M in 1913.

45. Ibid., pp. 26–28.46. A. E. Crouchley, The Investment of Foreign Capital in Egyptian Companies

and Public Debt, Cairo: Government Printing Office (1936), p. 73.47. Dramatic figures: from L.E. 10.7 M in 1903 to L.E. 51.0 M in 1907, to L.E.

100.0 M in 1914, on the eve of WWI. The last figure was enormous by those days standards.

172 Notes

48. Issawi, Egypt: An Economic and Social Analysis, pp. 30–32.49. Ali El-Gritli, “Tatawwur al Nizam al Masrafi fi Misr” [Development of

the Banking System in Egypt], in Buhuth al Eid al Khamsini, 1909–1959, Cairo: al Jama’iya al Misriya lil Iqtisad al Siasi wal Ihsa wal Tashri (1960), pp. 197–302.

50. Tignor, State, Private Enterprise, and Economic Change, pp. 19–21. For the rest of the chapter points derived from Tignor will be referenced in the text.

51. Thus, Mohammad Farghali was the head of a cotton investment company that was founded in 1865 by his grandfather, a cotton merchant from Alexandria. Amin Yahya became in charge of a booming family business, also in Alexandria, that enjoyed the support of resident expatriate capital-ists. A few other regionally based entrepreneurs emerged as well, as they used landed wealth to establish small textile plants—Ali Islam and the Lawzis among them (Tignor: p. 72).

52. Robert Vitalis, When Capitalists Collide: Business Conflict and the End of Empire in Egypt, Berkeley: University of California Press (1955), pp. 42–46.

53. Mahmoud Hafez et al., Talaat Harb: al Iqtisadi al Awwal [The Leading Economist], Cairo: Dar al Hilal (1939).

54. Vatikiotis, The History of Egypt, pp. 242–247.55. In a remarkable piece, the poet A. Fouad Tera in a personal communication

contrasted the situation of ordinary Egyptians under the British and under the coup led by the military in 1952. A rough translation of the poem reads: “We got rid of the light-skinned British to fall under the yoke of the dark-skinned British,” indicating that in both periods it was occupation by force just the same.

56. For a history of subsidies in Egypt,cf. Arab Republic of Egypt: Poverty Assessment Update, Washington, DC: The World Bank (2007); Toshikazu Yamada, Sustainable Development and Poverty Reduction under Mubarak’s Program, Japan: Institute of Developing Economies (2008); Grant M. Scobie, Food Subsidies and the Government Budget in Egypt, Washington, DC: International Food Policy Research Institute (1985); Tammi Gutner, The Political Economy of Food Subsidies in Reform EgyptWashington, DC: International Food Policy Research Institute, (1999), pp. 15–18.

57. El-Gritli, “Tatawwur al Nizam al Masrafi fi Misr,” pp. 197–302.58. Personal interview by the second author with Farouk El-Okda, governor of

Central Bank of Egypt (Cairo, December 2012).59. Robert Mabro and Samir Radwan, The Industrialization of Egypt, 1939–

1973, Oxford: Clarendon Press (1976), pp. 69–74.60. B. Hansen, “The Distributive Shares in Egyptian Agriculture, 1897–1961,”

International Economic Review 9 (1968).61. The bank’s initial subscription was a modest L.E. 80,000 in 1920. However,

through Mr. Harb’s tireless efforts, the bank raised its capital in succes-sion to reach L.E. one million in 1926. Much of the data in this section were taken from Tignor, State, Private Enterprise, and Economic Change. Specific page references are stated in the text not in endnotes.

Notes 173

62. The bank created Misr Export Company in the mid-1930s. It collaborated with British companies to establish three joint ventures: Misr Air in 1931; Misr Insurance in 1934; and Misr Travel in 1935 (Tignor: 135). By the late 1930s, Bank Misr was on an expansionary wave that established five more industrial companies. Three of those were in the cotton business: Misr Fine Spinning and Weaving Co. (largest); Misr Dyeing Co. (Beida); and Misr Clothing Co. The other two were Misr Cement and Misr Mining (Tignor: 167). Again, all such enterprises proved good grounds to train and prepare ambitious young Egyptians to take on the challenging task of developing industry in all its modern complexity.

63. Robert Vitalis, “On the Theory and Practice of Compradors: The Role of Abbud Pasha in the Egyptian Political Economy,” International Journal of Middle East Studies 22, 1990: pp. 291–351.

64. Figures in those paragraphs are from Tignor, State, Private Enterprise, and Economic Change (1990).

65. R. Al Barrawi, Tatawwor al Iqtisadi fi Misr fil-Asr al Hadit [Egypt’s Economic Development in Modern Times], Cairo: Maktebit Al Nahda Al Masreyia (1954).

66. Wahib Messiha, Falsafat al Iqtisad [Philosophy of Economics], Cairo: Cairo University (1950).

67. The names of Henri Naus, Michel Salvago, Yusuf Cicurel, and Yusuf Alan Qattawi rarely appear in studies of modern Egypt, although their influence on events and on the business environment was enormous (Tignor: 244). In the face of rising Egyptian nationalism, their commitment to European values doomed them to being cast out of the country.

3 State Policies: The Military (1952–2014)

1. Anouar Abdel-Malek, Egypt: Military Society (translated from French), New York: Vintage Books Edition (1968).

2. Saad Eddin Ibrahim, “Mubarak the Pharaoh,” Wall Street Journal, July 14, 2004.

3. After Mubarak’s removal, the Supreme Council of Armed forces (SCAF) came up with emergency assistance of L.E.2 billion of its own funds as a loan to the State Treasury. That raised a lot of eyebrows, which opened up Pandora’s box of public questioning in local papers, see for example, Al Masry Al Youm daily.

4. Gamal Abdel Nasser, Falsafat al Thawra [Philosophy of the Revolution], Cairo: Wizarat al-I’alam, (1953).

5. The act put a limit of 200 acres on individual land holdings, with a maxi-mum of 300 acres per family. Thousands of landed families were affected by the act. The land excess over those limits was redistributed in 5-acre parcels to hundreds of thousands of landless farmers. The limit on land ownership was reduced in 1966 to 50 acres.

6. Central Agency for Public Mobilization and Statistics—CAPMAS (July 1966) al Mu’asherat al Ihsa’eia 1952–65(Statistical Indicators), Cairo.

174 Notes

7. Khalid Ikram, The Egyptian Economy: 1952–2000, London: Routledge (2006), p. 5.

8. A number of oil companies—mainly Italian and American—set up joint ventures with Egypt’s State Organization in exploration projects; Robert Mabro, The Egyptian Economy: 1952–72, Oxford: Clarendon Press (1974), p. 69.

9. Robert Mabro and Samir Radwan, The Industrialization of Egypt, 1939–1973, New York: Oxford University Press (1976).

10. Tewfik Al Hakim, Awdatel Rouh [The Return of Consciousness], Cairo: Al Ahram Press (1974).

11. The National Archives UK, Reference: CAB 21/4113. Description: Suez Canal: Private Office papers Note: Letters dated September 13, 21, and 24, 1956, withheld Date: 1956 Jul 27–1956 Oct Held by: The National Archives, Kew. Former references: in its original department: 9/132/2 Pt 1; Legal sta-tus: Public Record. Access conditions: Retained Until 2006 Record opening date: December 01, 2006. Accessed December 2012.

12. As announced in government controlled news dailies (subsequently national-ized), especially al Ahram during 1956–1959.

13. The High Council on Industrial Development, Cairo, 1957.14. The known author Mohamed Hassanein Heikal wrote a series of articles

in al Ahram during the late 1950s on “Expertise vs. Loyalty” that left no doubt about the new direction of business management under the military-controlled regime.

15. Ali A. Soliman, Rowwad al Sina’a [Industry Pioneers], ‘Cairo: Alam al Kotob Publisher (1991).

16. World Bank reports on Egypt during the 1960s and 1970s.17. Dieter Weiss and Urlich Wurtzel, The Economics and Politics of Transition

to an Open Market Economy: Egypt, OECD (1998), p. 21.18. As reported in government-owned papers during the 1960s; cf. al Ahram, al

Akhbar, al Jomhouriya.19. Based on CAPMAS (July 1972) Statistical Indicators for UAE 1952–65,

and 1966–1970 (Arabic), Cairo.20. Cf. Moody’s and Standard & Poor’s credit rating repots, 1962–1969.21. National Bank of Egypt, Economic Bulletin, 1971–1976.22. The emulated command model not only failed in the Soviet Union, but also

contributed to the collapse of the Soviet state itself; see Steve Crawshaw, Goodbye to the USSR: The Collapse of Soviet Power, London: Bloomsbury (1992).

23. As quoted in Ikram, Egyptian Economy, p. 53. Bent Hansen was a Danish economist who lived and worked in Egypt in the 1950s. His tough-minded analysis of Egypt’s economic policies made him one of the world’s authorities on the Egyptian economy until his death in the early 1980s.

24. In Sadat’s own words: “Let me tell you that our economy has fallen below zero. We have commitments (to banks and others), which we should but cannot meet by the end of the year [1973]. In three months’ time, we

Notes 175

shall not have enough bread in the pantry,”; quoted in Ikram, Egyptian Economy. p. 13.

25. John Waterbury, The Egypt of Nasser and Sadat: Political Economy of Two Regimes, Princeton, NJ: Princeton University Press (1983), pp. 133–145.

26. Khalid Ikram was a World Bank economist who worked on Egypt for years. He recorded his observations in two books: Egypt: Economic Management in a Period of Transition, Baltimore, MD: Johns Hopkins (1980); and the Egyptian Economy: 1952–2000: Performance, Policies, and Issues, London: Routledge (2006).

27. Naiem A. Sherbiny, “Expatriate Labor Flows to the Arab Oil Countries in the 1980s,” Middle East Journal (April 1984). See also Salwa A. Soliman, al Imala al Masryya al Aa’eda [Returning Egyptian Labor], Cairo: Dar al Nahda al Arabyya (1988), Chapter 8. Over the years, remittances from Egyptians working in the oil-rich countries provided Egypt with increasing flows of foreign exchange resources with multiple benefits: improving the purchasing power of ordinary Egyptians at home, expanding the pool of local entrepreneurs, and creating thousands of small enterprises or financing their expansion.

28. Waterbury, Egypt of Nasser and Sadat, pp. 133–145.29. During the years 1974–1980, the head of the Investment Authority changed

five times; ibid. (p. 144, f. n. 10).30. Naiem Sherbiny and Ibrahim Shihata, “The OPEC Aid Phenomenon in

Perspective,” OPEC Review (Winter 1985); “A Review of OPEC Aid Efforts,” Finance and Development (March 1986).

31. Waterbury, Egypt of Nasser and Sadat, p. 143, Table 7.1.32. Authors’ estimates: using IMF, International Financial Statistics (Yearbook);

several volumes.33. Ibid.34. The number of absolute poor rural households declined from 51 percent in

the early 1970s to 30 percent by the early 1980s; the infant mortality rate declined from 117 per thousand to 93; life expectancy at birth rose from 50 to 58 years; the average caloric intake per capita increased from 100 to 128 percent of the minimum standard requirements; and the primary school enrollment ratio improved from 72 to 78 percent (K. Korayem, Poverty and Income Distribution in Egypt, Cairo: Third World Forum [1994]).

35. After years of public sector dominance, some businessmen of the early years of Sadat’s open door policy misunderstood capitalism. They advocated the repeal of state intervention in any facet of economic activity, to the extent of denying the right of the state to impose taxes or make regulations to protect consumers or workers.

36. Gouda Abdelkhalek, Alsina’a wal Tasne’e fi Misr [Industry and Industrialization in Egypt], Cairo: Academic Press (2005).

37. The debt figures in this paragraph are based on Ikram, Egyptian Economy: Table 5.7, p. 149.

176 Notes

38. The National Bank of Egypt, Economic Bulletin, 1970–1982.39. Government of Egypt, Ministry of Investment, Annual Reports,

2004–2008.40. Government of Egypt, Investment Authority, Annual Reports, 1975–1980.41. “March 27, 1977, was a day that became notorious in the annals of the

open-door policy; Waterbury, Egypt of Nasser and Sadat, pp. 145–146.42. Soliman, Ali, pp. 213–223; Waterbury, Egypt of Nasser and Sadat, pp.

152–157.43. Bent Hansen, and Girgis A. Marzouk, Development and Economic Policy

in the UAR (Egypt), Amsterdam: North Holland (1965), Chapters 5 and 6.44. Waterbury, Egypt of Nasser and Sadat, p. 146.45. Although oil investment and production data are not readily available from

Egyptian sources, international organizations provide data on oil produc-tion, but not on investment, especially on a time-series basis. Data shows the strong growth of oil and natural gas output from which one surmises that international energy investments must have been increasing equally strongly; cf. Organization of Arab Petroleum Exporting Countries (OAPEC), Kuwait, Annual Report, several years.

46. Since Sadat’s visit to Jerusalem in 1977, his public speeches have frequently mentioned the “peace dividend” to refer to the economic benefits that would accrue to Egypt from establishment of peace with Israel; Library of Alexandria collection of President Sadat’s speeches.

47. Omaima M Hatem, “Privatization in Egypt,” chapter in MED 11- MEDPRO—Prospective Analysis for the Mediterranean Region, ed. Rick Woodward, Brussels: Centre for European Policy Studies (2011).

48. Collections of Arabic-language articles by Saad Eddin Ibrahim written dur-ing a 20-year period (1990–2009); all issued in collected forms by the Ibn Khaldun Center publications, Cairo.

49. USAID reports, reviewing the conditions of various sectors in the Egyptian economy.

50. By the time he was removed by a popular revolt in February 2011, Mubarak had been in power for 30 years, making him the third longest serving ruler in Egypt’s extended history, after Ramses II and Mohamed Ali.

51. Reports of the International Monetary Fund on the state of global economy since the 1980s.

52. In Egypt’s case, labor migration for employment in the oil-rich countries was a major source of foreign-exchange revenues in the form of remittances. Conceptually, we could refer to this source as labor exports.

53. Moody’s reports in the 1980s.54. Omaima Hatem, High Growth and Raid Internationalization of Firms from

Emerging Markets: The Case of the Middle East and North Africa (MENA) Region, Doctoral Thesis, University of Edinburgh (2012).

55. IMF: 2007 Report on article IV consultation.56. By 1996, occasional nonpublished reports by World Bank, and regular

reports and articles by Financial Times and the Economist have favor-ably reviewed state policies after the implementation of Egypt’s structural

Notes 177

adjustment program established with international organizations in 1991.

57. Starting in the mid-1980s, Egyptian economists and columnists began ques-tioning such investments in daily papers (Ahram) and in specialized weeklies (Ahram Iqtisadi). They were strongly skeptical of the demonstrated high-return claims of the profit-sharing schemes by Islamic finance companies. Public opinion became split between support and criticism of those compa-nies. Supporters saw the companies providing valuable services to benefi-ciaries and investors and were against any government intervention. Critics wanted to protect the public from the Ponzi schemes implied by the high returns and called for strong state controls and audits of the companies.

58. According to Ministry of investment annual reports, details of this issue are contained in an article by the second author in a volume sponsored by the European commission.

59. World Bank database.60. Authors’ calculations, using International Financial Statistics, Annual

report, several years.61. Numerous volumes were written by Egyptian and international econo-

mists on poverty in Egypt. For a review, see Korayem, Poverty and Income Distribution.

62. After years in jail following the collapse of Mubarak’s regime, the alleged family wealth has not surfaced.

63. In a remarkable novel, the famed Egyptian writer Naguib Mahfouz attempted to draw a balance sheet of the positives and negatives in Nasser’s policies. However, after exhaustive deliberations, the High Court in the symbolic drama could not reach a verdict; see Naguib Mahfouz, Amaam al ‘Arsh [Facing the Throne], Cairo: Maktabat Misr Publisher (1983).

4 From Hibernation to Globalization

1. For example in retail outlets, especially food and household goods, coop-erative store shelves were empty—echoes of Soviet and East European economies.

2. John Waterbury, The Egypt of Nasser and Sadat, Political Economy of Two Regimes, Princeton, NJ: Princeton University Press (1983).

3. Ibid. 4. The deep-seated resentment toward the rich may have fueled feelings in the

public demonstrations that toppled Mubarak in February 2011. 5. Khalid Ikram, The Egyptian Economy, 1952–2000, London: Routlege

(2006), Table 4.4, p. 101. 6. Omaima M. Hatem, Privatization in Egypt: Chapter in a publication titled

MED 11-MEDPRO—Prospective Analysis for the Mediterranean Region, ed. Rick Woodward, Brussels: Centre for European Policy Studies (2011), Table 1. The originally reported figures were in local currency, the Egyptian pound (L.E). Expressing them in USD introduces a built-in error, due to

178 Notes

changes in the dollar/pound exchange rate over time. The dollar figures in that paper should thus be construed as approximations.

7. Ibid. Table 3. 8. Central Bank of Egypt, Economic Review, several issues. 9. Oxford Business Group, Emerging Egypt (Annual) The only issue that

takes a cursory look at the nationality composition of FDI is that of 2002.10. Philip Moore Egypt: Privatization and Beyond, London: Euromoney

Publications (1997), p. 39.11. Capital Market Authority, Annual Reports.12. Egyptian Stock Exchange Reports and Capital Market Authority, Annual

Reports.13. Moore, Egypt: Privatization and Beyond, p. 40.14. Ibid., p. 47.15. December ‘95 to May ‘97, according to Moore, ibid., p. 47.16. Wharton Business School, Knowledge at Wharton, online business journal

(January 2011).17. This is no different from the conditions following the Great Pasha’s mili-

tary defeat in 1839 (chapter 2 section titled “The Great Pasha’s Forced Modernization”).

5 Quo Vadis Egypt?

1. P. J. Vatikiotis, The History of Egypt, 2nd ed., Baltimore, MD: Johns Hopkins Press (1980), Chapter 4.

2. Calculated from National Bank of Egypt, Economic Bulletin, Annual issues 1970–1985.

3. Parenthetically, however, the political consequences of the 1967 war are still unresolved in the second decade of the twenty-first century.

4. National Bank of Egypt, Economic Bulletin, quarterly. 5. Moody’s investment service follows up on sovereign and corporate debts,

makes occasional reviews as the need arises, and assesses the subject’s financial health (country or corporation). For Egypt, prior to 2011 (the year Mubarak was removed from office), Moody’s reviews were infrequent—once every year or two, due to general stability. Starting in 2011, those reviews became more frequent as political instability eroded Egypt’s credit standing in international financial markets. The following decline in rating shows the precipitous decline in Egypt’s standing, as follows: October 2011 (Ba3 rating), April 2012 (B2 rating), September 2012, January 2013, February 2013 (B3 rating), March 2013 (Caa1 rating), and July 2013. Throughout the three-year period of instability Moody maintained a negative outlook; cf. Moody’s reports.

6. Based on a field visit to Egypt from December 2012 to January 2013 during which the first author met with businessmen, media specialists, and political and economic observers. Local media had frequent coverage of the ill-effects of instability on the country’s economic and business environment;for exam-ple, al Borsa daily (the Exchange).

Notes 179

7. See President Sisi’s address commemorating the 42nd anniversary of the 1973 October War, Al Ahram: July 7, 2014.

8. Nasser died at age 52, at the prime of his life as a political leader; he was born in January 1918 and died in September 1970.

9. The emulated command model failed in the Soviet Union; eventually it con-tributed to collapse of the Soviet state itself; see Steve Crawshaw, Goodbye to the USSR: the Collapse of Soviet Power, London: Bloomsbury (1992).

10. As quoted in Ikram, The Egyptian Economy, 1952–2000, London: Routledge (2006), p. 53. Bent Hansen was a Danish economist who lived and worked in Egypt in the 1950s and 1960s. His tough-minded analysis of Egypt’s economic policies made him one of the world’s authorities on the Egyptian economy until his death in the early 1980s.

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Index

1967 warsee Six-Day War

Abbud, Ahmad, 61–2, 65, 67aggregate demand, 1, 4–6aggregate production function,

16–17see also Solow, Robert

agricultureBritish occupation and, 49, 51cooperatives, 72, 102economic growth and, 17entrepreneurship and, 122–3, 144infrastructure and, 27–8, 59–60,

65–7Khedive and, 42, 47, 49, 148Nasser and, 72, 76, 103, 149, 157nationalism and, 54, 57Pasha and, 36, 59, 63, 146, 151technology and, 21

Al Ezz Steel Company, 144Al Maghraby Group, 143–4Al Rajhi Banking and Investment

Corporation, 131Al Sweedy, Ahmed and Sadek, 143Al Sweedy Company, 143Alexandria shipyard, 38, 64Algeria, 109, 115allocation of public resources, 9–10,

55–6, 63Anglo-Egyptian Bank, 45, 52, 64antibusiness policies, 71, 75–6, 84,

98, 108, 141

Arab socialism, 71, 108see also state capitalism

Arab-Israeli War (1973)see October War

Asian Development Bank, 10Aswan Dam, 49, 51, 65, 67, 148Aswan High Dam, 74, 98, 102, 149,

157autarchic policies, 2authoritarian societies, 3

Bank Misr, 58, 60–2, 65, 67, 128, 131

Barclays Bank, 52barter agreements, 75Baumol, William, 16, 18–20belle époque, 106, 152Bhide, A., 13Bonaparte, Napoleon, 34–5, 37,

139boom/bust cycles, 5Bread Riots, 100, 160Bretton Woods, 41British occupation, 34, 49–57, 59,

64, 66–7, 72, 102, 147–8, 151–3, 157

Cairo Stock Exchange (CSE), 46, 65, 128–9

capital goods, 38, 73capitulation regime, 43, 50captains of industry, 57, 61, 84, 96,

107–8, 139, 154

190 Index

Central Bank, 126, 131central planning, 9, 11, 76, 84, 108,

110China, 11, 115, 127, 134–5China Development Bank (CDB),

127Chinese entrepreneurs, 11, 127civil society, 23, 26–7, 54–5, 58, 90,

98, 158–9, 163civil society organizations, 54Civil War (U.S.), 41, 46Cleopatra Group, 144Cobb-Douglas Production

Function, 6, 16constitution, drafting of new, 57constitutional monarchy, 55corporate-military empire, 70corruption, 8, 89, 95–7, 101, 116,

150, 154, 157, 162cotton, 12, 36, 41, 44, 46–7, 49–52,

55–6, 58–61, 64–7, 75, 87, 90, 109, 146–7, 152

Credit Lyonnais, 45, 64creditworthiness, 77, 99, 112Cromer, Lord, 50–1, 64crony capitalism, 101, 103

Decree 170 (2009), 125Decree 414 (2009), 125deficit financing, 5, 79, 89desert reclamation, 118developing economies, 7Development Decade, 7, 41diminishing returns, 24–5distortions, markets and, 8, 76, 82diversification, 14, 58, 89, 136,

141–3, 150

econometrics, 6Economic Organization, 75economics

nationalism, 106–7neutrality, 3–4recovery, 1–2, 4–5, 7, 41, 153,

163

efficiency in capital use, 82, 93–5Egyptian Chamber of Commerce,

55, 65Egyptian Commercial Bank, 65Egyptian Federation of Industries,

54, 73Egyptian-Sterling parity, 49El-Gritli, Ali, 36Emergency Laws, 87, 95“enemies of the people,” 74, 76, 99,

103Estanbouly, 109Ethiopia, 64exchange and trade regimes, 82exchange rate, overvaluation of, 8,

82external conflicts, 77–8, 99–100,

137

fellah (small subsistence farmers), 35, 40

fiscal policy, 4five-year plans, 9, 102flows of Arab aid, 80–1food subsidies

see subsidiesforced modernization, 34–40forced savings, 5foreign banks, 45, 53, 59–60, 65,

74, 83, 102, 148foreign direct investment (FDI),

125–7foreign exchange revenues, 78, 81,

86–7, 89–91, 101, 107, 154–5Franco-Prussian War, 46French Campaign, 34, 139, 169n13

see also Bonaparte, Napoleon

General Egyptian Agricultural Syndicate, 54

General Motors, 112, 115globalization, 24, 87, 91–2, 102–3,

105, 138, 150, 159gold standard, 57–9, 65Goldman Sachs, 134–5

Index 191

Great Depression, 1, 4, 5, 14, 33, 58, 65, 148, 162

Great Pashasee Pasha, Mohamed Ali

Gulf War (1990), 102“guns and butter,” 99, 162

Hansen, Bent, 78, 159, 174n23, 179n10

Harb, Talaat, 55, 60–1hibernation, business and, 29, 76,

99–100, 105, 107–10, 137–8High Dam project

see Aswan High Damhuman capital, 27, 40, 138, 145,

152, 163human development, 9–10, 161Human Development Index (HDI),

9human infrastructure, 27–9,

97–101, 138, 145, 150–4, 163

Ikram, Khalid, 77, 79, 81–3, 85, 89–91

Iltizam system, 35incentives framework, 15increasing returns, 24–5incubators, 26Industrial Revolution, 1, 34, 45inefficient monopolies, 8infant industries, 8, 59, 147–8Infitah, 86, 102, 111, 113,

146, 149see also open door policy

infitah sadah madah (anything goes), 82

international assistance, 6–7International Bank for

Reconstruction and Development

see World Bankinternational capital market, 46International Monetary Fund

(IMF), 6, 10, 41, 91, 116, 149, 155

Investment Authority, 80, 83–4, 125, 175n29

investment environment, 15, 48Iron Fist policy, 74, 87, 101, 105,

148–9Islamic investment companies, 92–3

Jewish businesses, 40, 44–5, 170n16job market, 4–5Joint Commission on Commerce

and Industry, 54joint venture projects, 52, 65, 73,

83–5, 88, 102, 115, 131–2, 144

Keynes, John M., 4–5, 11, 14–15Keynesian school, 4–5, 7Khedive Ismail

after removal, 152–3British and, 49–52, 64, 148compared to predecessors, 41–2cotton industry and, 44, 46economic setbacks under, 47–8foreign investment and, 45–6,

139French and, 46–7“guns and butter” and, 162infrastructure and, 152international business and, 3,

41–8, 147leadership, 43–4state policies under, 42–3, 140

King Fouad, 57

“laissez faire laissez passer,” 1, 3, 148, 162

land reform act, 72, 102large corporations, 21–2Latin American Development Bank,

10Law 3 (2005), 125Law 19 (2007), 126Law 43, 84Law 91 (2005), 125Law 94 (2005), 125Leibenstein, Harvey, 16, 19–21

192 Index

Liberal Age, 8, 34, 51, 53–4, 56–65, 73, 84, 108, 128

economic agenda, 58–60industrial development, 60–3overview, 56–7political agenda, 57–8

Libya, 74, 109, 115, 142Lokma, 109low efficiency in capital use, 82

Mabro, Robert, 30, 73macroeconomics

birth of, 4–5management of, 7, 155

Maghrabi, 109, 118Man-foods, 143Mansour Group, 112, 115, 143–4marhalat el sifr

see zero phasemarket mechanisms, 3, 72, 76Marshall Plan, 6McDonald’s, 143Metwalli, 109migration, employment and, 80,

119–20military

budget, 70, 77Command Council, 72–4, 106coup, 72, 74, 87

Ministry of Public Enterprise Sector (MOPES), 114

monetary policy, 4–5Mubarak, Hosni

challenging start, 88corruption of ruling class, 95–7economy and, 69, 156–7efficiency in capital use, 93–5expansionary policies, 149–50external debt squeeze, 90–1foreign exchange revenues, 89–90future and, 156–7globalization and growth, 91–2impact on poverty, 95instability after removal, 154,

158–9

Islamic investment companies and, 92–3

policies, 100–1political priorities, 88–9probusiness initiatives, 87–97,

102reform of public enterprises, 93removal from power, 146, 154Sadat and, 114, 138, 154, 156socialism and, 140tax and customs reforms, 92

multinational corporations (MNCs), 53, 112–14, 133–6, 152

multiplier effect, 4, 120, 161

Nasser, Gamal Abdelantibusiness policies, 75–6, 84brutal command, 71–8defeat, 145, 153–4early years, 72–3economy and, 48, 69, 81, 94,

98–100external conflicts, 77–8foreign exchange revenues and,

90future and, 157–60“guns and butter” and, 162industrial initiatives, 73–4iron fist, 74, 148–9, 156Khedive and, 48macro changes, 76–7Mubarak and, 89, 97Orascom and, 142public enterprises, 84reform under, 80, 85Sadat and, 110, 149state capitalism and, 74–5, 79,

146subsidies and, 160

National Bank of Egypt, 53, 65, 131national income accounts, 5–6,

14–15nationalism

British occupation and, 50, 54constitutional monarchy and, 55

Index 193

economic, 58–60, 106entrepreneurs and, 109–10industrial development and,

60–5, 73, 108Joint Commission on Commerce

and, 54liberal age and, 56–67, 148military and, 69, 73, 106, 108political, 57–8Wafd party and, 44WWI and, 54–5

nationalization, 29, 36, 71, 74–5, 81, 98–9, 102, 106–9, 111, 133–7, 140, 142, 148, 153, 157

natural monopolies, 1, 106, 162neoclassical theory, 3, 19, 148nonprofit organizations, 23

October War (1973), 78–80, 100, 102, 111, 153, 155, 179n7

oil, 52, 78, 80–2, 84–6, 90, 92, 99–100, 107, 109, 113, 115, 126, 149, 153

open door policy, 78, 81, 83–4, 86, 99, 102, 111, 114, 149, 175n35, 176n41

see also InfitahOrascom

Construction Industries, 142Hotel and Development (OHD),

141–2Telecommunications Holding

(OTH), 141Organisation for Economic

Co-operation and Development (OECD), 134

Osman, Osman A., 108–9Ottoman Bank, 45, 64Ottoman Empire, 40, 46–7, 55, 151

Paris Club, 91Pasha, Mohamed Ali

agricultural policy, 59, 161British and, 99, 145, 151–2economic policy, 139, 162

entrepreneurship and, 39–40expatriate privileges and, 57–8forced modernization, 34–40French and, 35–6innovation and, 38–9Ismail and, 41key chronological events of

dynasty, 64–5Khedive and, 46, 48liberal age and, 63military and, 69Nasser and, 148overview, 34policy priorities, 35–6reforms, 35–6sectoral policies, 36–7self-reliance, 146–7

peace dividend, 87, 100, 153, 176n46

peace treaty with Israel, 79, 86, 102, 149

planning, 7, 9, 11, 76, 84–5, 108, 110, 165n4

policy sequencing, 35policy signals, 29political priorities, 4post-WWII policies, 6–11

assistance to developing countries, 7

import substitution, 8reconstruction of war

devastation, 6–7socialist economies, 9–11

Privatization Law 203 (1991), 114production possibility frontiers

(PPFs), 18profit maximization, 18property of the state, 9

see also socialismprotectionism, 8protective tariffs, 8, 147

see also tariffspublic debt, 83, 124public sector authorities, 108, 1110purchasing power parity (PPP), 34

194 Index

quantitative analysis, 5–6

Radwan, Samir, 30, 73Real Estate Bank, 65reforms

agrarian, 35–6, 64British occupation and, 50, 148business, 70capital market, 127–33, 137customs, 92, 102economic, 66–7, 72, 91–2, 94,

110–11, 126, 146globalization and, 91land reform act, 72, 102liberalization and, 149, 156,

160–2managing, 85–6nationalism and, 56–7, 62, 65privatization and, 114, 116–18public enterprises, 93, 102Sadat and, 80, 85, 89, 91, 100sequencing, 39slow pace of, 80, 100structural, 2tariff, 57, 59, 65tax, 57, 59, 65, 67, 92, 102

religious estates, 35representative agency model, 112,

114risk assessment, 9Rivlin, Alice, 36

Sadat, Anwarassassination, 102, 117breaking log-jam of business,

79–80business environment under,

83–5challenges faced by, 99–100desert reclamation, 118Egypt’s structural weaknesses

and, 82–3entrepreneurship and, 113increased financial resources,

80–1

liberalization policy, 149, 156Mubarak and, 87–9, 91, 94, 149,

153national expenditures under, 86open door policy, 86–7reform under, 80, 85–6, 128relaxation of state policies,

78–87, 137–8socialism and, 140socioeconomic implications, 81–2zero phase, 99, 110, 152

Sa’id Pashasee Pasha, Mohamed Ali

Saudi Arabia, 109, 115, 121, 127, 131

Sawiris family, 109, 112, 120–1, 141–2

Schumpeter, Joseph A., 11, 13–16, 18, 20–1, 25, 40, 57, 61, 82

Sen, Amartya K., 17, 167n19Shalakany, 109Sinai, 78–9, 86, 99–100, 102–3,

111, 120, 137, 153, 157Sisi, Abdel Fattah el, 97, 156,

158–9, 161Six-Day War (1967), 76–7, 86, 102,

110, 146, 149, 153, 178n3Smith, Adam, 12, 25social entrepreneurship, 22–3, 26socialism

antibusiness policy, 76Arab socialism, 71, 108attempts to move away from, 137,

140economy and, 2, 9–11failure of, 110–11, 145–6, 162human infrastructure and, 28industrial initiatives and, 73Mubarak and, 88, 91, 100Nasser and, 76, 78, 90, 98, 146,

153, 157, 159–60post-WWII, 9–11reform and, 80, 88Sadat and, 80, 83, 99, 140, 149see also state capitalism

Index 195

socialist economies, 9–11Solow, Robert, 6, 16–17, 19

see also aggregate production function

sovereign functions, 3–4Soviet Union

antibusiness bias, 71, 75, 108barter agreements and, 75collapse, 2, 9, 11, 163, 179n9command model, 71, 108, 110,

174n22, 179n9economic collapse, 9–11Egypt and, 71, 110, 140

stabilization programs, 10, 91, 155

see also International Monetary Fund

state capitalism, 71, 74–5, 77, 79, 83, 98–9, 107–8, 137–8, 146, 149, 153

see also socialismsteady state, 5, 150Sterling Zone, 58–9structural adjustment programs, 10,

93, 116, 126, 128, 149structural transformation, 9, 40Suarez Bank, 65subsidies, 4, 8, 26, 58, 70, 77, 100,

110, 142–3, 160–2Suez Canal, 41–3, 46–7, 49, 52–3,

55, 64, 71, 74, 78, 81–2, 86, 89–90, 98–100, 111, 120

Suez War (1956), 74, 100, 102, 106–7, 136–7

sugarcane, 42, 44, 54, 64, 147Supreme Council of Armed Forces

(SCAF), 97, 173n3

tariffs, 8, 37, 57, 59, 92, 147tax reforms, 57, 59, 65, 67, 92technical progress, 17, 24

Tignor, Robert, 55, 58, 60, 62–3, 172n51, 173n62, 173n67

Tojjar (merchants), 39–40total factor productivity, 24

USSRsee Soviet Union

Vatikiotis, P. J., 57vulgar capitalism, 82, 100

Wafd party, 44, 57Wali (ruler), 40

see also Ottoman Empirewar

devastation from, 6–7, 28, 41economy and, 53–4mobilization, 1, 5see also World War I; World War

IIWar Department, 36Wharton Business School, 135World Bank, 6, 10, 41, 85, 91, 116,

122, 149, 166n11World Development Report, 10World War I, 21, 28, 51–7, 65, 73,

145, 148, 163, 171n47World War II, 1–2, 20, 28, 41,

58–9, 61–2, 65, 72, 145, 148, 160, 163

see also post-WWII economic policies

x-efficiency theory, 19–21see also Leibenstein, Harvey

Yassin, Sayyid, 61, 65Yom Kippur War

see October War

zero phase, 78, 99, 110, 149, 153