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Growing Without Changing: a Tale of Egypt's Weak Productivity Growth

Author

Listed:
  • Hanan Morsy

    (European Bank for Reconstruction and Development)

  • Antoine Levy
  • Clara Sanchez

Abstract

This paper aims to identify the reasons why economic growth in Egypt, although comparable to its peers, failed to significantly reduce unemployment, lower poverty levels or raise overall productivity. We use cross-country comparisons, counterfactual scenarios and regression analysis to demonstrate that Egypt, even during the high growth period of 2000-2010, did not experience a reallocation of excess labor towards modern, productive sectors similar to that which occurred in other emerging markets, notably in South East Asia. The results show that, while there is large potential for productivity gains in the Egyptian economy, a limited openness to trade, a low diversification of exports and deficient access to finance prevented the country from witnessing structural shift of its labor force towards manufacturing and private services, locking Egypt instead within a “low value trap.” The paper then suggests some policy implications of these findings, relating to overcoming the main impediments to preventing an efficient sectoral reallocation of workers.

Suggested Citation

  • Hanan Morsy & Antoine Levy & Clara Sanchez, 2015. "Growing Without Changing: a Tale of Egypt's Weak Productivity Growth," Working Papers 940, Economic Research Forum, revised Sep 2015.
  • Handle: RePEc:erg:wpaper:940
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    Cited by:

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    2. Mahé, Clothilde, 2016. "Skills and entrepreneurship: Are return migrants 'Jacks-of-all-trades'?," MERIT Working Papers 2016-071, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Judit Ricz, 2017. "New developmentalist experiments in Brazil and Egypt - a comparative study," IWE Working Papers 227, Institute for World Economics - Centre for Economic and Regional Studies- Hungarian Academy of Sciences.
    4. Morsy, Hanan & Shimeles, Abebe & Nabassaga, Tiguene, 2021. "Structural Change and Inequality in Africa," IZA Discussion Papers 14878, Institute of Labor Economics (IZA).
    5. Mahe, Clotilde, 2017. "Occupational choice of return migrants: Is there a 'Jack-of-all-trades' effect?," MERIT Working Papers 2017-039, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Rim Ben Ayed Mouelhi & Monia Ghazali, 2021. "Structural transformation in Egypt, Morocco and Tunisia: Patterns, drivers and constraints," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(1), pages 35-61, January.
    7. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2020. "Public-private sector wage gap by gender in Egypt: Evidence from quantile regression on panel data, 1998–2018," World Development, Elsevier, vol. 135(C).
    8. Mahe, Clotilde, 2017. "Husbands' return migration and wives' occupational choices," MERIT Working Papers 2017-031, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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