Education, Innovation and Labor: Obstacles to Egypt’s Competitiveness?

Using panel data regressions for twenty-five countries, including Egypt, for the period 2005-2011, the current study investigates how labor, education and innovation affect Egypt’s competitiveness and in turn affect real economic growth. Results indicate that labor, education and innovation affect greatly competitiveness and real GDP growth and that investing in those dimensions is key for greater economic growth. Further using Egypt’s specific time series for the period 1980-1999, results indicate the importance of raising both the efficiency and level of expenditure on education; highlight the necessity to raise the innovation capacity of the country and stress upon the importance of youth employment and its positive impact on real GDP growth. Assuming that Egypt is able to improve its education, innovation and labor indicators that underlie the global competitiveness score by five percent, this will in turn lead to greater real GDP growth, estimated at 9.9 percent. The results emphasize the need to improve the quality and efficiency of the educational system; to invest heavily in the creation of employment, especially for the youth, and to invest in improving innovation capacity towards higher output growth and welfare.