Egypt at a Crossroads: MNEs and Economic Development in a Global Environment

A study of Egypt is appropriately included in this volume because it is genuinely at a crossroads, facing the same dilemmas as many of the transition economies around the world. Egypt is positioned at a strategic crossroads within the North African, Middle East and West Asian regions and has substantial opportunities to influence and to exploit the regional economic potential of the area. At the same time, the country is at a critical crossroads in its own economic strategy: thus it is seeking to switch from inward-oriented economic development to an outward-looking, export-oriented policy, in which multinational enterprises (MNEs) will inevitably have a focal role. But this is against the backdrop of fears of social and political unrest stemming from job losses associated with market reforms and privatization; and a lack of understanding of the potential benefits of foreign direct investment (FDI) and, indeed, fears of MNE domination. The aim of this chapter is to highlight the roles that FDI and MNEs currently play in the Egyptian economy, and to discuss some ideas for policy reform that would inter alia create greater integration between Egypt, MNEs and the global and regional economies. (This chapter draws substantially on UNCTAD (1998)).