On Going Research

Flagship Activities Flagship activities are large-scale research projects usually accomplished with the combined efforts of ECES and other regional and international organizations or individuals. Flagship activities generally take a minimum of one year of planning and typically culminate in a large event such as a conference and several subsequent publications.

Privatization in Egypt: Short-Term Challenges and Long-Term Opportunities Agricultural Development, Global Food Price Fluctuations and the Poor

Privatization in Egypt: Short-Term Challenges and Long-Term Opportunities

With the adoption of the Economic Reform and Structural Adjustment Program in Egypt in 1991, a wave of privatization of companies in several sectors followed. Since then, privatization has initiated a growing debate on the positive and negative implications of this policy. Merits of privatization include promoting competition, increasing productivity and efficiency, increasing capital and investments in the privatized companies, hence increasing activity, exports and employment. In addition, privatization has been expected to boost investor confidence, promote FDI, deepen and broaden domestic equity market and reduce the fiscal deficit. Notwithstanding these expected merits, the gains from privatization are not perceived by various stakeholders to be equitably distributed. There are mounting concerns about income and wealth being transferred from workers and consumers to capitalists. There are also concerns about monopolistic behavior, as well as irrational allocation of resources and mismanagement when companies are sold to employees’ associations.

Few studies have assessed the impact of privatization whether at the micro or the macro level. Moreover, the scope of these studies was too narrow, and was limited to a small number of companies. In addition, fewer indicators were used.

This study aims at assessing the impact of privatization on the companies from a wider perspective. The assessment is conducted in terms of the financial performance of privatized firms, as well as employment, investment, competitiveness, exports and governance. The assessment includes the total population—rather than a sample—of the privatized companies (reaching 88 companies).

Agricultural Development, Global Food Price Fluctuations and the Poor

There is increasing consensus that supporting the agricultural sector is necessary to boost productivity and reduce poverty in rural areas. Building on the 2007 research on agricultural productivity growth, employment and poverty in Egypt, ECES will undertake a large-scale research project on agricultural development and food security in Egypt.

Over the past half century, agriculture has been largely neglected in Egypt. Unlike in developed countries, it has been heavily taxed through interventions in the form of price fixing and imposing compulsory delivery of main agricultural crops. Population growth resulted in overcrowding in the Nile Valley and in the expansion of urbanization at the expense of old agricultural land. Self-sufficiency ratios of major food products, such as cereals and edible oil, declined. Egypt became a major grain importer.

The steady surge in food prices observed since 2006-2007 followed by their sharp decline by the end of 2008, have had social consequences worldwide. The impact has been particularly strong on the poor. The impact of a food price shock on different economies and different groups of the population differs depending on domestic food production and export/import structure, the relative importance of food consumption baskets, the degree of trade liberalization in agricultural/food products and domestic policies affecting food markets (e.g., direct subsidies, price controls and export bans).

To contribute to the ongoing debate on the need to enhance food self-sufficiency through enhancing agricultural development, and on how to reform the food subsidy system and to eradicate rural poverty, this activity focuses on the following research questions:

1. How to eradicate rural poverty?
2. Is enhancing agricultural productivity likely to achieve food security and poverty eradication?
3. How can different feasible policy schemes contribute to poverty alleviation and what are their fiscal consequences?
4. Which food policies are expected to support economic growth and poverty eradication; decrease inequality; minimize price distortions and improve fiscal position? And how resilient to price shocks are different feasible food policies?
5. To what extent will changes in international food prices impact international food trade patterns?