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Economic growth in Egypt has been held back by a severely limited amount of arable land (less than 5% of the total area) as well as a large and rapidly growing population. After 1945, a large proportion of funds and energy were devoted to preparing the country for warfare with Israel and later to rebuilding after the destruction incurred in the Arab-Israeli Wars. The country's industrial base increased considerably in the 20th cent., especially after 1952. The state owns much of the economy and plays a decisive role in its planning; however, in recent years Egypt has moved toward a more decentralized, market-oriented economy, and there has been an increase in foreign investment.
The country's farmland is intensively cultivated (usually two, and sometimes three, crops are produced annually) and yields-per-acre are extremely high. Control of the Nile waters by the Aswan High Dam brought considerable additional land into cultivation, but the needs of the growing population have prevented the accumulation of significant agricultural surpluses. Most farms in Egypt are small and labor-intensive. Nonetheless, about 40% of Egypt's workers are employed in farming. The principal crop is cotton; rice, corn, wheat, beans, tomatoes, sugarcane, citrus fruit, and dates are also produced. Cattle, sheep, water buffalo, donkeys, and goats are raised, and there is a fishing industry.
Petroleum and natural gas (found mainly in the Gulf of Suez) are produced; the principal minerals are phosphates, salt, iron ore, manganese, limestone, gypsum, and gold. Cairo and Alexandria are the main industrial centers; major manufacturing plants are also located in the other cities of the Nile valley and delta and at Port Said and Suez. The leading manufactures are refined petroleum, chemicals, fertilizers, textiles, clothing, processed foods, construction materials (especially cement), iron and steel, and metal products.
Leading imports include machinery and equipment, foodstuffs, durable consumer goods, capital goods, fertilizers, and wood products. The principal exports are crude and refined petroleum, cotton, textiles, metal products, and chemicals. The chief trade partners are the European Union nations, the United States, and Japan. Considerable foreign exchange is also derived from a tourist industry that has waxed and waned with the nation's various political and military crises. The Suez Canal, another important source of foreign exchange, was closed during the 1967 Arab-Israeli War and not reopened until 1975. The canal has since been deepened and widened, and navigation transit fees are a source of revenue. The country's rail and road networks are largely found along the Mediterranean coast and in the Nile valley.
Since the 1970s billions of dollars in economic aid have poured into Egypt from the United States, Arab neighbors, and European nations. However, the country's inefficient state-run industries, its bloated public sector, and its large investments in warfare resulted in inflation, unemployment, a severe trade deficit, and heavy public debt. A series of economic and fiscal reforms undertaken in the 1990s, with support from the International Monetary Fund, appear to be having a positive effect on the country's overall economy, and the quality of life and many of Egypt's services have shown improvement.
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