New sources of comparative advantage for the post-revolutionary Egypt

In the previous article, I explained how “the revolution” formed a trading barrier to Egypt. In this article, I will try to highlight what the economic strengths and potentialities of Egypt are, and how the new Egyptian government can take advantage of these potentialities and make from them sources of comparative advantages capable of building a strong economy and equitable social system.

In the first place, I’d like to emphasize the natural and cultural potentialities of Egypt:

·         First, the geographic situation of Egypt is so strategic. The country borders Libya to the west, the Gaza Strip and Israel to the east, and Sudan to the south. In addition, Egypt has coastlines on the Mediterranean Sea, the Gulf of Suez, the Gulf of Aqaba and the Red Sea.

·         Second, though Egypt is predominantly desert and only 3.5% of the total land area is cultivated, Egypt disposes of the Nile Valley and Nile Delta that are the country's only cultivable regions and supporting about 99% of the population.

·         Third, Egypt's mineral and energy resources include petroleum, natural gas, phosphates, gold and iron ore. Oil and gas accounted for approximately 7% of GDP in fiscal year 2000/01. Export of petroleum and related products amounted to $2.6 billion in the year 2000.

·         Fourth, the culture of Egypt has thousands of years of recorded history. Ancient Egypt was among the earliest civilizations. Ancient Egypt was among the earliest civilizations. For millennia, Egypt maintained a strikingly complex and stable culture that influenced later cultures of Europe, the Middle East and Africa.

In the second place, here are the demographic characteristics of Egypt:

·         Population: 82,079,636 (July 2012 est.)

·         Population growth rate: 1.96% (2011 est.)

·         Median Age: 24.3 (2011 est.)

·         Literacy rate: 70% (2010 est.)

According to the data above, I can state that Egypt already has these resources of comparative advantages:

·         Government subsidies

·         Unskilled workforce

·         Availability of natural resources

·         Topography of the region

·         Access to waterways

·         Existing infrastructure

However, if the new Egyptian government really intends to build a strong economy, these are the main areas that they should focus on.

First, it is true that the high population of Egyptian is a source of comparative advantage, but what the government should really think about is how many poor countries have this advantage? And did these countries create a valuable added value by exploiting their people?

Therefore, I suggest that the Egyptian government revise and create a new education system that is constructive and oriented toward international labor market that is increasingly looking for skilled labor. For instance, a great focus should be conducted in the subjects and the academic subjects that are taught in universities.

It is obvious that such a project requires much effort from the government; still, education remains fundamental for rehabilitation of the economy and re-establishment of the social system of the country.

Second, seeing that Egypt is a rich in natural energy and gas, it is important to take advantage of this raw material not by exporting it raw, but by developing and attracting investments in industries that require oil as raw material. Namely, Egypt can develop economy of scale in industries like chemical products, construction materials, and pharmaceutical products. Nevertheless, it is impossible for Egypt to develop such industries if it doesn't have qualified and skilled labor.

Finally, I have a recommendation to make concerning tourism. According to the data that I gathered and mentioned above, Egypt has a long history, rich culture and outstanding nature; three elements that have strengthened tourist industry in Egypt. However, I think that it is time for Egypt to orient its tourist industry towards new concepts, such as niche tourism and sustainable tourism. By developing these two concepts, Egypt will not only succeed in diversifying its tourist products and attracting new segment, but also in developing a responsible tourism toward environment and society.

In conclusion, Egypt has great and promising potential, yet, in order to have competitive sources of comparative advantage, it is necessary that the new government develops the following areas: education, and openness to international market and new markets.