Date of Award
Doctor of Philosophy (PhD)
Economics / Economic Policy
Egypt's first Five-Year Pian 1960/61 - 1964/65 charted a program for economic development based on industrialization via import substitution and self-sufficiency. The Plan was not designed on the basis of a comprehensive model and therefore could not take account of many interdependencies, nor was it possible to determine if the Plan was consistent with resource supplies. Unfortunately such aspects were considered only in a piecemeal fashion. Moreover, the selection of investment projects was based on the assumption that labour is abundantly available. The Plan envisaged an overall growth in value added of 40 percent during the 5-year period and an equilibrium in the balance of trade by the terminal-year. Although the growth target was nearly achieved, the trade deficit increased instead of disappearing.
This study represents an endeavour to remedy the shortcomings of the Egyptian planning practice as represented by the country's first Five-Year Plan in two ways. First, a comprehensive linear programming model was developed to assist in the choice of industries where capacity can be expanded to the optimum advantage. Second, alternate assumptions were introduced with regard to labour based on the observable fact that although unskilled labout is abundantly available, only skilled labour is required for an overall effort of economic development. Thus, a set of labour constraints by industry was incorporated into the model. This implies a given and well-defined pattern of skill requirements by industry. Simulations based on the linear programming model indicated that the neglect of labour leads to a bias in project selection in favour of investments with a relatively high foreign-exchange content. Some of these simulations also resulted in a pattern of expansion stressing agriculture, food processing and fertilizers in contrast with the Plan's emphasis on metals, machinery and chemicals.
The study also analyzes the interdependencies in the Egyptian structure of production. One of the conclusions of the analysis in this context is that agriculture occupies a very central place in the economy, and in fact constitutes a bottleneck industry. The finding that agriculture is very important contrasts sharply with the secondary place it occupies in tile country's priorities, judged from its first Five-Year Plan. Two consistency tests were performed, one to check the compatibility of the individual sectoral output targets and the other to check the consistency of the overall-growth and the balance-of-trade targets. The individual industry output targets turned out to be inconsistent, which seems to suggest that indirect relationships bftween the different industries were
not carefully considered. The overall growth target and the balance-of-trade target appeared inconsistent, which seems to suggest either that the planners neglected indirect import requirements or that they over-estimated the economy's capacity to replace about one-third of the target-year imports.
Two other aspects of the Egyptian structure of production were also examined utilizing input-output data for 1954 and 1963/64. One is to determine if that structure exhibits any recursivity. This was done by triangularizing the input-output coefficient matrix, and revealed that indeed there is a discernible hierarchy in the system of production. The other aspect examined was the degree of dependence, in production, on the rest of the world. The analysis here entailed deriving numerical values for the direct, indirect and total (direct plus indirect) import coefficients. The numerical results indicate clearly that the industries heavily stressed in Egypt's first Five-Year Plan (metals, machinery and chemicals) are heavily dependent on imports for their current production reqirements. If, to this, imported investment requirements for capacity expansion are added, we can then determine one of the important reasons why the balance-of-trade equilibrium was not achieved.
Mohamed, Gouda Abdel-Khalek El-Sayed, "Sectoral Interdependence and Egypt's Investment Strategy" (1974). Open Access Dissertations and Theses. Paper 4028.