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Why Egypt
The U.S. is Egypt’s largest bilateral trading partner. Egypt is one of the largest markets worldwide for American wheat and a significant importer of other agricultural commodities, machinery, and equipment. The U.S. is also the second largest investor in Egypt, after the United Kingdom. Roughly two-thirds of total U.S. investment is in the oil and gas sector, but also includes investment in areas such as information technology, consumer goods, automobile production, and financial services. Given its strategic position in the region, Egypt continues to benefit from strong donor support. The U.S. Government has worked closely with Egypt on its economic reform program, and is its largest bilateral aid donor. U.S. non-military economic assistance to Egypt in FY 2007 was approximately $455 million.
Egypt is the largest Arab country by population at a current 78.8 million…. Egypt sits in the heart of the Middle East and has a reasonably well-educated labor force. Egypt’s economy, traditionally associated with agriculture and particularly cotton, has become much more diversified than in the past. Its unmatched ancient monuments and spectacular coral reefs have made tourism its single largest foreign exchange earner. It is also a major oil and gas producer, with natural gas production increasing rapidly. The clothing and textile sector is the largest industrial employer and also a major foreign exchange earner. Other major industries include steel, cement, chemicals, pharmaceuticals, and light consumer goods. Agriculture, although shrinking as a percentage of GDP, still employs almost 30% of the population.
Since the beginning of 2005, Egypt’s economy has improved considerably due mainly to a reformist government that was appointed in the summer of 2004. The reformers have successfully taken several steps including floatation of the Egyptian pound, elimination of the foreign exchange shortages along with the black market, reduction in tariffs and simplification of the tariff structure by cutting the number of rates and categories, and the reduction of the amount of red tape necessary to conduct business, etc. The economy grew at a 5.9% rate for the first quarter of 2006 with estimated continued growth at between 5 and 6%. The new measures have inspired a wave of enthusiasm in the business community. As a result, the country’s stock exchange closed its last day in December 2005 140% higher than December 2004. The reforming spirit has been supported by other, tangible economic considerations. Tourism numbers are moving upwards and Egypt started significant natural gas exports in 2005, and is expected to eventually reach the level of the sixth largest gas exporter worldwide. Suez Canal revenues are up smartly. Trade agreements with the European Union and the establishment of Qualified Industrial Zones (QIZs) allowing duty-free exports to the United States augur well for strong export growth.
REGIONAL BRIEF: Multinational entrepreneurs and corporate executives are seeking access to this enormous market, whose rapid urban development and increasing stability present appealing opportunities for international investments. Beginning in the late 1980s, many of the MENA economies were committed to far-reaching economic reforms to restore macroeconomic balances and promote private sector-led development. As a result, the late 1990s witnessed restructuring with the average gross national income per capita for the region increasing from US$ 1,800 in 1985 to US$ 2,080 in 2000. The annual gross domestic product (GDP) growth in the region also remained steady at 3.1% for the past decade.
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