1981)
-
1973
(
Sadat`s Era
Ch 3
The "open door" policy (consumption phase)
At the beginning of the 70s Egypt has founded the economic policy known
as the ‘open door’ policy ‘El-Inftah’. Also called the consumption phase.
The objectives of the open door policy:
Laws and acts have been elaborated in order to:
A- Attracts Arabian and foreign capitals.
B- Encouraging the private capital to have an active role on developing the
national economy. While Keeping the leadership role to the public sector
C- Egypt widely opened the doors to Arabian and foreign investment which
had been closed in the preceding period.
Steps of open door policy:
- The open door policy has two different phases :1971 -1973 period and
1974-1982 period.
-The first stage: training period (1971-1973)
The first stage is considered as a training period for the new policy.
Because during this period many laws were elaborated and many actions
were taken to crystallize the new economy period.
-The second stage: application period (1974-1981)
- determined changes in the structure of different sectors of the Egyptian
economy.
-The public sector has remained the leader sector of the economy
development. Also try to free public sector from the direct control of the
government have been taken.
-The private sector whose activity is still limited has benefited from a
series of facilities concerning the enlargement of investments and activities
carried in different areas of the Egyptian economy.
- Thus through change of law No.43/1974 on investment with the law
32/1977 ,guaranties and facilities for the participant in the development the
economy (exemption from taxes, benefits) Were offered. Significant
advantages were created in the private sector compared to public one.
- The Egyptian economy was based on 4 important sources of income:
a-The development of oil industrial sector.
b-The development of tourism.
c-The increase of the traffic on the Suez Canal.
d-The foreign currency transferred by the Egyptian working abroad,
especially inside the Arabian counties.
Collapse of open door policy:
1-Open door policy has not extended to the domestic economy. The
government kept underlining that the opening policy didn't represent giving
up the principles of the dominance of the public sector but just an attempt
to increase its efficiency.
2-The private investors that were trying to start a business, affirmed that the
bureaucratic remained and that corruption was strongly spread. Contrary to
expectations the foreign investors expect for the Arabian oil funds did not
hurry to benefit from the advantages of El-infitah policy.
3-The participation of the private sector to the economic growth was law
and because of the fact that positive changes brought by the new policy in
the private sector were not accompanied by monetary policy changes.
Conclusion:
The open door policy didn't reach the institutional economic aspects
positively and wasn't integrated in a complete reform program.