Tuesday, November 07, 2006

Me no understand

I came across this interesting article about reported growth in the Egyptian economy. (It is produced below cos I know you won't open a link. Also, sodding Blogger is acting up and won't let me do rich text or whatever it's called.)

I understand nothing about economics - macro, micro, or miniscule - but I sometimes hear the grown-ups anxiously whispering downstairs about the dire state of the Egyptian economy, its impending collapse and the armageddon which will ensue.

I'm therefore wondering whether anyone can help me out with the following queries:

1. Is the Egyptian Gazette independent?
2. Who organised this London forum?
3. Is the alleged growth referred to in this article mere government propaganda?
4. Can you recommend a publication which will help an economics layman and maths retard to understand the basics of economics? It can't have algebra in it, and preferably not graphs with those lines that look like a heart-rate monitor reading. Pie-charts are acceptable. Also, it should tell me how, for example, the growth of an economy is measured. I know it's not with a ruler, but that's where my understanding stops.

Ta in advance to anyone who deigns to illuminate my economics darkness.

The Egyptian Gazette, Monday 6th November

Egypt's economy gets guarded praise at London forum

Special to The GazetteLondon - Economists have hailed Egypt's surging economy - with a warning that the country must overcome significant challenges if its boom times are to be sustained.

The economists, including Egypt's foremost businessman Naguib Sawiris, gathered in London for two days to examine the evolving relationship between Egypt and the UK.The high but guarded praise came on the opening day of this prestigious conference, at which British and Egyptian politicians, diplomats, business people and education experts were gathering to mark the two nations' growing friendship since the Suez Crisis 50 years ago.In the Evolving Economic Relations Session, leading Middle East economic analyst Fiona Moffitt told this unique gathering that the Egyptian economy - currently growing at an enviable 6.9 per cent per annum - was the source of huge optimism both at home and abroad. “Egypt's reformist economic team have done exceptionally well,” she said. “They've overhauled customs, massively reduced corporate tax, revised tariffs and brought in financial sector reform. But their hard work has only just begun: they face substantial challenges that need to be solved if the economic revival is to keep on course.” The economic boom has encouraged massive foreign investment in Egypt, led by British companies: some 200 have now invested a staggering £18 billion, making the UK Egypt's biggest Western investor.Moffitt said Egypt's economic challenges now included creating jobs, solving unemployment and under-employment and addressing a 'mismatch between the education people receive and the skills needed in the job market.' Improving the lot of the lower-income population was also crucial, she said. 'Growth will need to exceed the current 6.9 per cent - it will have to be 7-9 per cent - and, crucially, be sustained year on year.' She outlined ways Egypt could maintain its economic surge, including encouraging more foreign investment, improving educational standards, creating more employment - 700,000 new jobs are needed each year - and by boosting tourism.She also said state subsidies of E£100 billion a year had to be addressed to ease Egypt's budget deficit. “A number of hard decisions are going to have to be made with large social and political consequences, in areas like privatisation and reduction in subsidies and these will be controversial. They will test the government's political will and its commitment to reform.”Sawiris, the CEO of Orascom Telecom Holding, backed Moffitt's call for unemployment and under-education to be tackled as essentials for the long-term good of the economy. He also made a plea for the reformist government to “open the door a little bit” to multi-party politics - and not to lose heart in privatisation because “good private sector management and good private sector money means better salaries and better incentives.” But he warned those who doubt Egypt's commitment to change that there was no going back on economic reform. “We have a great business environment now, run by a great government team,” he said. “They are composed of intelligent people who are really focussed on reform. The first impression you gain as a businessman is the qualities of the people you see around you - and the team now in Egypt is a winning team.”The conference considered how Egypt and the UK can develop closer ties in politics, economics, international relations, cultural heritage and education, through government and the public and private sectors.



Anonymous said...

The Gazette is indeed part of the official press; I've yet to meet anyone who takes it seriously! I'm no economist and although these statistics might be valid, that's what they are, mere statistics. These markers of so called growth are heavily disputed by many economists today as they generally offer skewed conclusions that as you suspect are used by politicians to expound their own success.

Any discussion about economics today can't be had without references to globalization, privatization, IMF, the World Bank and trade agreements.

Blind adherehence to IMF and World Bank policies such as decentralization and the suspension of tariffs to ostensibly enable free trade between nations has been proven to harm developing countries rather than help them by perpetuating dependency rather than inspire self sufficiency.

Globalization and its Discontents by Joseph Stiglitz is the best book to read to understand the ravaging impact of these policies on the Third World. Check out this link for a summary of its main ideas: http://www.informationclearinghouse.info/article4799.htm

Also these are articles offering lucid perspectives on the NDP's current brand of economic reform, something of an opposing opinion to Sawiris's comments.

Galal Amin, in Arabic sorry!: (http://harakamasria.org/node/7949)

The wonderful Maria Golia: (http://www.dailystaregypt.com/article.aspx?ArticleID=3503)

And when it gets too much and the world looks bleak visit here for the happy pill : (http://www.amcham.org.eg/)


Scarr said...

Thank you for that very comprehensive answer mate. I fortuitously brought Stiglitz with me from the UK, and shall read it.

I have a basic understanding of how the World Bank and private multinationals basically pimp out developing countries from a business and HRs course I did. Incredibly depressing.

I love Golia, her Cairo City of Sand I started reading, and enjoyed a lot.

Thanks for the links, just what I was after.

Anonymous said...

as a former student of economics and a lover of maths I can give u one advice, take whatever economists say with a grain of salt. Economist never have and probably will never reach consensus on what is good or bad for the economy.

Numbers can easily be manipulated to describe very different stories.

For example Galal Amin, writes with a socialist agenda in mind, he want an economichttp:/ policy like nasser's. Sawiras on the other had, wants the government to privatize more and interfere less. Both of them will describe a very different picture of Egypt's economy.

As for the Gazzette it is published by Al-Tahrir publishing house, which publishes many government mouth pieces like Al Gomhuria and Al Messa.

Scarr said...

Yes thanks Memz...I had understood that as well as having to contend with baffling theories and mathematical formulas, I also have to bear in mind that (as in most other disciplines) economists manipulate reasoning to fit the conclusion already made, rather than the other way round. Sigh.

Yes nice to see you as well at the Greek Club.

Butterfly said...

well be careful with your generalizations. I'm an economics major, so i can't be entirely objective on this, but that's not what Economics - "or most other disciplines"- are there for. Just because we find it hard to be objective or that everybody has a subconscious agenda that he seems to propagate, doesn't mean that we can reach pretty good results every now and then.

Scarr said...

Grain:I'll take your word for it! I didn't mean to slander the entire economics profession...it's just that for a layman economics is so inaccessible, and slightly scary.