Economic Liberalization in Egypt: A Way to Reduce the Shadow Economy?!

Posted: 18 Feb 2021

See all articles by Mohammad Reza Farzanegan

Mohammad Reza Farzanegan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS)

Mai Hassan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS)

Ahmed Mohamed Badreldin

University of Marburg - School of Business & Economics; University of Marburg - Center for Near and Middle Eastern Studies (CNMS)

Date Written: December 3, 2019

Abstract

This study examines the relationship between economic liberalization and the size of the shadow economy in Egypt. We use annual data from 1976 to 2013 and show that economic liberalization policies in Egypt have a statistically significant decreasing effect on the size of the shadow economy as a percent of Gross Domestic Product (GDP). This effect is confirmed for both short- and long-term oriented economic liberalization policies. Based on our results, policies which promote trade and economic liberalization can reduce the extension of the shadow economy in Egypt. Therefore, we suggest conditioning international development assistance to Egypt on demonstrable policy actions with respect to economic liberalization.

Keywords: Shadow economy, Economic liberalization, Time-series analysis, Arab Spring, Egypt

JEL Classification: E26, O17

Suggested Citation

Farzanegan, Mohammad Reza and Hassan, Mai and Badreldin, Ahmed Mohamed, Economic Liberalization in Egypt: A Way to Reduce the Shadow Economy?! (December 3, 2019). Journal of Policy Modeling, Vol. 42, No. 2, 2020, Available at SSRN: https://ssrn.com/abstract=3749251

Mohammad Reza Farzanegan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS) ( email )

Deutschhausstraße 12
Marburg, 35037
Germany

HOME PAGE: http://www.uni-marburg.de/cnms/wirtschaft

Mai Hassan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS) ( email )

Deutschhausstraße 12
Marburg, 35037
Germany

Ahmed Mohamed Badreldin (Contact Author)

University of Marburg - School of Business & Economics ( email )

Am Plan 2
Marburg, D-35037
Germany

University of Marburg - Center for Near and Middle Eastern Studies (CNMS) ( email )

Deutschhausstraße 12
Marburg, 35037
Germany

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