The Changing Economic Environment and the Development of the Micro and Small Enterprises in Egypt 2006

This paper used the Egyptian Labor Market Panel data 2006 to compare the changes that took place in the labor market, and particularly the MSEs market, over time (1998 and 2006) in order to answer several questions. The most important of which are: How do the continuous economic changes affect the role of the private sector and distribution of workers among the different sizes of the enterprises? And, are the MSEs still the major job providers or are the medium and large sized companies starting to offer a growing percentage of work opportunities to the labor force? The comparisons revealed the following: The steady pace of the privatization process, in the wider sense of the word, revealed that the estimated numbers of MSEs increased by 4.7% annually from 2.5 million Economic Units (EUs) to 3.5 million EUs in 2006, which is a far higher growth rate compared to that of the period 1988-1998, which was 1.6% annually. The market was vibrant. In fact, movement is happening in the MSEs, huge numbers are leaving the market everyday, and more are entering it daily. New economic units are replacing marginal, inefficient MSEs all the time. The size of the MSEs in 2006 tends to be extremely micro in terms of number of workers and capital. Certain economic activities are disappearing, while new, modern activities are born. The female’s share among the self-employed and employers community in Egypt dropped by 1.2 percentage points during the period in question from 19.1% in 1998 to 17.9% in 2006. This result concurs with other studies, which indicate a slow decline in the percentage of femaleowned enterprises in Egypt. As for the role of trade liberalization in opening up new export markets in front of MSEs, data showed that export markets were of extremely minor importance within the array of clients they dealt with.