The Reforms Needed to Attract More FDI in Egypt: Lessons from the CEEC Experience

Abstract

This paper compares the reforms and policies that countries from Central and Eastern Europe (CEE) have adopted to attract significantly more FDI than Egypt. The analysis identifies the privatization programs, the sound political stability and the efficient institutional reforms undertaken under the hospices of the European Union as the main determinants of the CEEC's impressive attractivity.

The paper points out that the foremost FDI motivation is the regional market accessibility under the form of free trade agreements providing the investors with free circulation of goods, allowing them to reach a larger number of consumers. The regional integration in the framework of the EU Association Agreements and the sub-regional cooperation within the Central European Free Trade Agreement have been the most pertinent attractivity factors for the CEECs, since they reflect the large market access for the potential foreign direct investments.

The paper concludes that though further reforms are needed for Egypt to satisfy the major FDI preconditions, the country is on good track in conducting a multi-regional cooperation strategy, which consists in becoming member of numerous bilateral and multilateral free trade partnerships.

Keywords: FDI, Egypt, Central and Eastern Europe, reforms

JEL Classification: F15, F21, F23