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Wednesday, November 30, 2005

Egypt, and their economy

Egypt has had to depend on their government for many centuries. they have had many resources and labor to use. In the last century Egypt has attained minimal growth of around 2-3%. This is a good productivity. The problem they have now is the public sector is involved in too many aspects of the society. There are regulations and rules that do not allow foreign investment to acheive the full rewards. The regulations slow down the Egyptian economy.
The World Bank is donating 2.0-2.8 billion dollars to help Egypt improve its private sector. This is to boost the economy of Egypt. My problem is that The world Bank is investing this money when it can invest it somewhere else. The Egyptian government is working on ways to privatize many sectors of the economy. Why does the World Bank need to invest their money to help out Egypt. If the government would overnight, say on December 31st of 2005, the government will only be involved in necessary markets, such as security, energy, and water, What would happen?
There would be a spontaneous order that created a more vibrant economy. the government would reap the rewards of a larger private economy. The World bank would be able to invest in other countries that need help. Egypt has the capacity to run on a mainly private markets. I believe that Egypt's government is affraid of the loss of control.
If the economy of Egypt would be allowed to opperate with a majority of free markets the economy would flourish. They would grow at unseen rates. The people would respond and the poverty rate would jump out of the 16.7% rate it is at now. The unemployment rate would become les than the current amount of 9.9%.
The world needs to identify the strength of free markets and less government intervention. Do you think the world would grow faster if there was no government, public, sector?

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