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Economic reform, privatization and tourism in Egypt

1998; Taylor & Francis; Volume: 34; Issue: 2 Linguagem: Inglês

10.1080/00263209808701224

1743-7881

Matthew Gray,

Global socioeconomic and cultural dynamics

Since the promulgation of al-infitah ('economic opening') by Anwar Sadat in 1974, Egypt has gradually moved away from the state-led development (SLD) economic orthodoxy of the Nasser period, replacing SLD and import substitution policies with a strategy based on the retreat of the state from economic management and an expansion of the role of the private sector. Since reaching a standby agreement with the International Monetary Fund (IMF) in May 1991, in particular, the Egyptian government has accelerated the pace of economic liberalization, and introduced a broad and ambitious programme to privatize state-owned enterprises across a range of economic industries. To the supporters of privatization and economic reform, the sale of public assets offers the opportunity for greater productivity, lower public debt, and increased competition and consumer choice. More ardent supporters argue that without substantial reform, Egypt will soon be unable to satisfy even its most basic needs, such as food, infrastructure and education. To its detractors, economic liberalization is, at best, unable to deliver many of the promises it makes and, at worst, will lead Egypt further into poverty and dependency on external powers for survival. The truth probably lies somewhere in between. Given the enormous economic and social challenges facing Egypt, it is difficult to argue that no economic reform is necessary, but on the other hand the arguments in favour of economic liberalization and privatization are often simplistic and overoptimistic. The benefits, and the costs, inherent in privatization and economic liberalization are especially evident in the case of the tourism sector in Egypt. In comparison with other economic sectors, tourism has traditionally had strong private sector involvement, beginning with the Thomas Cook company in the 1860s, and in the republican era (post-1952) with the establishment of the Nile Hilton hotel in Cairo in 1958. The land and assets of the Nile Hilton remained publicly owned, but the management of the hotel was left in private sector hands. More recently, however, private sector involvement and investment in tourism have expanded rapidly, so that by 1993 all investment in the tourism sector, apart from a small amount of