Economic Policy Reform in Egypt

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Economic Policy Reform in Egypt

By Iliya Harik
University Press of Florida, 1997
344 pp. $49.95
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Harik has been studying the Egyptian economy with a political scientist's eye for much of the past 30 years. This book is a major interpretation of the choices made in the Nasser era to design a managed economy to promote order and balance, and only secondarily to foster growth. Harik argues that it is a mistake to see in the Nasser model a clear preference for urban workers over rural peasants -- the so-called urban bias model -- because the regime was seeking to appease both. He describes a regime more concerned about jobs than profits, simultaneously extracting wealth from the population by means of low wages and providing subsidies to keep food prices, energy, and housing inexpensive. This all makes a certain kind of sense. But it had disastrous economic consequences. Beginning in the 1980s, Egyptian leaders knew that serious reforms were needed, but they feared the political and social consequences of embracing the free-market model. Egypt has finally begun to carry out serious reforms -- Harik dates them to about 1990 -- and has recently been added to a major index of emerging markets; in addition, the stock market has been rapidly rising. Harik concludes with thoughts on the proper role of the state as mediator with the private sector. All in all, a very impressive book.