Economic restructuring and the dilemmas of manufacturing in Egypt : business interests and the political economy of the Qualifying Industrial Zones (QIZS) under Mubarak -

Abstract

The signing of the Qualifying Industrial Zones agreement by Ahmed Nazif’s government in 2004 was more than just another episode in the US campaign to impose normalization between Egypt and Israel against popular opposition. The agreement not only would compel the cooperation between businessmen of both countries, but also aimed to perpetuate its own existence by securing its indispensability for the Egyptian economy, particularly with regards to the garment sector. In the Import Substitution Industrialization phase since the 1950s, the advancement of the manufacturing sector was actively sought. Although the rhetorical primacy of industry was later on retained, the subsequent economic opening of “Infitah” and the taking up of the Structural Adjustment Program drew a very different picture, signifying a move away from manufacturing development. In the latter phases, particular state-connected businessmen reaped substantial economic benefits. However, the economy itself became vulnerable to changes such as the termination of the Multi Fiber Agreement in 2005. This economic “calamity” was an opportunity that the QIZ project could grasp. The thesis charts the emergence of the QIZs in Egypt against the long run transformation in the Egyptian economy and its manufacturing sector in particular. It investigates the economic justifications for the QIZ agreement and the story of its implementation, through identifying the role of particular businessmen in the project. This latter element in specific is illuminated through a study of the project’s official consultation processes, which were kept under wraps until they were made public through WikiLeaks. The big businessmen who mostly benefited from the QIZ agreement were active in the low-cost garment sector, bringing about an unpromising trend in the Egyptian economy.