Egypt's Growth Performance Under Economic Liberalism: A Reassessment with New GDP Estimates, 1885-1945

Following a period of rapid growth in the late 19th century, Egyptian real per capita income stagnated in the first half of the 20th century. This widely accepted belief is based on trends in agricultural productivity but a fragmented body of evidence on aggregate output. In particular, no estimates of national income exist for any extended period prior to WWII. Using a money- based cointegration approach and a new measure of broad money, we exploit Egypt's intimate economic links with the UK to provide the first continuous estimates of GDP for the period 1885-1945. Our estimates are consistent with trends in agriculture and other stylized facts about the Egyptian economy in the late 19th and first half of the 20th century. The empirical results provide support and some qualification to the conventional wisdom about Egypt's growth performance in addition to offering a detailed characterization of output cycles.