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Did Muhammad Ali Foster Industrialization in Early 19th Century Egypt?

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  • Panza, Laura
  • Williamson, Jeffrey G

Abstract

Muhammad Ali, who ruled Egypt between 1805 and 1849, intervened in Egyptian markets in an attempt to foster industrialization, especially between 1812 and 1840. Like a modern marketing board, the state purchased agricultural commodities (cotton, wheat) at low prices and sold them on world markets at much higher prices, a policy equivalent to an export tax. Ali also replaced tax farming with his own land taxes. The revenues so derived were used in part to finance manufacturing investment and to build irrigation canals. In addition, Ali supplied flax and cotton at those cheap purchase prices to domestic textile manufacturing, thus subsidizing the industry. He also used non-tariff barriers to exclude foreign competition from domestic markets. Were Ali’s state-led policies successful in fostering industry? The answer is no easier to extract from this phase of Egyptian history than from other poor countries at that time since Egypt faced the same terms of trade boom typical of most poor commodity exporters – Egyptian export commodity prices soared relative to manufactured imports, forces that were causing de-industrialization everywhere else in the poor periphery. Ali picked a very difficult time to pursue his agenda, but we show that his policies were successful.

Suggested Citation

  • Panza, Laura & Williamson, Jeffrey G, 2013. "Did Muhammad Ali Foster Industrialization in Early 19th Century Egypt?," CEPR Discussion Papers 9363, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9363
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    References listed on IDEAS

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    1. Panza, Laura, 2013. "Globalization and the Near East: A Study of Cotton Market Integration in Egypt and Western Anatolia," The Journal of Economic History, Cambridge University Press, vol. 73(03), pages 847-872, September.
    2. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273.
    3. González, Rafael Dobado & Galvarriato, Aurora Gómez & Williamson, Jeffrey G., 2008. "Mexican Exceptionalism: Globalization and De-Industrialization, 1750–1877," The Journal of Economic History, Cambridge University Press, vol. 68(03), pages 758-811, September.
    4. David G. Surdam, 1998. "King Cotton: Monarch or Pretender? The State of the Market for Raw Cotton on the Eve of the American Civil War," Economic History Review, Economic History Society, vol. 51(1), pages 113-132, February.
    5. Clingingsmith, David & Williamson, Jeffrey G., 2008. "Deindustrialization in 18th and 19th century India: Mughal decline, climate shocks and British industrial ascent," Explorations in Economic History, Elsevier, vol. 45(3), pages 209-234, July.
    6. Williamson, Jeffrey G., 2011. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262015158, January.
    7. Jeffrey G. Williamson, 2011. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262015153, January.
    8. Wright, Gavin, 1974. "Cotton Competition and the Post-Bellum Recovery of the American South," The Journal of Economic History, Cambridge University Press, vol. 34(03), pages 610-635, September.
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    Cited by:

    1. Allen, Robert C., 2014. "American Exceptionalism as a Problem in Global History," The Journal of Economic History, Cambridge University Press, vol. 74(02), pages 309-350, June.
    2. Ewout Frankema & Jeffrey Williamson & Pieter Woltjer, 2015. "An Economic Rationale for the African Scramble: The Commercial Transition and the Commodity Price Boom of 1845-1885," NBER Working Papers 21213, National Bureau of Economic Research, Inc.
    3. Laura Panza, 2014. "De-industrialization and re-industrialization in the Middle East: reflections on the cotton industry in Egypt and in the Izmir region," Economic History Review, Economic History Society, vol. 67(1), pages 146-169, February.

    More about this item

    Keywords

    19th century; de-industrialization; Egypt; industrial policy; trade;

    JEL classification:

    • F1 - International Economics - - Trade
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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