|University of Oslo
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Egypt has shown good progress on a number of indicators for economic development in recent years. This progress, however, seems to only benefit the higher strata of society and not the vast majority of the population. In this thesis I take a look at how the transition to a liberal market economy has affected the peripheral governorate of Matruh on Egypt s northwest coast and how easy it is for small and medium enterprises to develop their businesses. I then try to reflect on how this data sheds light on the advantages and disadvantages of the current Egyptian economic model. Egypt officially shifted from a state-controlled to a liberal market economy in the 1990s with their signing of a Structural Adjustment Loan with the World Bank and a Stand-By Agreement with the IMF. These institutions advocate integration of developing countries into the free market world economy, abolishment of all kinds of inward-looking protectionist strategies and reduction of the role of the state and public sector as much as possible. The critics of this neo-liberal strategy for development say that all of today s rich and developed countries have used protectionist strategies to nurture infant industries until they were able to compete on the international market. In light of the recent transition to a liberal market economy, proclaimed objectives for the Egyptian government are to promote investment and the size of the private sector, encourage the growth of small and medium sized enterprises (SMEs) and have all areas of the country take part in development on an equal footing through a comprehensive decentralisation process. In my data it first of all becomes clear that Egypt remains an only partially liberalised country as the traditionally strong central state with its vast bureaucracy remains strong. On the other side, the economy has been liberalised in that it fully allows the forces of the free market to rule in the private sector. Also, the state has pulled out its support, and private businesses are no longer encouraged by state subsidy, directed credit or help with marketing. Judging by the impediments faced by my interviewees, the Egyptian economic model is currently one that has kept the disadvantages of socialism and added the problems of capitalism. First, representatives from the different trades and industries say that they lack opportunity to develop their businesses due to the cost and complications in relation to state bureaucracy. Second, they lack either sources for funding, or sufficient marketing, or both. What is more, the state remaining so centralised, peripheral regions like Matruh do not at all seem to get the same attention in terms of what state services there still are. Due to Matruh s still being characterised by its history as a remote and cut off area dominated by the rule of Bedouin tribes and its limited number of inhabitants, business is also to a great extent limited to the local market.