Egypt’s Economic Modernization Will Support Democratization

The United States stands ready to help Egypt develop its private sector, which will increase economic opportunities by spurring demand for Egyptian products and services.

By Stephen Kaufman,
IIP Staff Writer
Washington
18 January 2012
A successful Egyptian transformation to democracy will require not only political reform, but also increased economic opportunities for the Egyptian people, and the Obama administration wants to encourage private enterprise through partnerships with American companies.

The United States also wants to complement private sector initiatives by supporting infrastructure development and mobilizing other resources to spur economic growth.

“Egypt’s mix of geography, population and resources makes it a natural hub for regional trade and commerce,” Deputy U.S. Trade Representative Miriam Sapiro said January 17. “According to at least one study, if Egypt strengthens its economic institutions now, and embraces economic modernization, it could be one of the top 10 world economies within a generation.”

Speaking to an audience that included Egyptian entrepreneurs at the U.S.-Egypt Business Council in Washington January 17, Sapiro said the United States “stands ready to do all it can to help Egypt develop its private sector” by encouraging U.S. companies to fully participate in Egypt’s economic growth and by supporting the foundation for a partnership between the two countries “that will remain strong and durable for years to come.”

She said that ultimately Egypt’s economic growth will be led by the private sector’s ability to spur new demand for Egyptian products and services both within and outside the country.

“Increased foreign trade and investment play a key role in stimulating growth,” Sapiro said, and experience has shown that “economic growth is far likelier to be stimulated quickly and substantially through a country’s open trade and investment policies than through assistance.”

She encouraged Egyptians to look to examples such as Brazil, India and Turkey, which have deliberately integrated their economies into the global marketplace and, as a result, have strengthened their economic competitiveness and their prospects for sustained growth.

Direct trade and investment from the U.S. government will be based on a two-part approach, with a short-term strategy to deliver quick and concrete results, and a longer-term plan that would position Egypt and other countries in the Middle East and North Africa “in a fundamentally different position vis-à-vis the global economy,” Sapiro said.

The 2011 Group of Eight Summit saw the launch of the Deauville Partnership, which is an economic framework to support Middle Eastern and North African countries in achieving transparent and accountable governments as well as sustainable and inclusive growth. Sapiro said the United States is committed to the best use of that partnership for Egypt, and is ready to cooperate on expanding trade, services and investments, agriculture and good regulatory practices. The United States also wants to encourage regional trade and investment arrangements to create more export opportunities for Egyptian goods and services, she said.

“We would like to see Egyptian companies take greater advantage of existing programs that would benefit Egyptian exports to U.S. markets, such as the Globalized System of Preferences (GSP). These programs allow certain types of Egyptian goods to enter the U.S. duty-free, making it cheaper to ‘Buy Egyptian,’” she said. Based on data from 2010, Sapiro said, some Egyptian exports to the United States, such as car parts, fruit juices and carpets, had entered the U.S. market without taking advantage of their duty-free eligibility.

“Our goal is to promote trade, investment and innovation to help create jobs, and assist Egyptian businesses increase and diversify their activities as the surest path to increased prosperity throughout Egypt,” Sapiro said. “But it will be companies and entrepreneurs like all of you, from Egypt, countries throughout the region and the world, who will play the largest role in the ongoing transformation of the Egyptian economy.”