Download - Legatum Prosperity Index

Legatum Prosperity Index 2016
Egypt
Ranked 117th of 149 on the 2016 Legatum Prosperity Index™
OVERVIEW
Egypt’s prosperity has improved since the 2013 political transition, but the
deterioration in its prosperity pre-transition means that over the last decade,
progress has been limited.
Egypt is the second least prosperous country in North Africa after Libya. Between 2009 and
2013, Egyptian prosperity was declining in an absolute sense and relative to its peers. A
sharp drop preceded the 2013 military coup that ousted the president, Mohammed Morsi,
who was democratically elected in 2012. Since the coup and subsequent political transition,
Egyptian prosperity has risen, closing in on North African levels. This rise is due to
improvements across Egypt’s Economic Quality, Governance, and Safety & Security subindices
Legatum Prosperity Index 2016
www.prosperity.com
Sub-Index Rankings
In the Prosperity Sub-Index rankings, Egypt
performs best on Health and Education and
scores lowest on the Personal Freedom subindex.
Visit our Rankings table to see how Egypt
compares to other countries.
PROSPERITY GAP
The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's
expected Prosperity Index ranking.
Egypt has the third smallest prosperity deficit in North Africa, falling some distance behind
Morocco and Tunisia and narrowly behind Algeria. While Egypt’s prosperity deficit remains
significant, a period of relative political stability since 2013 has seen the deficit close by 27%.
Legatum Prosperity Index 2016
www.prosperity.com
COMMENTARY
Over recent years, Egyptian prosperity has been associated with political and social unrest.
Declining prosperity from 2009 to 2011 led to the 2011 revolution in which president Hosni
Mubarak was ousted during the Arab Spring. Prosperity then stabilised at a low level from
2011 to 2012. However, in the second election with more than one candidate in the
country’s history, Mubarak was replaced by Mohammed Morsi in 2012, who was then
ousted in a military coup in 2013. Prosperity contracted sharply from 2012 to 2013, but the
coup was the start of a political transition that ended with the election of the House of
Representatives in December 2015. Over this period, Egyptian prosperity rose by 13 ranks
globally.
Prosperity score (level of Prosperity) in Egypt and North Africa
After years of relative decline, and following the 2013 political transition, Egyptian prosperity is converging on the North
African average
The pre-2013 period of decline was driven by decline in the Economic Quality, Governance,
and Safety & Security sub-indices and it was these same sub-indices that drove Egypt’s rising
prosperity post-2013. In terms of Economic Quality, the Egyptian economy started to
recover in 2014-15, as the government boosted infrastructure spending and restored
macroeconomic stability by gradually replacing universal subsidies with a more targeted
transfer programme, taking measure to control its wage bill and increase tax revenues. As
such, GDP growth picked up and more Egyptians felt comfortable with their level of
household income and satisfied with their living standard, although poverty rates remain
high. Egyptian anti-monopoly policy has improved and the prevalence of non-tariff trade
barriers has reduced, improving the economy’s trading position. This economic reform has
been supported by changes to Egypt’s governance.
Legatum Prosperity Index 2016
www.prosperity.com
While Egypt suffers from many governance issues, including the deterioration in its
democracy level since 2012, it has improved its performance across many other areas of the
Governance sub-index since the political transition. Corruption is perceived to have declined
while government effectiveness, judicial independence, and the rule of law have also
improved. Many more Egyptians have confidence in the honesty of national elections and in
the national government now than they did before 2013. It is important to stress that these
are improvements from a low base. Corruption remains widespread throughout
government. General Sisi issued a decree granting the president the power to dismiss heads
of state auditing bodies, undermining their independence and enabling corruption. In terms
of rule of law, while the Supreme Judicial Council, a supervisory council of judges,
nominates most members of the judiciary, the Justice Ministry still has the power to reassign and transfer judiciary members.
Safety & Security and Personal Freedom ranks (global ranks of Safety & Security and Personal Freedom) in Egypt
While Egypt’s Safety & Security has improved since the 2013 political transition, its Personal Freedom remains among the
lowest in the world
While terrorism-related deaths and Egypt’s Political Terror Scale remain at an elevated level,
Egypt’s overall Safety & Security has improved by 19 ranks since 2013. This is largely on
account of improvements in its individual-level component variables. More Egyptians have
access to adequate food and shelter now than they did in 2013. More Egyptians feel
comfortable walking alone at night and self-reported theft has gone down. These
improvements stem from a time when General Sisi greatly expanded authorities’ powers
with sweeping counter-terrorism laws and the torture and forced detainment of people by
the Interior Ministry’s National Security Agency. There have also been mass trials targeting
Muslim Brotherhood members in military courts. It is interesting to see that these measures
were designed to improve Safety & Security, however, they have a detrimental effect on
measures like political terror. They also have a significant effect on the Personal Freedom
sub-index, which in itself is important for national prosperity. Strengthening personal
freedoms is important and, more than any other sub-index, Personal Freedom holds the
potential for the largest gains in prosperity.
Legatum Prosperity Index 2016
www.prosperity.com
Ways to make a change
Click on the Tweets to help make a change in your nation.
1.
2.
3.
Is there a trade-off between security and personal freedom? Time to give Egyptians
their freedom
Convert economic progress into social progress: Egyptians are still unfree
Better, faster, stronger: keep up the momentum on governance reform
SPECIAL ANALYSIS
After years of declining prosperity, Egyptians grew increasingly prosperous between 2013
and 2016. This improvement is largely due to reversing the trend of decline across its
Governance, Safety & Security, and Economic Quality sub-indices. Despite this progress,
Egypt ranks among the least prosperous countries in North Africa and the world.
Liberalising Personal Freedom, which remains among the world’s worst, is one route to
prosperity.
Areas of success
Egypt has improved its prosperity substantially between 2013, the year of its political
transition, and 2016. This improvement is largely due to reversing the trend of decline
across its Governance, Safety & Security, and Economic Quality sub-indices.
Areas of little change
Personal Freedom and Social Capital have hovered around the same low level since 2007.
More broadly, Egypt’s prosperity story is one of two halves: decline in the first,
improvement in the second. What this means at the end of the day is that Egyptian
prosperity in 2007 looks a lot like Egyptian prosperity in 2016.
Areas for improvement
One area that calls for improvement is Personal Freedom. It has ranked in the bottom 10
since 2007, but since 2013 has ranked within the bottom three countries globally.
Strengthening performance in the Personal Freedom sub-index is where the prosperity
gains can be greatest, and does not necessarily come at the cost of declining Safety &
Security.
Visit Egypt’s country profile on www.prosperity.com.
Legatum Prosperity Index 2016
www.prosperity.com