266 Michael BoMMes, siMon FellMer and Friederike ZigMann
foodstuffs for Egypt’s own population. This, in turn, translates into a high
dependency on imported foodstuffs, which rank second only to machinery
and electronic and technical equipment (Büttner & Ḥamzāwī 2007; Ibrahim
& Ibrahim 2006). In 2011, industry and services contributed 38 and 48 per
cent respectively to GDP (CIA 2012). The Egyptian economy mainly rests
on three legs – the Suez Canal as a source of foreign exchange, the growing
sector of tourism and the export of natural resources, namely oil and gas.
Because of this structural dependence on transfer payments, the export
of natural resources and tourism, the Egyptian economy is very prone to
f luctuations of all kinds – witness, for example, the situation following
the terror attacks on 11 September 2001 or the ups and downs occurring
on the commodity markets. Tourism, in particular, reacts immediately to
any terrorist attacks and the overall security situation in the Middle East.
Egypt’s oil reserves are also limited – oil production has been falling for the
past ten years, and it is currently assumed that reserves will be exhausted
within the next twenty years. Gas reserves make up only about 1 per cent
of worldwide reserves, but the country has been a major exporter due to
its having developed these resources very early on (Observatoire Méditer-
ranéen de l’Energie 2011).
In recent years, the foreign-trade def icit f luctuated between 3 and 5 per
cent. Currency transfers by Egyptians living abroad have been one of the
most important sources of foreign currency. In 2011, a total of some US$14
billion was transferred to Egypt from abroad (see Zohry in this volume).
The economic situation in Egypt has improved overall due to a number
of reforms that have especially benef ited foreign investors. Yet, persistent
bureaucracy and corruption, as well as a lack of legal certainty, have re-
mained severe national problems. Adamant structural problems are the
high national debt, high inf lation and the future of the energy supply when
the oil and gas reserves have been depleted. This will further increase
the high dependency on imports and the f luctuations in export income
- the major weaknesses of the Egyptian economy. Egypt ranks 101st of 169
countries on the Human Development Index (HDI) of the United Nations
Development Programme (UNDP 2010: 144), and thus lies behind all other
North African countries, with the exception of Morocco.
Public expenditure, debt and inf lation
The Egyptian economy is, even today, a centralistic one. Only very recently
has the Egyptian state seriously begun to privatise state-owned enterprises
(such as the Bank of Alexandria) and to improve the investment conditions
for foreign companies. This may be traced, in part, back to the Europe-