Download Economic Freedom Score Country Comparisons Freedom Trend 52.9

EGYPT
Economic Freedom Score
25
World Rank:
135
Regional Rank:
13
Least
free
gypt’s economic freedom score is 52.9, making its economy
Epoints
the 135th freest in the 2014 Index. Its overall score is 1.9
lower than last year, reflecting declines in half of the 10
50
75
Most
0
100 free
52.9
Freedom Trend
62
economic freedoms including investment freedom, property
rights, and freedom from corruption. Egypt is ranked 13th out
of 15 countries in the Middle East/North Africa region, and its
overall score is below the world and regional averages.
Over the 20-year history of the Index, Egypt’s economic freedom score has risen over 7 points, reflecting advancements in
fiscal freedom and trade freedom. However, overall improvement has been held back by considerable deterioration in
other areas, particularly the rule of law as measured through
property rights and freedom from corruption. The country’s
uneven reform progress has largely stalled in recent years,
and scores for investment freedom and financial freedom
have fallen back as well. Egypt is now on a downward path of
economic freedom, registering its lowest score in 12 years in
the 2014 Index.
Egypt’s lack of progress in advancing economic freedom has
trapped many of its citizens in poverty and economic stagnation. As noted in earlier editions of the Index, institutional
reforms are critically needed to ensure Egypt’s transition to
a functioning market economy under an effective rule of law.
BACKGROUND: The Egyptian army ousted President Hosni
Mubarak in February 2011 after massive protests destabilized
his government. The Supreme Council of the Armed Forces
assumed power pending election of a new civilian government. The parliament was dissolved in June 2012 after the
Supreme Constitutional Court ruled that one-third of its
members had won their seats illegitimately. Mohamed Morsi
of the Muslim Brotherhood’s Freedom and Justice Party
won the June 2012 presidential election and granted himself
sweeping new powers in November. This led to his ouster
in mid-2013. Domestic instability and political uncertainty
have hurt tourism and foreign investment, both of which are
important sources of foreign exchange. There have been limited market reforms, but the government still heavily subsidizes
food, energy, and other key commodities.
How Do We Measure Economic Freedom?
See page 471 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
60
58
56
54
52
50
2010
2011
2012
2013
2014
Country Comparisons
52.9
Country
World
Average
60.3
Regional
Average
61.5
Free
Economies
84.1
0
20
40
60
80
100
Quick Facts
Population: 82.5 million
GDP (PPP): $540.0 billion
2.2% growth in 2012
5-year compound annual growth 4.2%
$6,545 per capita
Unemployment: 12.3%
Inflation (CPI): 8.6%
FDI Inflow: $2.8 billion
Public Debt: 80.2% of GDP
2012 data unless otherwise noted.
Data compiled as of September 2013.
191
EGYPT (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Country
World Average
Property Rights 20.0
Freedom from Corruption 28.6
0
20
40
60
80
Rank
1–Year
Change
139th
113th
–15.0
–0.4
100
Corruption is pervasive at all levels of government and has eroded trust in the economic system. The rule of law has been highly unstable across the country, and the judicial system’s
independence is poorly institutionalized. Judicial procedures tend to be protracted, costly,
and subject to political pressure. Property rights are not protected effectively, and titles to real
property may be difficult to establish.
Fiscal Freedom 85.6
GOVERNMENT
Government Spending 69.6
SIZE
50th
90th
0
20
40
60
80
0
+0.2
100
The top individual income and corporate tax rates are 25 percent. Other taxes include a property tax and a general sales tax. The total tax burden is 13.8 percent of GDP. Government spending
is 32 percent of the domestic economy, and public debt, now over 80 percent of GDP, continues
to rise. International support has buoyed delicate public finances amid political instability.
REGULATORY
EFFICIENCY
Business Freedom 62.7
Labor Freedom 45.7
Monetary Freedom 60.5
100th
153rd
175th
0
20
40
60
80
–0.6
+2.4
+2.1
100
Launching a company and organizing new investment remain burdensome. Previous regulatory reforms have failed to create real momentum for dynamic entrepreneurial growth. In the
absence of a well-functioning labor market, informal labor activity persists. Among energyimporting countries, Egypt has one of the highest levels of electricity and fuel subsidies; in
2012, outlays for subsidies soared by 42 percent.
OPEN
MARKETS
Trade Freedom 71.4
Investment Freedom 45.0
Financial Freedom 40.0
124th
125th
107th
0
20
40
60
80
–2.4
–5.0
0
100
Egypt’s average tariff rate is a relatively high 9.3 percent. Political unrest discourages new foreign investment. Investment flows have slowed significantly due to the challenging economic and political situation. The state-dominated financial system has been under stress, with
negative impacts from the global economic slowdown exacerbated by domestic turbulence.
Banking-sector reform programs have been stalled or derailed.
Long-Term Score Change (since 1995)
RULE OF LAW
Property Rights
Freedom from
Corruption
192
–10.0
–1.4
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
+39.6
+16.0
REGULATORY
EFFICIENCY
OPEN MARKETS
Business Freedom
+7.7
Labor Freedom
–13.9
Monetary Freedom –11.5
Trade Freedom
+46.4
Investment Freedom –5.0
Financial Freedom
–10.0
2014 Index of Economic Freedom