Strengthening national competitiveness: The evolution of economic clusters in Egypt

Purpose: This paper examines the evolution of clusters and economic zone policies in Egypt and assesses their role in improving national competitiveness. Further, it provides insights to developing countries like Egypt on how to strengthen their national competitiveness by effectively leveraging clusters and economic agglomeration policies, such as economic zones. Methodology: The paper critically analyzes existing literature on modern cluster policies and economic zones, illustrating the evolution of economic cluster policies in Egypt. It also evaluates the contribution and impact of economic zones on improving national competitiveness. Findings: Despite recent policy reforms in implementing an economic cluster-based strategy, particularly economic zones, several constraints prevent these economic zones from fully reaching their potential to attract foreign investment and address the national trade deficit in Egypt. While these economic zones increased exports, they didn't sufficiently reduce the national trade deficit. Moreover, the Egyptian Government faces an increasing challenge in maintaining Egypt's position as a leading investment destination in North Africa and the wider region, mainly in front of the face of the increased competition from other emerging economies. Implications: Egypt's recent attempts to implement an economic cluster-based strategy for enhancing national competitiveness highlight the need for closer alignment between the country's economic national strategies, including Egypt's Vision 2030, National Investment Plan, Trade and Industry Development Strategy 2016-2020, and National SME and Export Development Strategies, with the objectives of the economic zone. Originality: This study contributes to understanding how to strengthen national competitiveness in developing countries by examining the evolution of clusters and economic zones in Egypt. It provides valuable insights for academic researchers and policymakers seeking to enhance national competitiveness through strategic economic policies. Limitations and directions for future research: Further research on the impact of economic clusters on leveraging national competitiveness in Egypt could significantly improve related policymaking. Comparative analyses of other countries' experiences could also provide valuable lessons for policy formulation.