By Rodney Wilson (auth.)
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Extra resources for The Economies of the Middle East
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38 The price distortions are not only economically inefficient, but often regressive from the point of view of income distribution. NaturaIly, urban workers like to see cheap bread in the shops, but the low grain prices undoubtedly have a disincentive effect in the agricultural sector, while, in addition, farm workers are usually much poorer than those engaged in the country's protected industries. As in the Soviet Union, in Egypt there is a system of compulsory procurement of agricultural produce with farmers required to market a substantial proportion of their output through state channels.
Unfortunately it seems that this policy is not working successfully, since there are few new enterprises in evidence, perhaps because, as already indicated, foreign businessmen are put off from investing in Egypt by the country's cumbersome bureaucracy. Ironically, it is therefore as a result of its bureaucracy that Egypt is unable to escape from the economic morass into which it has fallen. Egypt's complex labour laws, a legacy from the Nasser era, also deter many foreign businessmen from setting up new ventures.
17 Within the industries themselves a large number of administrators are needed to deal with the constant paperwork coming from the civil servants, and the ratio of white-collar to blue-collar workers in Egyptian industry is consequently one of the highest in the world. 18 This bureaucratic overmanning in industry was one of the factors which prompted Sadat to reverse Nasser's economic policies of state control, and restore an element of private enterprise in the economy again. President Sadat believed that the competition from the new private sector industries established under the Open Door Policy would not only help widen Egypt's industrial base, but also improve performance in the state sector, which would be no longer in a monopolistic position.