As part of his turn to the West, Egypt’s President Anwar as-Sadat in 1974 announced an open-door policy (infitah) for foreign investment and markets. But for the next fifteen years, income per person barely rose despite massive aid from the West and from Arab states, plus billions sent home by Egyptians working in the newly-rich Arab oil countries. The Left used this experience to argue that capitalism does not benefit ordinary people.
Harik offers a much sounder explanation, namely, that the infitah changed little. In 1990, the government-owned sector was still responsible for 65 percent of output, 70 percent of investment and 80 percent of foreign trade. Harik brings to life the economists’ dry phrase “structural impediments to growth.” In successive chapters, he details the perverse effects of over-regulation in industry, agriculture, pricing, foreign exchange, education, and housing. A penultimate chapter details how economic policy affected popular attitudes and behavior, with the heavy regulatory environment reinforcing resistance to change. Harik dubs the “uncivic culture” an environment in which citizens regard the violation of laws about economic matters as morally acceptable and officials are uninterested in the public good.
The final chapter offers a dismal evaluation of Egyptian policy reform, accurate enough for the period Harik analyzes, 1974-90, but not for the years since. As of late 1997, Egypt is well on track to fulfill its October 1996 commitment to sell 56 percent of public enterprises in two years. The economy grew 5 percent in 1996/97 and should grow faster thereafter. The stock market is booming, with capitalization at $19 billion. Harik’s elliptical comment in the introductory chapter about the infitah slowly preparing the country for capitalism would seem to be vindicated.
