Difficulty Confronting the Egyptian Economy

Egypt's foreign debt, however, remains a heavy burden on the economy. Economic plan targets, announced May 1992, included an average GDP growth of 5.1 percent between 1993-1994 and 1996-1997; and the creation of 2.5 million jobs between those same years (Egypt, 1993, p. 996).

The Egyptian economy has long provided contrasts. For example, a square meter of land may cost $5,000, but the typical monthly salary is $50, and rubbish is still collected by bedraggled children in rickety donkey-carts (The sphinx, 1992, p. 42). President Hosni Mubarak's reforms may make the contrasts even sharper. His government hopes to wean his people from 30 years of expecting the state to provide secure jobs and cheap food, energy, housing, medicine, and schools.

The legacy of Egypt's experiment with nationalization and central planning has been calamitous. Almost half the workforce is paid--miserably--by the state. Five hundr

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. 22). Its cotton industry is also experiencing difficulties because of a decline in quality. Cotton is the country's main agricultural export (Brindle, 1992, p. 24). Furthermore, a study that examined Egypt's farm labor market revealed that real wages in Egypt rise and fall sharply with the international oil prices. Supply shifts explain these real wage shifts and the wage shifts that primarily result from international labor migration (Richards, 1994, p. 239). Tourism is big business in Egypt. However, the threat of terrorism by Islamic fundamentalists has had a negative impact on this industry. In early 1994, Muslim militants wounded four people, including two non-Egyptians, after opening fire on the night train from Cairo to Luxor with automatic weapons. The attack dealt another blow to the tourist industry (Muslim militants, 1994, p. A8). Tour operators state that bookings for the winter season 1994 remained sparse and groups and package tours were difficult to attract (Hedges, 1994, p. E3). Egypt's film industry, the most prominent in the Arab world, has declined in local production. To counteract this, Egypt has put a ceiling on the number of foreign films that may be shown. During religious festivals, when atte
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