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Egypt—Searching for Binding Constraints on Growth

  • Klaus-Stefan Enders
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    Since 2004 Egypt's growth has been accelerating in step with the launching of a series of ambitious reforms, reversing a trend during the preceding half-decade when Egypt's growth rate fell below that of most regional peers and well below that of the average developing country. This paper seeks to identify factors that held back Egypt's growth in the recent past, and explores whether recent reforms have removed the most binding constraints to allow at least a temporary growth spurt. Overall, the Egyptian reforms launched in 2004 appear to have focused well on the most critical constraints-reducing red tape and tax rates, and improving access to foreign exchange-thereby getting a strong growth response out of a limited set of reforms. However, inefficient bureaucracy remains an important obstacle to higher growth and reforms in this area should continue to have high payoffs. Ongoing reforms are also addressing constraints that are likely to become binding soon (or have become so already), such as inefficient financial intermediation and high public debt. Improvements in education may rapidly become a critical factor for sustaining higher growth.

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    Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/57.

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    Length: 34
    Date of creation: 01 Mar 2007
    Date of revision:
    Handle: RePEc:imf:imfwpa:07/57
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    1. Hausmann, Ricardo & Hwang, Jason & Rodrik, Dani, 2006. "What You Export Matters," CEPR Discussion Papers 5444, C.E.P.R. Discussion Papers.
    2. repec:rus:hseeco:123922 is not listed on IDEAS
    3. David Hauner, 2006. "Fiscal Policy and Financial Development," IMF Working Papers 06/26, International Monetary Fund.
    4. Arvind Subramanian, 1997. "The Egyptian Stabilization Experience: An Analytical Retrospective," IMF Working Papers 97/105, International Monetary Fund.
    5. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
    6. Ricardo Hausmann & Lant Pritchett & Dani Rodrik, 2005. "Growth Accelerations," Journal of Economic Growth, Springer, vol. 10(4), pages 303-329, December.
    7. Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003. "Debt intolerance," MPRA Paper 13932, University Library of Munich, Germany.
    8. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
    9. Indermit S. Gill & Todd Pugatch, 2005. "At the Frontlines of Development : Reflections from the World Bank," World Bank Publications, The World Bank, number 7357.
    10. Anton Dobronogov & Farrukh Iqbal, 2004. "Economic Growth in Egypt: Constraints and Determinants," Working Papers 0420, Economic Research Forum, revised Oct 2004.
    11. Ministry of Planning of the Arab Repubic of Egypt & World Bank, 2004. "A Poverty Reduction Strategy for Egypt," World Bank Other Operational Studies 15713, The World Bank.
    12. Jeromin Zettelmeyer, 2006. "Growth and Reforms in Latin America: A Survey of Facts and Arguments," IMF Working Papers 06/210, International Monetary Fund.
    13. Susan Creane & Rishi Goyal & A. Mushfiq Mobarak & Randa Sab, 2006. "Measuring Financial Development in the Middle East and North Africa: A New Database," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 7.
    14. Rodolphe Blavy, 2006. "Public Debt and Productivity: The Difficult Quest for Growth in Jamaica," IMF Working Papers 06/235, International Monetary Fund.
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