Was the Open Door Policy Successful? PDF
Document Details
Uploaded by IlluminatingOcean
Tags
Summary
This document analyzes the Open Door Policy in Egypt, examining its positive and negative impacts on the country's economy. The analysis highlights macroeconomic indicators, private sector participation, and investment trends. It also discusses criticisms of the policy, including issues like foreign intervention and neglecting the agricultural sector. Questions regarding the policy's success are included.
Full Transcript
3. Was the Open Door Policy Successful? Positive effects 1. Improvement in macroeconomic indicators: Higher growth rate of real GDP (9%) & per capita income. 2. More private sector participation in the economy (higher private sector share in industrial production). 3. Increase in the investment and...
3. Was the Open Door Policy Successful? Positive effects 1. Improvement in macroeconomic indicators: Higher growth rate of real GDP (9%) & per capita income. 2. More private sector participation in the economy (higher private sector share in industrial production). 3. Increase in the investment and savings rates. Criticism and Negative effects 1. Improvements in Egypt’s economic growth did not result from the new policy but resulted from favorable external conditions: oil boom, increased remittances from Egyptians working in the Gulf, and higher Suez Canal revenues. 2. Private sector and foreign investment increased but less than the expectations of the policymakers. Negative effects 3. Egypt’s external debt increased substantially due to the rapid increase in imports of intermediate & capital goods. 4. Although the investment rate increased, most investments targeted unproductive sectors such as public infrastructure and financial services. 5. Economic activity remained dominated by the inefficient public sector which represented a burden on Egypt’s budget. 6. Egypt’s financial and economic policy was subject to foreign intervention from international institutions such as the IMF (1977 food riots due to reduction of subsidies) 7. Leakage of public sector human resources to the private sector worsened the efficiency of the public sector. 8. Ignoring the agricultural sector despite its importance in reducing the pressure from rising food imports. Questions -The open door policy was criticized due to: a. Privatizing public sector companies b. Attracting foreign investments c. Targeting unproductive investment activities (True or false) -The open door policy ignored the agricultural sector -There was an improvement in macroeconomic indicators during the open door policy in Egypt.
