Issue No. 596
Opinion
Previous issue
Site map
|
|
25 - 31 July 2002 Issue No. 596 Opinion |
Current issue Previous issue Site map | |
| Published in Cairo by AL-AHRAM established in 1875 | Recommend this page | ||
Shifting strategies, similar goals
Ibrahim Nafie reviews 50 years of post-revolutionary economic development
The July Revolution, unlike most, was bloodless. This "white" revolution was also unique in that it sought to respond to the very real needs and aspirations of the people without imposing a rigid ideological doctrine.
The first economic landmark of the revolution was the agrarian reforms intended to counter the grossly distorted distribution of income, and the attendant plagues of widespread poverty, ignorance and disease. In pre-revolutionary Egypt, 0.5 per cent of the population controlled nearly all the sources of wealth and power.
For seven years the governments of the revolution sought to engage the private sector, whether domestic or foreign, in a programme of national economic development. The experiment clearly failed to achieve its desired humanitarian objectives, leading to the need for more direct state intervention. The July Revolution's "Socialist Laws" -- the second economic landmark of the epoch -- instituted centralised economic planning, regarded as the most effective means for stimulating equitable economic development.
That the revolution should opt for this course was very much in keeping with the spirit of the times. It was the age of Third World national liberation movements and the determination to consolidate independence through the promotion of self-reliant and rapidly developing economies. Indeed, the trend towards centralised planning at the time was not restricted to the Second and Third Worlds -- "guided planning" was adopted by some advanced Western economies.
It should be stressed that the revolution sought to develop its own forms of centralised planning, drawing on the Soviet experience only in so far as it might meet the particular circumstances of Egyptian society. The result was a distinct and unique experiment in state controlled economic development.
Undoubtedly the most momentous landmark in Egypt's drive to development in the 1950s and 1960s was the construction of the High Dam. The vastly increased amount of water the dam made available enabled Egypt to increase the area of land under cultivation by nearly a million feddans. The conversion from the dependence on annual floods to a permanent source of irrigation also meant that land already under cultivation doubled, even tripled its yield. In addition to more intensive cultivation, irrigation water permitted for greater flexibility in determining the choice of crops. No longer would there have to be a significant lull in the annual agrarian productive cycle.
As a result, the period following the completion of the dam brought unprecedented yields. In the second half of the 1960s agricultural production increased by LE150 million, at the prices of 1964-65. Most of this produce consisted of export crops, such as cotton and rice, alongside the most vital foodstuffs such as wheat, corn and barley.
The High Dam project also made it possible for Egypt and Sudan to finally conclude the negotiations that would result in the long sought after Nile Water Agreement, which was signed in 1959. With a permanently fixed and vastly increased quota of Nile waters, Egypt was at last able to feel secure even during those years when the water level of the Nile was at its lowest. Had it not been for the dam the seven year drought that afflicted the sources of the Nile in the Ethiopian highlands from 1980 to 1987 would have had disastrous consequences for Egypt. Nor can we deny the credit due to the dam for protecting Egypt from the ravages of overflooding, which would have been its fate in 1998 when the level of the Nile was higher than at any time since the construction of the High Dam.
With the completion of the High Dam and its hydro-electric possibilities electricity could be generated at a quarter of the cost of fuel powered by more conventional generators. As the reservoir behind the dam rose, so too did the amount of power that could be generated, from 4.33 billion kilowatts per hour in 1967 to 6.5 billion kilowatts in 1974. By 1974, of the total 8,525 billion kilowatts per hour of electricity produced that year, 4,459 billion were generated by the High Dam. In other words, within a decade of its completion the High Dam was already providing the nation's power network with 52.9 per cent of the total electricity generated in the country.
Simultaneously, the amount of fuel used for generating electricity dropped from 1.26 million tons in 1967 to 843,300 tons in 1974, or by nearly a third, in spite of the steadily increasing rates of power consumption. In addition, the total fuel costs for operating fuel powered generators dropped from LE9.5 million in 1967 to LE6.7 million in 1974, in spite of the drastic rise in oil prices following the October 1973 War.
More and cheaper electricity from the High Dam enabled a boom in electrical powered industries such as the fertiliser, aluminum processing and iron and steel industries. It thus became the determining factor in the choice of those industrial projects that were included in the 1970-1980 economic investment programme, and it made it possible for the ambitious Kima fertiliser plant in Aswan to operate at full capacity within a year of its inauguration. But of even greater significance, the hydroelectric power made available by the High Dam could reach every Egyptian village, meeting their basic needs for lighting and power for electrically powered agricultural machinery and small industries.
In spite of the many accomplishments, which lifted Egypt from a predominantly agrarian economy dependent upon a single cash crop to a much more developed mixed agrarian-industrial economy, Egypt nevertheless experienced considerable economic hardships, especially following the defeat in June 1967. The outcome of excessive state intervention in the economy was to generate a top-heavy, bloated, cumbersome bureaucracy that stifled initiative. It also created a public sector that used far more labour than necessary, generating a severe spread in masked unemployment. Equally, if not more, detrimental, was the import substitution policy which combined excessive protectionism with inadequate attention to production for export, the result of which was a marked decline in quality of products that were being produced at a cost considerably higher than their foreign-made counterparts. Exacerbating this situation were the large military allocations needed for liberating the land Israel occupied in 1967.
Victory in the 1973 War cleared the way for economic difficulties to be tackled with greater vigour. The Open Door policy announced in 1974 sought to remedy the economy's over- dependence upon the state in production and employment. Lending impetus to the policy was the dramatic rise in oil prices following the 1973 War and the greater prospects of investment this brought. Nevertheless, in spite of the spurt of economic growth Egypt experienced during this period, by the end of the 1970s it fell off again. To many the Open Door policy had acquired a reputation as too laissez faire -- "anything goes" was how some put it -- and too dependent upon foreign loans, resulting in a skyrocketing of Egypt's foreign debt.
When President Mubarak assumed power in late 1981 he inherited a very precarious economy. His first step towards overcoming the difficulties was to hold an economic conference in 1982, bringing together Egypt's foremost economic experts, regardless of their political affiliations. The conclusion reached by the participants was to rehabilitate centralised planning, but in a manner that would cede an increasing role to the private sector in steering the national economy.
Mubarak's second step was to develop Egypt's infrastructure, the sina qua non for investment which had suffered serious neglect for the past three decades. Thus, in the 1980s and 1990s billions of pounds were poured into roads and transportation, telecommunication networks and water supply and waste disposal systems. It was also realised that substantial economic reforms were necessary.
At the outset of the 1990s the president initiated what has proven one of the most ambitious and successful economic reform programmes in modern Egyptian history. Yet it was simultaneously a programme that did not place excessive pressures on those in society managing on limited incomes. Having largely succeeded in turning the economy around, the primary focus of economic policy makers today is how to increase economic growth so as to improve the overall standard of living of the Egyptian people and generate productive job opportunities. In the economic domain, as in the political, Mubarak has embodied the spirit of the revolution, which was inspired by the dedication to develop the nation in a way that would better the lot of the Egyptian people as a whole.
|
 |
|
|||||||||||||||||
| ARCHIVES Letter from the Editor Editorial Board Subscription Advertise! |
WEEKLY ONLINE: www.ahram.org.eg/weekly Updated every Saturday at 11.00 GMT, 2pm local time weeklyweb@ahram.org.eg |
 Al-Ahram Organisation |
