On Law and the Transition to Market: The Case of Egypt

On the eve of independence from European colonialism, Egypt, like most other developing countries, undertook the project of de-linking itself from colonial economy by initiating domestic industrialization. The economic project known as Import Substitution Industrialization (“ISI”) was designed to liberate Egypt from raw commodity production--specifically, agricultural and mineral--servicing its previous colonial master, Great Britain. The engine of development would be an expanding public sector with nationalization and socialism as leitmotifs. In re-orienting the economy towards industrial production, Egypt hoped that the terms of trade with the international economy would significantly improve, thereby leading to an improvement in the living standards of its population. And, like most other developing countries (with *352 the exception of the East Asian Tigers), Egypt failed. A symptom of its failure was a severe debt crisis that hurled Egypt into the brutal embrace of the International Financial Institutions (“IFIs”): the World Bank and the International Monetary Fund (“IMF”). To be rescued from its debt crisis, Egypt had to concede to the neo-liberal economic program of these institutions, otherwise known as the Washington Consensus. The program aimed to improve Egypt\u27s capacity to repay its debts to international creditors by: re-linking it to the global economy via trade liberalization and through the re-regulation of its domestic economy to be more market oriented with the private sector, henceforth, being the engine. And like most other debtor-countries, Egypt had to go through an austerity program to improve its savings