Working Papers

Do Governments Pick Winners or Losers? An Assessment of Industrial Policy in Egypt

Publication Number: ECESWP108-E&A

December, 2005

Author : Ahmed Galal and Nihal El-Megharbel

Type : Working Papers

This paper assesses the merits of selective intervention (or industrial policy) in the Egyptian manufacturing sector over the period 1980-2000 to determine whether this policy contributed to increased diversification and improved performance of different industries. The paper finds no positive association between the preferential incentives accorded to different industries and their performance, and attributes this result to the way the incentives were designed. Looking ahead, the paper argues in favor of redesigning industrial policy to target activities with positive spillover effects rather than specific sectors, and new rather than old products and technologies. Last but not least, the new industrial policy should be performance-based and ought to be applied for a pre-specified period of time.