Egyptian Economy and Its Peculiarities - Essay Example

Egypt is a land of a rich cultural heritage. There are many resources that have helped the country and its people to survive above years of hardshipsand problems. This is a country that has a long history that dates back to the times of the pyramids and the pharaohs. It was a strong economy country then in the past and it still continues today to be an important country in Northern Africa. The 2009 estimates for Egypt’s gross domestic product (GDP) were $188 billion. It had an annual growth rate of 4.7 percent and the estimated per capita GDP was $5, 650 (‘Egypt’, 2010). In ancient Egypt agriculture was the main resource. Farming was done along the Nile River by many persons who lived in the region. The Nile River played a very important part in the lives of Egyptians because approximately ninety six percent of the land is desert land. Sometimes during the year the river would flood and the people would use this opportunity to plant many crops. The first crop that they would plant was grain. This was an important crop for the population because it supplied food to a large number of persons. Many families relied on these grains for food. Some important grains that they grew were barley, corn and wheat. They used the wheat and the corn to make bread and porridge and the barley was used to make beer. They also grew fruits and vegetables. The vegetables were planted after the grains were reaped. The vegetables that were planted included onions, leeks, cucumbers, beans and cabbages. Flax was also grown. This was used to make linen. Another economic activity of Ancient Egypt was trading. The country is situated in a strategic position where travelers could easily pass from Europe to Africa. They traded agricultural products such as wheat and barley and minerals such as gold to traders from the Mediterranean area. In the nineteenth century cotton was introduced into Egypt during the reign of Muhammad Ali Pasha. He is called the founder of Egypt as we know it today. Cotton was manufactured on a large scale and it brought some well needed cash into the country. The money that was earned from cotton production in Egypt in 1864 was about $56 million. The cotton production resulted in the construction of many clothes factory and the growth of the textile industry which still continues today. Egyptian cotton and fabric are still treasured today by many persons. Merchants are busy in the marketplace selling bed sheets, table cloths and other fabrics used for household use. A large number of Egyptians still depend on agriculture for a living. In addition to cotton which is mostly exported to other countries they grow crops such as sorghum, rice, tomatoes, potatoes, citrus fruit, sugar cane and beets. The castor oil plant which was a traditional medicinal plant in Ancient Egypt is still an important agricultural product. It is also combined with other oils to treat a variety of illnesses. At the beginning of the twentieth century the Egyptian government began to invest in other industries in a bid to diversify the Egyptian economy. This was mostly in construction and petroleum. Petroleum came to be an integral part in Egypt’s economy. Between 1980s and the 1990s the Egyptian economy benefitted much from oil production. The best years were in the mid 1990s when they used to produce 935,000 barrels of oil per day. It has dropped considerably to what they produce now. They now manage to produce 685,000 barrels per day. The economy today is still dependent on oil. The country exports many petrochemical products to European countries. The country is the largest oil producer in all of Africa. The oil that they have comes from a number of areas in the country. It is found mostly in the Eastern and Western Deserts, the Nile Delta, the Gulf of Suez and the Mediterranean Sea. They are self sufficient and they do not have to buy oil from other countries. They are placed 29th on the list of oil producing countries CIA world fact book). The January 2010 issue of the Oil and Gas Journal has reported, however, that because the country uses more oil than what they produce they had to import a relatively small volume (‘Independent Statistics and Analysis’, 2010). Egypt now has a thriving natural gas industry. This is exported to countries within the Mediterranean region as well as to countries in Europe. Most of what is produced is in the form of liquefied natural gas. The economy is also getting assistance from the development of compressed natural gas. The Oil and Gas Journal reported that on the continent of Africa Egypt places third behind Nigeria and Algeria with the countries to have the highest gas reserves. This is predicted to change as the government is planning to increase production in this sector. The government is also encouraging the Egyptian population to consume more of the natural gas by using machinery that will use natural gas instead of oil. The country got help from the World Bank in 2008. They received loans for the Natural Gas Connections Project. The production of these gases brings much needed benefits to the Egyptian economy. They do not have to depend on exports for their electricity and energy needs. Many countries that are not oil producing countries spend a greater part of their earnings on energy needs. The government also helps to maintain the consumption of the natural gas. They only export a percentage of the produce because they want to endure that enough remains in the country for domestic use. Another area of Egypt’s economy that is growing is the hydroelectricity sector. This comes mostly from the Aswan High Dam and Aswan Reservoir Dam. The Nile River is instrumental in providing the resources needed for this growing sector. The Suez Canal plays a very important in the development of Egypt’s economy. From as early as the thirteenth century BC the government at that time was interested in linking the Red Sea to the Mediterranean Sea by creating a passage through the Nile River. Canals were dug during that time but it wasn’t done on a large scale. Serious actions were not carried out, however, until it began in the mid 1800s. The Canal connects the Red Sea to the Mediterranean Sea. It helps marine transports to travel between Europe and Asia without going through Africa. The construction of the canal was paused briefly about three times before its completion. There were problems with the British and Turks who did not approve of the project and there were other conflicts that caused work to be delayed. It was finally opened on November 17, 1869 after $100 million were spent. The Canal brought joy as well as sadness to the people in the region. It didn’t fare well for many African countries as it became easier for European countries to gain access to the continent and to take advantage of the poorer countries. It has also suffered extensive damage to its structure in different times of war. It was closed for a number of times but since it has been reopened in 1975 it has kept open since then. Repairs and upgrades have been done constantly to maintain its upkeep. The Suez Canal gets most of the revenue from the oil tankers that travel through it. It provides a shorter route to the countries where trading is done. Although there has been conflicts and doubts surrounding its operations it continues to be a main source of income for the Egyptian economy. The country is expected to benefit from this sector for many years to come. The Canal helped the Egyptian economy as it brings in added benefits. The fees collected from users of the Canal provide a large source of income for the country. The Suez Canal Authority reported that in 2009 the total number of vessels that passed through the Canal was 34, 456. The economy of Egypt receives over $5 billion annually from vessels that use the Canal. Another major industry in Egypt and which has been growing in recent times is the tourism industry. The country has a lot to offer. It remains an important destination for persons interested in learning about the history and culture of ancient civilization, for example. In February 2010 Egypt’s Minister of Economic Development reported that alongside construction and manufacturing tourism helped the economy to grow and record the fastest growth in more than a year (Wahba and Shahine, 2010). Tourism grew by more than 13 percent. The tourism and travel industry provides a considerably amount of employment for Egyptians. There are also many industries that are spinoffs from the tourist industries. Tour companies, sales of artifact are among the many services that the population takes advantage of and which helps to bring more revenue to the Egyptian economy. According to the World Travel and Tourism Council Egypt’s Travel and Tourism is ranked number 33 in the world in terms of size. The revenue earned from tourism and travel industry in Egypt is expected to be 22% of total export by the end of the 2010 fiscal year. This industry which accounts for 11 percent of the country’s gross domestic product has already brought $5.58 billion at the end of June 10, 2010. International travelers to the country take advantage of the geographic features of the country. The deserts make an interesting place for sightseeing and exploration. The pyramids and other historical structures attract tourist from many places in the world. The Nile River is also a fascinating destination. This enhances the tourism product and helps the smaller business persons to share the economic wealth that is offered in this industry. Egypt has some other industries that also contribute to the nation’s economy. Among them are limestone, gypsum, iron ore, zinc and lead. The country also has aluminum and they produce cement as well. Many manufacturing businesses from some of these minerals play their part in the economic sphere of the country. The 2009 revenue gained from export in areas such as clothing and textile, fruits and vegetables, manufactured goods was in the region of $25.2 billion. Their major export markets are the United States, the Middle East and the European Union. They in turn import many of their goods from China, the United States and the European Union. They import products like machinery, livestock and food and beverages. Since 2004 the GDP of Egypt has been witnessing a steady growth. Plans instituted by the government have helped the country to grow economically. The political situation of the country over the years have prevented the country from moving forward economically in some respect. The global economic crisis has also affected the country’s economy. Since it relies on tourism for much of the countries revenue this can be easily affected especially with conflicts in that area of the world. The terrorist attacks on the Sinai Peninsula in 2005 are an example of how this can affect tourism. The different political leadership sometimes has varying policies that will either help or block the development of certain industries. With the recent decline in world’s economy it is important for political leaders to make economic plans that will help to push the country forward. For the future Egypt is planning to improve the provision of gas through pipelines to Jordan, Lebanon and Syria. This is currently done through the Arab Gas pipeline. This will be a good move for the economy as more countries may take advantage of this product since the cost of oil over the years has affected many of the world’s economies. As many countries are seeking new alternatives to petroleum this will be a step in the right direction. It will not only boost the economy but will further diversify the available resources. The country is making plans to develop another form of energy by 2015. This is wind and solar energy which will even further help to boost the economy. Plans are also in place to develop a nuclear power station. There is a nuclear research center already in place in the Nile Delta but there are plans to improve and develop this sector. There are other plans and ongoing projects that will give further help to the economy if they are carried out efficiently. International organizations such as UNESCO have been donating funds to help improve the tourism product. Real estate is also a growing industry. Investors are being offered incentives to develop this area. The incentives include the sale of land in tourist resort areas at reasonable prices. Egypt is also collaborating with other countries in the region to develop some products that will attract more tourists to the area. Egypt had introduced a 5-year development plan in 1960 that had seen an increase in the national income. The employment rate increased and salaries also were improved. The economy of Egypt has seen an interesting past and continues to be one of the major economies on the continent. With the available resources and the potential that lies in this populous country it can once again be a dominant force in the world economy. Agriculture in Egypt. n. d. Map of World. Web. 6 December 2010. Egypt, n.d. Bureau of Near Eastern Affairs. Web. 6 December 2010. Independent Statistics and Analysis. n.d. U.S. Energy, Information, Administration. Web. 6 December 2010. Key Facts at a Glance. n.d. World Travel and Tourism Council. Web. 6 December 2010. Wahba, Abdel and Shahine, Alaa. “Egypt’s Economy Boosted by Tourism.” Eturbo News. February 11.2010. Web. 6 December 2010. Read More