The Dilemma of “Weak Country” and Egypt’s Reindustrialization Prospects

  As the most populous country in the Arab world, Egypt has many conditions suitable for the development of an industrialized economy, such as abundant energy resources, diversified income sources, good agricultural infrastructure, huge domestic market, superior geographical environment and strong demographic dividend. But to this day, the United Nations Industrial Development Organization still classifies Egypt as “other economies that are industrializing.” Why has Egypt not been able to fully realize its industrialization transformation despite having so many advantages?
  As a developing country, if you want to surpass developed countries economically, it must be guided by strong industrial policies to promote the development of social innovation and achieve economic development by leaps and bounds. However, only a country with strong national capabilities and national autonomy can effectively formulate and implement industrial policies and strategic trade policies to better develop the modern economy. This article believes that the slow process of industrialization in Egypt is precisely because of the lack of national capacity building and lack of national autonomy, which restrict the formulation and implementation of industrial policies. First, from the perspective of national capacity building, although Nasser initially established a bureaucratic system with strong penetration capabilities, when they tried to adjust social relations or use specific methods to allocate resources, they encountered insurmountable obstacles to social forces. Fragmented social control hinders the use of state capabilities between the state and society. Second, after entering the democratization process, the Egyptian government gradually lost its ability to independently formulate industrial policies, and was widely interfered by commercial interest groups. After the “Arab Spring” and the short-lived Muslim Brotherhood in power, Egypt’s Sisi government learned from its painful experience and used the military as a medium to solve the problem of national capacity building, and to shape a depoliticized environment to reformulate industrial policies. The model it explored The historical opportunities encountered are different from the previous stages. This article will start from summarizing the historical lessons of Egypt’s industrialization failure and discuss the possible reindustrialization path of Egypt.

  Construction of national capacity and failure halfway industrialization
  era of colonial Egypt belong to the world of “marginal” areas, providing raw materials and products for the consumer market for the industrial countries at the core of the international trading system. From the end of World War II to the mid-1950s, Egypt’s industrialization process was dominated by private enterprises. After completing the initial accumulation of capital by exporting cotton, Egypt entered the initial stage of import substitution industrialization. The economic system at that time was mainly controlled by Egyptian national capitalists and some foreign capital, and the government implemented relatively protectionist trade and investment policies. [1] However, in the absence of strong government intervention and guidance, Egyptian private companies only focus on short-term profits, and their investment is concentrated on the production of consumer goods with lower investment and technical requirements. It was not until Nasser came to power in 1954 that the Egyptian government began to invest directly in industry on a large scale, which continued until the mid-1960s.
  On July 23, 1952, a group of middle-level officers in the Egyptian army who claimed to be “liberal officers” organized a military coup and overthrew the Muhammad Ali dynasty that had ruled Egypt since 1805. The leader of the “Free Officers” movement, Jamal Abdul Nasser, declared in February 1953 that “the establishment of a new government is only a trivial matter compared with the broad goals of our revolution. The goal here is to change the political system.” [2] In order to change the political system of Egypt, the “liberal officers” set six goals for the revolution, namely, eliminating all aspects of imperialism, eradicating feudalism, abolishing capitalist monopoly and control over the government, and developing a powerful national army , Institutionalize social justice and establish a reasonable democratic society. From the deposing of the king in 1952 to the dissolution of parliament and political parties in 1953, officers gradually eliminated the remnants of the old regime. [3] But the question Nasser faced was how to complete this change movement without other core support forces other than the army. Thus, he began the construction of state institutions and complex party organizations.
  On January 23, 1953, the “Liberation Officers” established the Liberation Rally, which was their first attempt to use political organization to win popular support and institutionalize a new political order. The Liberation Conference is an organizational tool for the authorities to carry out political mobilization. It aims to mobilize the people to participate in national construction and realize national unity. It is established by the authorities from top to bottom and constitutes the outer layer of political power in the transitional period. [4] However, due to the dissatisfaction of the masses caused by the working methods of the Liberation Congress, it was finally disbanded by Nasser in 1958.
  From 1952 to 1956, due to ideological ambiguity, the economic reform policies of Nasser and the “liberal officers” mixed capitalist and leftist ideas. On the one hand, they encouraged local and foreign capital, and on the other hand, they carried out land Reform and nationalization are called the “free enterprise period” in this article. In the military officers’ reform plan, the policy of encouraging foreign capital predated the land reform. Only one week after the seizure of power, that is, July 30, 1952, the new regime revised Article 6 of the 1947 Company Law, reducing the proportion of Egyptian capital required for joint venture companies from 51% to 49%. %. This modification aims to attract more foreign capital into Egypt. In the field of private capital, the law of 1953 exempted the emerging industries from taxation for 5 years. On the other hand, although the new regime encourages private enterprises to operate freely, state-owned capital has begun to participate more and more in development projects. The Permanent National Production Development Committee established in 1952 was a model of the combination of the military and private capital at that time. [5]
  According to the 1956 Constitution, Nasser established the National League (Ittihad Qaumi) in May 1957, with the main task of establishing the “mass base” of the ruling elite. The organizational structure of the National League is divided into three levels: local councils, national conventions, and the highest executive committee. The body that connects the top of the party to the masses is the Central Committee of the Local Government, composed of ministers appointed by Nasser. Nasser declared that the National League is the country’s highest authority and a “national” organization representing the “comprehensive interests”. Its purpose is to “strive for the establishment of a political, social and economically exploitable, cooperative and democratic socialism.” “. After the merger of Egypt and Syria in 1959, the National Alliance also became a governance structure spanning north and south, which facilitated the export of Egyptian national capitalists to the Syrian market. After the separation of Egypt and Syria in 1961, the National League existed in name only, and Egypt’s attempt to integrate the Common Market of Arab States also failed.
  With the growth of state institutions, from 1956 to 1960, the Egyptian government began to expand the state’s control over private enterprises, which Nasser called “guided capitalism”. The 1956 Constitution emphasized the leadership role of the public sector in the economy and the need for national planning. [6] The National Planning Regulations promulgated in January 1957 established a new National Planning Committee (National Planning Committee), which has the power to formulate a comprehensive five-year plan from 1960 to 1964. This is the first attempt to plan since the “Freedom Officer” came to power. In the three years from the beginning of the plan to the implementation of the plan, the Egyptian government formulated a specific agricultural and industrial plan that lasted five years. In December 1957, Nasser proposed for the first time to build a “socialist, democratic and cooperative society”, which opened up the government’s control of private enterprises.