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Egypt beyond the crisis : medium-term challenges for sustained growth

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Listed:
  • Herrera, Santiago
  • Youssef, Hoda
  • Youssef, Hoda
  • Zaki, Chahir

Abstract

The paper analyzes the impact of the recent global crisis in the context of the previous two decades'growth and capital flows. Growth decomposition exercises show that Egyptian growth is driven mostly by capital accumulation. To estimate the share of labor in national income, the analysis adjusts the national accounts statistics to include the compensation of self-employed and non-paid family workers. Still, the share of labor, about 30 percent, is significantly lower than previously estimated. The authors estimate the output costs of the current crisis by comparing the output trajectory that would have prevailed without the crisis with the observed and revised gross domestic product projections for the medium term. The fall in private investment was the main driver of the output cost. Even if private investment recovers its pre-crisis levels, there is a permanent loss in gross domestic product per capita of about 2 percent with respect to the scenario without the crisis. The paper shows how the shock to investment is magnified due to the capital-intensive nature of the Egyptian economy: if the economy had the traditionally-used share of labor in income (40 percent), the output loss would have been reduced by half.

Suggested Citation

  • Herrera, Santiago & Youssef, Hoda & Youssef, Hoda & Zaki, Chahir, 2010. "Egypt beyond the crisis : medium-term challenges for sustained growth," Policy Research Working Paper Series 5451, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5451
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Constantino Hevia & Norman Loayza, 2012. "Saving And Growth In Egypt," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-23.
    2. Peeters, Marga, 2011. "Demographic pressure, excess labour supply and public-private sector employment in Egypt - Modelling labour supply to analyse the response of unemployment, public finances and welfare," MPRA Paper 31101, University Library of Munich, Germany.
    3. Marga Peeters, 2011. "Modelling unemployment in the presence of excess labour supply," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(2), pages 58-92.
    4. 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.
    5. Haq, Tariq. & Zaki, Chahir., 2015. "Macroeconomic policy for employment creation in Egypt : past experience and future prospects," ILO Working Papers 994894173402676, International Labour Organization.

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    Keywords

    Economic Theory&Research; Debt Markets; Access to Finance; Emerging Markets; Banks&Banking Reform;

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