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Reshaping Egypt’s Economic Geography

August 8, 2012


An aerial shot by NASA of the Nile River delta at night.


This new report titled Reshaping Egypt’s Economic Geography: Domestic Integration as a Development Platform investigates Egypt’s regional economic growth, explores the causes for geographically unbalanced development, and proposes policy options to make unbalanced growth compatible with inclusive development.

The 2009 World Development Report described how location is the most important correlate of an individual’s welfare. The same rule holds at the national level—particularly in Egypt. Some regions grow faster than others and concentrate production, and wages and income are higher in those areas. But in other regions incomes are perennially lower and poverty is higher.

In Egypt, there are still substantial gaps in consumption and opportunities between growth poles and the rest of the country.

Returns to assets are different across the country because economic activity is denser and business opportunities more abundant in Greater Cairo and urban Lower Egypt. So, by facilitating goods and factor mobility, all Egyptians can benefit from higher growth, wherever it occurs. But as the report shows, this requires more than just building roads or improving trade logistics.

This report’s central proposal is adopting spatial integration as a development platform, in which the policy focus shifts from spreading out industrial location to spreading out access to basic public services and facilitating factor mobility, which will make growth more inclusive and development more balanced in Egypt.

Adopting integration as a development platform is not simple because spatial disparities are spanned in three dimensions: urban/rural dichotomies, the Upper Egypt/Lower Egypt duality, and the differences between large metropolises and the rest of the country.

This report first identifies the gaps in consumption and in opportunities, showing the stark contrasts between regions and how they evolve through time. It then explores the causes of the gaps, revealing a multiplicity of factors and exposing the complexity of the problem. Finally, the bulk of the report presents policy options to address the integration challenges.

Read the full report Reshaping Egypt's economic geography : domestic integration as a development platform.