February 27, 2004
There are economic reforms emerging in Egypt that have the power to transform the country into a wealth-creating dynamo which will be similar in magnitude to the experiences of Hong Kong and Ireland. Egypt, says Steve Forbes, is poised to bring millions of Egyptians into a vibrant and increasingly democratic middle class, while at the same time deal a devastating blow to global terrorism.
At the heart of this resurgence, says Forbes, is the recognition by the state of individual property rights. While those in the West have long taken the right to buy property, sell it, improve it, and start a business with it for granted, property rights have largely been absent among the rest of the world. Egypt has clearly been no exception:
- About 88 percent of all enterprises are extralegal because the process of obtaining business licenses is too costly and too lengthy.
- Similarly, 92 percent of Egypt's housing operates within the country's shadow economy.
- There is an estimated $248 billion in assets that have accumulated outside the state's legal system.
However, all this activity and all the assets are dead capital -- assets that cannot be leveraged to obtain credit and investment. That is where the emergence of property rights becomes so important. Forbes concludes that it is not as though Egypt lacks an entrepreneurial class; the country merely lacks institutions and legal structures so that this class can expand and flourish, explains Forbes.
Source: Steve Forbes, "Mideast Miracle?" Forbes, February 2004.
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