From Currency Depreciation to Trade Reform : How to Take Egyptian Exports to New Levels?
The Arab Republic of Egypt is yet to meet its exports potential, which has been historically hampered by several domestic market distortions and multiple barriers, resulting in weak export performance and modest regional and global integration. Alt...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/539431554812683933/From-Currency-Depreciation-to-Trade-Reform-How-to-Take-Egyptian-Exports-to-New-Levels http://hdl.handle.net/10986/31538 |
| Summary: | The Arab Republic of Egypt is yet to
meet its exports potential, which has been historically
hampered by several domestic market distortions and multiple
barriers, resulting in weak export performance and modest
regional and global integration. Although the liberalization
of the exchange rate in November 2016 was a necessary step
to correct the exchange rate misalignment and ease the
ensuing shortages in foreign currency, it has not been
sufficient to guarantee a notable improvement in export
performance. This paper analyzes Egypt's exports along
three dimensions that are key for export performance and
future growth: (i) composition and relatedness of exported
products; (ii) geographic and product concentration; and
(iii) relatedness to globally traded products. The analysis
suggests that Egypt continues to specialize in traditional
areas of comparative advantage and limited value-added or is
expanding toward products for which global demand is
declining. The paper uses a gravity model to predict
bilateral trade flows based on the economic size, geographic
distance, and other relevant characteristics that should
typically contribute to facilitated trade and identify
specific sectors and markets for which Egypt seems to have
an untapped potential. To understand this underperformance,
the paper investigates the key impediments to meeting the
export potential. It explores some of the important supply
and demand side factors and assesses the role of trade
policy measures (tariffs and non-tariffs barriers) in
impeding export growth. The analysis reveals that despite
significant liberalization efforts, Egypt remains among the
group of developing countries that have the highest
frequency index and coverage ratio of non-tariff measures.
Policy recommendations include a call to improve external
competitiveness by fostering and diversifying domestic
production and complement these efforts by engaging in trade
facilitation reforms to remove the non-tariffs barriers to
trade, notably, the administrative, technical, and sanitary
barriers to trade. These are all necessary for the country
to capitalize on its competitive gains from the currency
depreciation and to improve the degree of Egypt's
integration into global markets. |
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