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Egypt Mubarak's Gradualism?
Whereas Nasser followed a statist approach to economics and
Sadat, at least in theory, tried to break away from that model
through infitah, analysts found it harder to label Mubarak's
policy. It has variously been called "gradualism," "reform by
stealth," and even "indecisiveness." The president himself seemed
to indicate his commitment to privatization and at the same time to
the public sector, which he once described as the only cushion for
the poor. Analysts attributed this state of affairs to such reasons
as the personality of the president, vested public and private
interests, fragmentation of the elite, the government's longstanding commitment to providing a safety net for the broad mass of
the population that was its main source of legitimacy, the
questionable success of the infitah, and the sheer weight of
the bureaucracy.
Available information seemed to indicate perceptible, albeit
slow, changes in the relative weights of the state and private
sectors in the economy that favored the latter. For example,
between FY 1983 and FY 1986 the ratio of public investment to gross
investment dropped from 83 percent to 70 percent. The FY 1987-91
Five-Year Plan envisioned private sector investment to rise to 37
percent of all investment compared with 24 percent in the previous
plan. In September 1982, Mubarak introduced a new investment law
that offered Egyptian investors most of the privileges foreign
investors had enjoyed. The draft of another new investment law was
being debated in early 1989 in the People's Assembly (Majlis ash
Shaab, formerly the National Assembly), but as of early 1990 no
action had been taken
(see Direct Foreign Investment
, this ch.).
This latest proposal aimed at combining and amending all the
investment laws passed in the preceding fifteen years to provide
more incentives for the private sector.
Private-sector investment was largely confined to the service
areas and agriculture, where land was privately owned, although the
state retained considerable influence through a web of price and
other controls. At the end of the FY 1982-86 Five-Year Plan, 57
percent of private investment was in housing and about 11 percent
in agriculture. The private sector made some inroads into the
tourist industry after the mid-1980s, when privatization was
actively encouraged by the minister of tourism. As of 1990, private
investment had not yet become a major player in the commodityproducing sectors, apart from agriculture. Foreign direct
investment was not forthcoming, and what little there was went
mainly into the oil industry.
The government's control of the economy was reinforced by
various financial and administrative mechanisms. Prominent among
these were price controls, setting the exchange rate of the
Egyptian pound, collection of public revenues and allocation of
expenditures, and development planning. Since 1987, reforms
loosened the government's control over these areas.
Data as of December 1990
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