Growing Without Changing: A Tale of Egypt's Weak Productivity Growth

36 Pages Posted: 9 Feb 2018

See all articles by Hanan Morsy

Hanan Morsy

European Bank for Reconstruction and Development; International Monetary Fund (IMF); Economic Research Forum (EFR)

Antoine Levy

European Bank for Reconstruction and Development (EBRD)

Clara Sanchez

European Bank for Reconstruction and Development (EBRD)

Multiple version iconThere are 2 versions of this paper

Date Written: September 20, 2014

Abstract

This paper aims to identify the reasons why economic growth in Egypt, although comparable to its peers, failed to significantly reduce unemployment, lower poverty levels or raise overall productivity. We use cross-country comparisons, counterfactual scenarios and regression analysis to demonstrate that Egypt, even during the high growth period of 2000-10, did not experience a reallocation of excess labour towards modern, productive sectors similar to what occurred in other emerging markets, notably in South East Asia. The results show that, while there is large potential for productivity gains in the Egyptian economy, a limited openness to trade, a low diversification of exports and deficient access to finance prevented the country from witnessing a structural shift of its labour force towards manufacturing and private services, locking Egypt instead within a “low value trap”. The paper then suggests some policy implications of these findings, relating to overcoming the main impediments to preventing an efficient sectoral reallocation of workers.

Keywords: productivity growth; job creation; structural change; sectoral productivity

JEL Classification: D24, O47, O5

Suggested Citation

Morsy, Hanan and Levy, Antoine and Sanchez, Clara, Growing Without Changing: A Tale of Egypt's Weak Productivity Growth (September 20, 2014). EBRD Working Paper No. 172. Available at SSRN: https://ssrn.com/abstract=3121119 or http://dx.doi.org/10.2139/ssrn.3121119

Hanan Morsy (Contact Author)

European Bank for Reconstruction and Development ( email )

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London, EC2A 2EH
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International Monetary Fund (IMF) ( email )

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Economic Research Forum (EFR) ( email )

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(P.O. Box: 12311)
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Egypt

Antoine Levy

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

Clara Sanchez

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

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