Since the ancient times, Egypt has relied heavily on agriculture due to their ability to grow various crops, but for the first time in the 1950’s we begin to see the first steps towards industrialization. Egypt’s fast growing population was depleting the agricultural resources, leading to the first industrialization program of 1952-1966, and in 1961 a major policy shift brought all economic activity under the purview of the government. When it looked as though things were about to change, their economy experienced a short setback that lasted from 1965-1974. However, the economy was free to breathe once more with the introduction of the “open door” policy whose purpose was to move their highly centralized economy to a more liberal economy which encouraged private investment. With this new policy Egypt saw rapid growth within its industries and economy. When they began to experience a “credit crunch” in the 1980’s due to non-performing loans, they were forced to implement the “Monetary” policy in order to contain inflation and stabilize the Egyptian Pound.
In the last few decades Egypt has seen a quite rapidly growing economy with the increased tourism, heavy industry, revenue from the Suez Canal, and huge oil supplies. Although they are not part of OPEC (Organization of the Petroleum Exporting Countries), Egypt is home to large quantities of crude oil, which combined with natural gas makes up 12% of the countries GDP. Egypt continues to grow and massive external debt relief has show a great improvement in the countries macroeconomic situation. Yet, this massive growth has not managed to touch the lives of Egyptian citizens as the government has not been able to increase the standard of living.
Now, the current struggle for power in Egypt has paralyzed their economy. Foreign exchange reserves are being depleted and industrial production is running at only 50% capacity. The need for economic reform is crucial in to the future of Egypt. If the new government does not act soon, there could be an economic setback that will devastate the country.
