I can think of a hundred ways of how a high rate of growth of the Egyptian economy may not bring any benefit to the majority of the citizens. I can also think of another hundred ways of how it may actually coincide with a fall in their standard of living.
This is what the former Brazilian president meant some 40 years ago – during what was called “The Brazilian miracle, when the rate of growth of Brazil’s Gross Domestic Product (GDP) was impressively high – when he said: “Brazil is doing well, but the people are not.
This was the first thing that came to my mind when I heard that Egypt realized a GDP growth rate of seven percent last year, and was expecing about the same rate this year. Of course, seven percent is a very respectable rate of growth for any country; it would mean doubling the total product in 10 years and increasing the income of the average Egyptian by more than 60 percent in the same period. But the “average Egyptian is a mere fiction. There are Mohamed and Hussein, but there is no average between the two. A 60 percent increase in average income only means that Mohamed gets much richer while Hussein gets even poorer.
Let us imagine, for example, that a mechanized way of garbage collection and disposal is introduced. This would make the total product of Egypt bigger (by increasing the value of the service offered) but it also leads to laying-off the number of garbage collectors by half, which would increase unemployment figures.
A Cambridge economist once explained that if a man marries his domestic servant this would result in a fall in the national product, because what was previously counted in GDP, as the wage of a servant, is now replaced by the work of a housewife who offers her work free of charge and hence does not enter into national accounts. By the same token, turning a housewife into a worker outside the house may increase national income but may not increase the family’s or the nation’s welfare.
All economists are ready to agree on this, but they disagree on one important point: Is this only a short term phenomenon or is it likely to change in the long run? Those who celebrate the rise in the growth rate to seven percent may be ready to admit that the poor will not realize immediate benefit, and may even suffer more. “Wait a few years, they say, “and the higher rate of growth is bound to benefit all. This may indeed have happened several times in the history of other countries but unfortunately, there is no reason to expect it to happen this time to the Egyptians.
