Egypt in the Age of Permacrisis
Abstract
The Egyptian economy grapples with persistent challenges and systemic vulnerabilities, often referred to as a “permacrisis.” Various paradigms compete in navigating this enduring state. Acemoglu and Robinson’s seminal work, “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” (2012), exposes a crucial divide between inclusive institutions that foster prosperity and extractive ones that perpetuate poverty. Peter Blair Henry, in “Turnaround: Third World Lessons to First World Growth” (2013), highlights the role of pragmatic leadership and strong institutions in driving nations forward amidst hardships.This paper advocates, firstly, for a holistic approach where both paradigms can be aligned and underpinned by effective political leadership and institutions. The paper draws upon various economic approaches and empirical studies, including the Growth Commission Report (2008), to argue that long-term success in development hinges on strategic integration with the global economy, resource mobility, high savings and investment rates, macroeconomic stability, and effective leadership and governance. It suggests that a pragmatic economic policy that prioritizes learning from past experience and avoiding “bad ideas” is crucial to navigating economic shocks and achieving sustainable development. Secondly, through this lens, the paper adopts an evidence-based approach to evaluate Egypt’s crisis management and reform efforts in response to recurring shocks to the system. The aim is to establish whether Egypt’s crisis management and reform endeavors have contributed to the country’s continued growth and development following such setbacks. Three main crises are analyzed: debt, health, and climate. The paper delves into Egypt's crisis management strategies. It addresses the macroeconomic and health system impacts of the COVID-19 pandemic, which emerged as a temporary, yet profound shock exacerbated by pre-existing health system vulnerabilities. Additionally, the paper explores the resurgence of threats following the war in Ukraine and evaluates Egypt’s performance against successful developing countries.