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Title: Critically assess the economic legacy of President Anwar Sadat’s Infitah policy
Description: Infitah policy or “Open Door Policy” is one of the most important drifts that took place within the Egyptian economic system. The main objective of the policy was to enhance the economic strength of Egypt, while attracting many of national and international investors (McLaughlin, 1978). This policy had been implemented in 1974, after the peace treaty of Camp David and the end of Egyptian-Israeli war. The policy had been recognized to be changing the Egyptian direction apart from Nationalism of Abdel Nasser (Vandewalle, 1986). According to Cooper (1982), the application of this policy had been considered to be one of the most disastrous economic policies that took place in the Egyptian history, as it failed to achieve any of the objectives that had been claimed by the government. For instance, private investors paid little attention to industrial projects, the gap between consumption and production, as well as exports and imports, had been financed throughout internal and external borrowing. This led to the maximization of national budget deficits and foreign debts (Nagarajan, 2013). The Infitah Policy or the economy opening policy had been targeting the removal of the trade barriers, reducing the state control over the factors of production, enhancing the abilities of the private sector to get involved in the production processes, the maximization of the national benefit international trade, and the growing of the national economy resources, which had been declined after the war (Stivi-Kerbis & Kahana, 2013). The paper argues that the Infitah policy failed to be effectively implemented, which led to the limitation of its economic benefits, while the enhancement of the national political conflicts. The main aim of the paper is to identify the better path that should had been followed by Sadat for enhancing the national economy.
Description: Infitah policy or “Open Door Policy” is one of the most important drifts that took place within the Egyptian economic system. The main objective of the policy was to enhance the economic strength of Egypt, while attracting many of national and international investors (McLaughlin, 1978). This policy had been implemented in 1974, after the peace treaty of Camp David and the end of Egyptian-Israeli war. The policy had been recognized to be changing the Egyptian direction apart from Nationalism of Abdel Nasser (Vandewalle, 1986). According to Cooper (1982), the application of this policy had been considered to be one of the most disastrous economic policies that took place in the Egyptian history, as it failed to achieve any of the objectives that had been claimed by the government. For instance, private investors paid little attention to industrial projects, the gap between consumption and production, as well as exports and imports, had been financed throughout internal and external borrowing. This led to the maximization of national budget deficits and foreign debts (Nagarajan, 2013). The Infitah Policy or the economy opening policy had been targeting the removal of the trade barriers, reducing the state control over the factors of production, enhancing the abilities of the private sector to get involved in the production processes, the maximization of the national benefit international trade, and the growing of the national economy resources, which had been declined after the war (Stivi-Kerbis & Kahana, 2013). The paper argues that the Infitah policy failed to be effectively implemented, which led to the limitation of its economic benefits, while the enhancement of the national political conflicts. The main aim of the paper is to identify the better path that should had been followed by Sadat for enhancing the national economy.
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Critically assess the economic legacy of President Anwar Sadat’s Infitah policy
Table of Contents
Introduction
...
3
Economic Impacts of President Anwar Sadat’s Infitah policy
...
7
Discussion
...
11
Bibliography
...
The main objective of the policy was to
enhance the economic strength of Egypt, while attracting many of national and
international investors (McLaughlin, 1978)
...
The policy
had been recognized to be changing the Egyptian direction apart from Nationalism of
Abdel Nasser (Vandewalle, 1986)
...
For instance, private investors paid little attention to
industrial projects, the gap between consumption and production, as well as exports
and imports, had been financed throughout internal and external borrowing
...
The
Infitah Policy or the economy opening policy had been targeting the removal of the trade
barriers, reducing the state control over the factors of production, enhancing the abilities
of the private sector to get involved in the production processes, the maximization of the
national benefit international trade, and the growing of the national economy resources,
which had been declined after the war (Stivi-Kerbis & Kahana, 2013)
...
The main
aim of the paper is to identify the better path that should had been followed by Sadat for
enhancing the national economy
...
Egypt sought for improvement of the
situation, throughout establishing new economic opening policy, under name of Infitah
policy, for attracting foreign and Western investments
...
This is because; economic opening policy did not
provide benefits for different types of Egyptians
...
According to Ayubi (2010), economic opening
policy didn’t enhance economic opportunities and benefits for all Egyptians
...
The growth of Islamic movements and
violence in 1980s resulted from great opposition of Islamic groups to economic opening
policy
...
S
...
On the
other hand, one of the political outcomes, which resulted from the implementation of the
economic opening policy, was based on the change that took place in the Egyptian
strategic alliance
...
Egyptian foreign policy focused on
strengthening of partnership between Egypt and the United States of America, which
Page 3 of 13
was based on Egyptian highlighting for common interests, future paths, and roadmap
that will be followed by both of states to achieve political and economic benefits, as well
as stability in the region, especially between Egypt and Israel (Alterman, 1998)
...
Economic Impacts of President Anwar Sadat’s Infitah policy
One of the most important results from the economic opening policy had been
based on the enhancements of the private companies’ abilities and freedom to get
involved in the production processes and economic activities (Roll , 2013)
...
Regarding, the Egyptian Exports, as a percentage of
Gross Domestic Product, the rate had been increasing from 14
...
8 in the year of 1979/1980
...
Regarding,
the Egyptian Gross Annual Foreign Capital Flow, the rate had been increasing from
10
...
6 in the year of 1979/1980
...
Regarding, the Egyptian Debt Service, as a percentage of
Page 4 of 13
Gross Domestic Product
, the rate had been increasing from 2
...
2 in the year of 1979/1980
...
2 at
1972/1973, to be reaching the value of 21
...
Regarding, the
Egyptian Investment, as a percentage of Gross Domestic Product, the rate had been
increasing from 22
...
4 in the year of
1979/1980
...
2 at 1972/1973, to be reaching
the value of 9
...
Regarding, the Egyptian Average Annual
growth of Gross Domestic Product, the rate had been stable from 8 at 1972/1973, to the
same value in 1979/1980 (Ateş, Duman, & Bayraktar, 2006)
...
In the year of 1974, Industry value added as
a percentage of the Gross Domestic Product had been reaching a value of 25
...
0
...
9, while the inflation rate of the
consumer prices, amounted to be growing annually on a rate of 9
...
In the year of 1976,
Industry, value added as a percentage of the Gross Domestic Product had been
reaching a value of 26
...
3
...
2,
while
the inflation rate of the consumer prices, amounted to be growing annually on a rate of
12
...
In the year of 1978, Industry value added as a percentage of the Gross Domestic
Product had been reaching a value of 28
...
1
...
8, while the inflation rate of the consumer prices, amounted to be growing annually
on a rate of 9
...
In the year of 1980, Industry value added as a percentage of the Gross
Domestic Product had been reaching a value of 36
...
8
...
7, while the inflation rate of the consumer prices, amounted to
be growing annually on a rate of 10
...
In the year of 1982, Industry, value added as a
percentage of the Gross Domestic Product had been reaching a value of 32
...
8
(World Bank, 2016)
...
25
...
8
20
...
0
10
...
7
10
...
7
14
...
1
9
...
3
10
...
0
0
...
40
35
30
25
20
15
10
5
0
1974
1975
1976
1977
1978
1979
1980
1981
1982
Figure 2: Industry Value (World Bank, 2016)
Study of the long term effect of the Economic Opening Policy on FDI and BOT
Throughout the study of the foreign direct investments of Egypt from 1990-2000,
which is considered to be after the application of the Economic Opening policy with
nearly 10 years, the studies showed that the Foreign Direct investments held a huge
part within the Egyptian Total national income
...
As well, it reached its highest
rate in 1994 the FDI of Egypt at an amount of 1256000000 Egyptian Pounds
...
The changes in the foreign direct investments of Egypt can be illustrated in the
following diagram:
Page 7 of 13
FDI of Egypt, Arab Rep
...
00
1,256,000,000
...
00
1,200,000,000
...
00
1,000,000,000
...
00
1,065,300,000
...
00
890,550,000
...
00
600,000,000
...
00
636,000,000
...
00
493,000,000
...
00
253,000,000
...
00
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Figure 3: FDI Egypt 1990 – 2000 (World Bank, 2016)
On the other hand, the studies of the same period showed that there was a huge
decline within the balance of trade, which indicates that there had been higher rates of
exports than the rate of imports
...
For instance, the balance of trade of Egypt
was -546
...
5 million Egyptian Pound
...
32 million Egyptian
Pound (World Bank, 2016)
...
32
-200
-295
...
08
-284
...
64
-300
-368
...
93
-500
-600
-660
...
28
-749
...
79
-800
-900
Figure 4: Egyptian deficit in the balance of trade (World Bank, 2016)
Discussion
Throughout the previous data, it can be ensured that the economy opening policy
had been contributing in the expansion and growing of the industry value, which had
been resulted from the huge facilities and motivations that had been provided by the
Egyptian government for the private and the foreign investments
...
At the same time, there
had been motivation for the loss of the national production that increases the national
income
...
For an instance, the economy that had been conducted showed that
Page 9 of 13
there had been a high growing rate of the inflation, which would be reflecting the rise at
the prices of products and services in the markets
...
This indicates that there had been a high rate of
inequality within the distribution of economic resources and benefits among the different
social groups, which created an income gap between the rich and the poor
...
2 increasing rates, while the rise of Egyptian imports as a
percentage of the gross domestic products had been accounted to 32 increasing rates,
at the same period between 1972/1973 and 1979/1980, which indicates that the
importance became higher than the exports
...
It can be argued that the success all economy opening policy that had been
adopted by Egypt in the era of Mohammed Anwar El-Sadat succeeded in achieving high
national involvement in international trade and attracting foreign investments, but the
policy couldn’t develop an effective system for its implementation, which could had the
power for the maximization of the national exports to be exceeding imports, maintaining
equality within the distribution all economic benefits and resources upon the different
social groups, and ensuring that the Egyptian economy would be able to follow a
sustainable growth strategy
...
Regardless the effectiveness of the economy opening
policy, the failure of the policy to achieve the targeted growth rates had been based on
the limited abilities of the Egyptian government to implement a full-scale change and
restructuring for its policies that would ensure the enhancement of the national economy
benefits
...
This will be ensuring
that the developing countries will be able to maintain high rate of benefits for
international trade
...
In addition, decisions regarding economy opening policies
should be focusing on the location of the public opinion, which would be playing and
essential roles within the success or the failure of the policies’ implementation
...
Page 11 of 13
Bibliography
Alterman, J
...
Sadat and His Legacy: Egypt and the World, 1977-1997
...
Retrieved from
http://www
...
org/policy-analysis/view/sadat-and-his-legacyegypt-and-the-world-1977-1997
Ateş, H
...
, & Bayraktar, Y
...
A STORY OF INFITAH: EGYPTIAN
LIBERALISATION UNDER STREES
...
Retrieved from
https://egyptinrevolt
...
wordpress
...
Hoffmann , T
...
THE MUSLIM BROTHERHOOD IN EGYPT: PURSUING
MODERATION WITHIN AN AUTHORITARIAN ENVIRONMENT
...
McLaughlin, G
...
Infitah in Egypt: An Appraisal of Egypt's OpenDoor Policy for
Foreign Investment
...
Retrieved from
http://ir
...
fordham
...
cgi?article=2311&context=flr
Nagarajan, K
...
Egypt’s Political Economy and the Downfall of the Mubarak
Regime
...
3 No
...
Retrieved from
http://www
...
com/journals/Vol_3_No_10_Special_Issue_May_2013/3
...
(2015)
...
Politik
und Gesellschaft des Nahen Ostens, DOI 10
...
Page 12 of 13
Roll , S
...
Egypt's business elite after Mubarak
...
Stivi-Kerbis, S
...
(2013)
...
Routledge
...
tandfonline
...
1080/08850607
...
842811?journalCod
e=ujic20
U
...
Library of Congress
...
The Rise of Political Islam and Repression
...
S
...
Retrieved from http://countrystudies
...
htm
Vandewalle, D
...
Egypt's Development and Mubarak's inheritance
...
Retrieved from http://www
...
org/wpcontent/uploads/2015/09/DJV-1
...
(2016)
...
World Bank
...
worldbank
Title: Critically assess the economic legacy of President Anwar Sadat’s Infitah policy
Description: Infitah policy or “Open Door Policy” is one of the most important drifts that took place within the Egyptian economic system. The main objective of the policy was to enhance the economic strength of Egypt, while attracting many of national and international investors (McLaughlin, 1978). This policy had been implemented in 1974, after the peace treaty of Camp David and the end of Egyptian-Israeli war. The policy had been recognized to be changing the Egyptian direction apart from Nationalism of Abdel Nasser (Vandewalle, 1986). According to Cooper (1982), the application of this policy had been considered to be one of the most disastrous economic policies that took place in the Egyptian history, as it failed to achieve any of the objectives that had been claimed by the government. For instance, private investors paid little attention to industrial projects, the gap between consumption and production, as well as exports and imports, had been financed throughout internal and external borrowing. This led to the maximization of national budget deficits and foreign debts (Nagarajan, 2013). The Infitah Policy or the economy opening policy had been targeting the removal of the trade barriers, reducing the state control over the factors of production, enhancing the abilities of the private sector to get involved in the production processes, the maximization of the national benefit international trade, and the growing of the national economy resources, which had been declined after the war (Stivi-Kerbis & Kahana, 2013). The paper argues that the Infitah policy failed to be effectively implemented, which led to the limitation of its economic benefits, while the enhancement of the national political conflicts. The main aim of the paper is to identify the better path that should had been followed by Sadat for enhancing the national economy.
Description: Infitah policy or “Open Door Policy” is one of the most important drifts that took place within the Egyptian economic system. The main objective of the policy was to enhance the economic strength of Egypt, while attracting many of national and international investors (McLaughlin, 1978). This policy had been implemented in 1974, after the peace treaty of Camp David and the end of Egyptian-Israeli war. The policy had been recognized to be changing the Egyptian direction apart from Nationalism of Abdel Nasser (Vandewalle, 1986). According to Cooper (1982), the application of this policy had been considered to be one of the most disastrous economic policies that took place in the Egyptian history, as it failed to achieve any of the objectives that had been claimed by the government. For instance, private investors paid little attention to industrial projects, the gap between consumption and production, as well as exports and imports, had been financed throughout internal and external borrowing. This led to the maximization of national budget deficits and foreign debts (Nagarajan, 2013). The Infitah Policy or the economy opening policy had been targeting the removal of the trade barriers, reducing the state control over the factors of production, enhancing the abilities of the private sector to get involved in the production processes, the maximization of the national benefit international trade, and the growing of the national economy resources, which had been declined after the war (Stivi-Kerbis & Kahana, 2013). The paper argues that the Infitah policy failed to be effectively implemented, which led to the limitation of its economic benefits, while the enhancement of the national political conflicts. The main aim of the paper is to identify the better path that should had been followed by Sadat for enhancing the national economy.