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Aspects of the Economic Reform and Structural Adjustment Program


Economic Reform and Structural Adjustment Program in Egypt (Nasser, H. 1997)

ERSAP is divided into three basic groups, each relevant to certain effects on the society and on WOMEN as members of the society.

The first group of ERSAP aims at economic stability through decreasing the inflation rates and the deficit in both the local and foreign balances. Therefore, this group of policies endeavors to reduce the public expenditure through various programs such as employment policies, which aim at reducing the rate of wage growth, and through the financial policies which attempt to rationalize the government expenditure in the service sector (health and education) and to reduce the subsidy ratio to total expenditure. These policies aim also at improving the public revenues depending on indirect taxation.

The second group of ERSAP aims at realizing an economic growth through a number of policies aiming at transferring the public expenditure from the service sectors to the productive sectors and from consumption to investment, by introducing a change in the relative prices of goods and services to the benefit of tradable goods.

The third group of ERSAP includes the policies which aim at realizing improvements in the rate of growth of GDP such as trade liberalization policies, the reduction of the government role in the economic activities, the improvement in the money and capital markets, the establishment of a free pricing system, the encouragement of the market economic system, the integration with the external world and the improvement of the human capacities through developing the incentive system.

An obvious difference exists in the nature of the various structural adjustment policies, according to the category of each group of policies. It is normal that the policies of the first group of ERSAP would have recessional effects, due to the limitations imposed on the supply of money and the reductions in the government expenditure. All these measures should result into negative effects on real incomes as well as employment opportunities. As for the second and third group of policies of ERSAP, these are of expansionist nature by transferring the resources from the service sectors to productive sectors, which produce tradable goods.

Relevant to the previous remark is the time interaction between the various policies of ERSAP. The policies in the first group are characterized by recessional effect occurring immediately, given that most of these policies imply procedural policies and as soon as they are undertaken, their effects occur. Therefore, their social impact occurs in the short run. As for the expansionist effects of the second group of policies of ERSAP it is expected that these policies would occur after a relatively longer period of time. This is due to the significant amount of financial resources needed for this group of policies, the presence of some problems related to the inflexibility of the productive systems, the need for new laws and regulations and the need of highly skilled personnel available.

The third main point in order to understand the nature of the social impact of the ERSAP is the difference in the degree of intensity from one country to another, according to several factors such as the size of population, the burden of foreign debt, unemployment rate, dependency rate and the percentage of those who live below the poverty line.

Handy, H. & A. Subrmanian (1997) "The Egyptian Stabilization Experience"(Washington D.C.: International Monetary Fund)

Korayem, Katima (1997) "Egypt's Economic Reform and Structural Adjustment", Working Paper No. 19, (Cairo : The Egyptian Center for Economic Studies)

Laithy, Heba El, and Oman, O. M, "Profile and Trend of Poverty and Economic Growth in Egypt", A Background Paper Prepared for Egypt Human Development Report 1996, UNDP

Subramanian, Arvid (1997 ) “The Egyptian Stabilization Experience: An Analytical Retrospective“ (Washington, D.C.: International Monetary Fund)

Testing for the significant change in the Egyptian Economy under the Economic Reform Program

As Egypt is characterized by a relatively high population growth rate as well as high dependency rate (which reaches 37%) and a relatively low participation rate in the labor force ( 28.4% in the last Census) and a relatively high poverty incidence rates(22.47%and 23.2% the lowest poverty line and 44.9% and 50.2% the highest poverty rate in urban and rural areas, respectively), it is expected that the negative social effects of ERSAP in the short run will be intensified.

Grigorian, David A. & Rania A. Al-Mashat (1977) "Economic Reforms in Egypt: Emerging Patterns and Their Possible Implications (Washington D.C.: World Bank)

El-Tawil, Mona Samir (1997) Development [sic] and reform in the third world : an analysis of the Egyptian economic reform program. Thesis (Cairo: American University in Cairo. Dept. of Sociology, Anthropology, Psychology and Egyptology)

Omran, Mohammed (2001) “Testing for the Significant Change in the Egyptian Economy under the Economic Reform Programme Era

Aly, Abdel Hamid (1994) The Impact of Structural Adjustment and Stabilization Policies on the Labor Market in Egypt. A paper prepared for the T.W.F & UNICEF

Soliman, Azza Abdel Aziz. (1995) Programme of economic reform & structural adjustment & its effect on Egyptian woman in labour force (Cairo: Cairo Demographic Center)

Economic and Social Commission for Western Asia (1998) Impact of Economic Reform Policies on Poverty in Selected ESCWA Member Countries: Egypt, Jordan and Yemen (New York: United Nations)



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