Stabilization and Adjustment in Egypt

Reform or De-Industrialization

Gouda Abdel-Khalek, Professor of Economics, Faculty of Economics and Political Science, Cairo University, Egypt

This book studies the impact of Egypt’s Economic Reform and Structural Adjustment Programme (ERSAP), the effects of which have been of great interest to the international community. Organizations such as the World Bank and the IMF uphold the programme as a success story and example for other countries to follow. ERSAP also has its critics, however, who resent its tendency to downsize government and fear possible negative effects on growth and development. The author discusses these concerns along with those regarding the possible negative social effects of ERSAP.

‘Professor Abdel-Khalek, an Egyptian economist with numerous high-quality publications to his credit, gives another example of fine scholarship with this volume . . . the book . . . deserves high marks. The author has done an excellent job pointing out the shortcomings of using monetary policies alone to achieve multiple targets . . . Abdel-Khalek’s work should set the standard for current research.’
– Khairy Tourk, The Journal of Energy and Development

‘This book will be of interest to a large variety of readers interested in economic policy, not only in Egypt but in many other developing countries as well . . . The author has done a good service in opening up questions regarding much of the policy package and the importance of tailoring more carefully to specific country circumstances. His reservations about the exchange rate, monetary policy, capital market liberalization, and trade liberalization merit consideration by all policy makers engaged in this work.’
– F. Desmond McCarthy, Journal of Economic Literature

‘Well written and informative, the book is highly recommended to readers interested in the Egyptian economy or the IMF’s and WB’s structural reform programs. Upper-division undergraduate through professional collections.’
– D.D. Miller, Choice

‘Professor Abdel-Khalek has produced a damning critique of the effects of the IMF structural adjustment programme in Egypt based on a detailed appraisal of the experience of the 1990s. He demonstrates how the macroeconomic reforms resulted in an overvalued real exchange rate, leading to a consumption binge by the better off, rapidly rising imports and a deteriorating trade balance. At the same time high domestic interest rates penalised local industries, yet domestic savings actually fell rather than rose as might have been expected. The evidence from Professor Abdel-Khalek’s painstaking investigation of the effects on Egypt’s aluminium and steel industries revealed that much more damage was done to the latter, but that even for aluminium there was no significant benefit. Parallels are drawn between the experience of Egypt and that of Mexico and some East Asian countries. It is clear that structural adjustment programmes can actually weaken economic fundamentals and result in at best sluggish and volatile growth. This study is an important contribution to the literature that illustrates how the Washington consensus on structural adjustment is misguided. It deserves to be read by those with an interest in the political economy of the Middle East, as well as by all those concerned with development issues more widely.’
– Rodney Wilson, University of Durham, UK

‘I find it [an] authentic and unorthodox study about economic reform and structural adjustment programs (ERSAP). It presents an alternative way to reform different than that of the IMF. The analysis of the effects of ERSAP on industrialization in Egypt is original and profound. The book contains a wealth of data about the Egyptian economy and industry with clear and lucid analysis.’
– Mohamed Abdel Wahab, Egypt’s Former Minister of Industry