Impact of the Revolution on Egypt - Research Paper Example

Impact Of The Revolution On Egypt Introduction Developing countries often suffer from high level of social inequality, weak level of governance and high level of corruption. The social and economic inequality amongst people many a times fuels their desire to overthrow the government in power and earn their rights. This is more compounded in an authoritarian government where people have less freedom. In Egypt people suffered from decades of social and economic injustice, corruption, authoritarian government which meant no democratic freedom. The Egyptian people had long suffered from these imbalances and oppression and there was a growing resentment among the people. The old generation still used to adapt to the situation. However the young could not tolerate the injustice and they set out correct what they thought was unfair. The following paper analyzes Egypt in terms of the changes that have taken place to it from before the revolution to after the revolution has occurred. Discussion Before the revolution The main reasons which fuelled the revolution in Egypt was rising poverty level, rise in inflation, and rise in the social and economic injustice and rising corruption level. In addition to that Egypt followed a mixed form of governance. In a mixed form of governance there is both democracy guided by a written constitution and an authoritarian government. In Egypt for example Hosni Mubarak had assumed supreme power. The people specially the youth had reached a point of indignation due to this series of events which they considered as unfair. Hence they were waiting for a spark to start a revolution. That spark was provided by the parliamentary election in 2010. The parliamentary election in 2010 cited a lot of controversy over allegation that it was conducted in an unfair way and there was gross violation of democracy. This event added spark to the already burning fuel of indignation that burned in the hearts of people and the result was this bloody revolution. Through this revolution the youth in particular and Egypt’s overall population in general wanted to overthrow the government and bring in more democracy in the system. The aim of the revolution was to bring in more political and economic equilibrium. Egypt was a country which could basically be considered as a developing country at best. The GDP growth rate of the country prior to revolution was 5.1%. Most of the revenue that the Egypt government earned was from Tourism. The tourism contributed to $1 billion in revenue in 2010. The country had 14.7 billion tourists in 2010. The foreign exchange reserve in 2010 that pre revolution period was $36 billion. The CPI inflation figure pre revolution was 16.2% in 2009. It had dropped to 11.7% in 2010 that is year prior to the revolution year. The budget deficit was at 6.6% of GDP in the year 2009 and 8.1% of GDP in 2010. The poverty level was at 22%. Macroeconomic indicators of Egypt before and after revolution (Source: Abdou and Zaazou 98) Once, the foreign direct investment in Egypt had reached figures amounting to $113 billion. Even in the year prior to revolution the foreign direct investment received was to the tune of $6.8 billion. Before the revolution occurred, the country’s economy was performing moderately well as given by the GDP growth rate, foreign direct investment amount, foreign exchange reserves in store and stock index. The main worrying factor was the inflation and the poverty level. The inflation and the poverty level was a major source of concern because the country’s 22% population was poor and the high inflation meant that they could not afford the foods. What this meant was the fact that the corruption levels were so high that any growth in the upper level did not translate to all sections of the society. This was one of the reasons why people revolted. After the revolution The revolution has dealt a drastic blow to the economy of Egypt. One of the sectors that has been worst affected by the revolution is the tourism sector. One of the Egypt’s main revenue sectors is tourism and it accounts for 1 out of every 7 jobs in Egypt. Tourism was down by 80% compared to 2010 in 2011. Tourism acts as the number one foreign exchange earner for Egypt and it makes 11% of Egyptian economy (Kunkle). After the revolution the people have started fearing of safety. The revenue from the tourism sector has dropped to $352 million from $1billion in year before revolution. In view of their tension and fear for life millions have either cut their tour plan to visit the country or have decided to not visit Egypt at all. This has meant a severe blow for all the people of the country who depend on tourism either directly or indirectly. Due to the revolution other sectors of the economy has also been badly impacted. Foreign direct investments to the country have dried up. No investor wants to invest in a country that is facing a political turmoil or is not in a stable position politically. The reason behind this is simple as no investor wants that his investment should be risky as every investor wants to gain positively through his investment. In light of this requirements and present scenario, the investors have stopped investing in the country. There has been negative impact on the food inflation as well. The food prices have raised be 48 percent. In Egypt most of the wheat is imported and in fact Egypt is the largest importer of wheat. However in light of the consequences of revolution and the global economic scenario the prices of essential food commodity in Egypt have sky rocketed. Another problem that Egypt is facing after the revolution is the unemployment rate. The unemployment rate in Egypt was already 12%. In addition to that more workers are returning from countries such as Libya due to unrest in those countries which has stepped up the problem (Rt). Another problem that Egypt is facing is that the poverty level in the country is already at 22% of the population. The revolution is likely to add to the numbers and the inflation is going to be a major cause of concern for the country. In Egypt in order to curtail unemployment rate it is required that the country grows at the rate of 6% annually. However as a result of this revolution the growth has fallen to estimated level of just 2.5% in 2011.In comparison to 2011 the growth figure for 2010 was 5.3%. It is estimated that given the current state of affairs if things doesn’t improve drastically then poverty level will reach to about 60% of the population. With 0 foreign investments the foreign exchange reserves has come down to $28 billion from $36 billion. It is feared that if investor confidence is not boosted that the remaining foreign exchange reserve will be wiped off in 6 months. The stock market has also experienced a blow after the revolution and the stock index of the country has fallen by 22% since the revolution (Schenker). Conclusion As evident from the economic figures the revolution has been very costly for Egypt. The revolution has meant that there is an overall loss of confidence of the people and the investors on Egypt. In fear of their safety the tourists have stopped coming to Egypt. The revolution has also seen a drop of foreign investments to Egypt. As a result of these developments the foreign exchange reserve of the country has dwindled. As per the present scenario the forex reserve will not last for another 6 months if conditions persist. The stock market has fallen and there is a rise in unemployment post revolution. The poverty level is on the rise and so is inflation. This problem is going to continue at least for the time period till Egypt forms a stable government. Works cited Kunkle, Fredrick. Tourists stay home after Egypt's revolution in blow to nation's economy. 2011. Web. 16 January 2015. < http://www.washingtonpost.com/world/tourists-stay-home-after-egypts-revolution-in-blow-to-nations-economy/2011/04/14/AF0Cc3qD_story.html>. Schenker, David. Egypt and the Arab fall. 2011. Web. 16 January 2015. < http://articles.latimes.com/2011/jun/01/opinion/la-oe-schenker-egypt-20110601>. Rt. Egypt's costly revolution. 2012.Web. 16 January 2015. . Abdou, Doaa, and Zeinab, Zaazou. “The Egyptian revolution and post socio-economic impact”. The journal of topics in Middle Eastern and African economies. 15.1. (2013): 92-115. Print. Read More