| dc.description.abstract | Despite the consensus on the importance of stimulating economic diversification
and structural transformation for growth and development, as well as enhancing
resilience in the face of increasing global challenges, this remains a significant
challenge for the Egyptian economy. This challenge is a primary reason for
Egypt's inability to overcome the middle-income trap and transition to a path of
high and sustainable growth.
This paper conducts an in-depth analysis of the results derived from one of the
most prominent methodologies employed in studying economic diversification,
which is still underutilized in Egypt: The Economic Complexity and Product
Space methodology. The paper has two objectives: firstly, to analyze the evolution
of the complexity of the current structure of the Egyptian economy; and secondly,
to review potential diversification pathways, with a focus on those that stimulate
structural transformation in light of the findings of this methodology.
Additionally, it discusses the limitations of this approach and evaluates the
consistency of its findings with previous studies, as well as with the objectives of
the national structural reform program.
The analysis revealed the limited complexity of the Egyptian economy from 2000
to 2021, highlighting its lag behind many international and regional competitors.
Despite this, Egypt leads the first group of countries in terms of its ability to
diversify its export structure, according to the methodology's findings.
The paper proposed an initial list of key products that could be included in the
strategy for diversifying Egyptian exports. This list includes approximately 272
products with a complexity level above the overall average and, at the same time,
close to the current production capabilities.
The paper concludes with a set of suggestions to enhance Egypt's efforts to
achieve economic diversification and structural transformation. It emphasizes the
necessity of finalizing a clear and sustained strategy for economic diversification
and structural transformation with more detailed sectoral targets, alongside
supportive institutional and regulatory frameworks that can efficiently manage the
process and respond to international, regional, and local dynamics. This includes
utilizing modern scientific methodologies to determine targets, design policies,
and establish monitoring and evaluation mechanisms.
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The paper also highlights the importance of classifying all productive
establishments in terms of their current and future capabilities for growth and
export, and increasing the complexity of products to design appropriate policies
and incentives. It recommends adopting policies that incentivize private sector
investment in R&D and continuous efforts to improve the business environment,
enhance competitiveness, and lower transaction costs, especially for SMEs.
Finally, it underscores the importance of continuity, succession, and
comprehensiveness of policies that stimulate overall and sectoral productivity as
the pathway to a high growth trajectory and the creation of qualified jobs | |
