Business environmental constraints for Egyptian firms

This paper evaluates the main obstacles that Egyptian enterprises face to do business in their country and investigates to what extent the constraints affect firm performance. Firm’s performance is measured as Total Factor Productivity (TFP), which is obtained using Levinsohn and Petrin (2003) methodology. Our analysis evaluates the effects of the different business indicators obtained from the World Bank Enterprise Survey using firm level data from manufacturing firms on TFP. A number of control variables commonly used in the empirical literature are also included in the model. To check the robustness of our result alternative measures of firm performance are used, namely total sales and the average number of workers. The main results indicate that access and cost to finance, tax rates, regulatory policy uncertainty, the price of land and basic infrastructures, such as access to water and electricity, are among the most relevant factors. These findings have important policy implications, in particular for policy makers and will help them decide what sort of specific actions can be taken to reduce the main obstacles and consequently to pave the way for manufacturing Egyptian firms to become more competitive.