Research Papers

Don’t spend it all in one place: The medium-term effects of a national cash transfer program on household well-being

Cash transfer programs are often effective at increasing household consumption in their early years, but impacts become more nuanced over time as the use of transfers varies. This paper examines the medium-term effects of Egypt’s f lagship cash transfer program, Takaful, on several measures of household wellbeing using a regression discontinuity (RD) design. Findings reveal no significant impacts on household consumption (total, food or non-food), but notable decreases in monthly wage income that are comparable in magnitude to the average monthly transfer. Employment patterns are suggestive of a decrease in hours worked in formal labour among men. There are positive effects on asset ownership, particularly productive assets, indicating a shift toward longer-term investments. Reductions in informal debt suggest improved financial health among beneficiaries and increases in enrollment in primary and preparatory school suggest increased human capital investment as well. These results underscore the potential of cash transfer programs to foster economic stability and investments in the future, even in the absence of significant immediate consumption effects.

Would you rather? Household choice between cash transfers or an economic inclusion program

We study households’ choice between continued cash transfers and a new economic inclusion program—two global prevalent social protection programs—offered by the Egyptian government. Lower-than-expected early adoption of the new program is correlated with differing perceptions on its design. We randomize official messaging to households describing the new program’s (i) consumption support duration and (ii) income-earning potential. Both treatments increase respondents’ likelihood of recommending the new program. A theoretical model estimated using households’ perceptions of program design predicts interest in the new program, and how it diminishes with increasing effort costs, asset loss probability, risk aversion and loss aversion.

Digital tools for smallholders in Egypt: The launch of a new price monitoring tool - Mahsoly

The rapid adoption of mobile phones in agricultural and production systems provides an avenue to unlock the potential of digital innovations to transform smallholder agriculture in low- and middle-income countries. Previous research highlights how the adoption of digital tools can enhance farmers' profits and marketing outcomes by improving market efficiency through better supply and demand matching. Other research similarly emphasizes how digital innovations can facilitate agricultural transformation and transform the functioning of markets by addressing multiple forms of institutional and market failures. However, despite these advantages and the availability of numerous digital tools for agriculture, their adoption remains low and uneven across Africa, where agricultural markets are still underdeveloped. Smallholder farmers in developing countries, including Egypt, face challenges in accessing essential information, which limits their ability to leverage market opportunities and maximize profitability. Given the limited understanding of the primary challenges hindering Egyptian farmers' adoption of digital technologies and the strategies needed to enhance their access to these innovations, this paper aims to utilize an extensive survey of smallholder farmers in Egypt to: (i) examine the constraints to adoption of digital agricultural tools in Egypt; and (ii) assess the impact of farmer training programs on the awareness and adoption of digital tools, using the Mahsoly mobile application and its new price monitoring tool as a case study.

Nutrition-sensitive food distribution amidst inflationary shock: Evidence from a randomized intervention in Egypt

We evaluate the impacts of a traditional food distribution and a nutrition-sensitive food distribution intervention in the context of a rapidly increasing inflationary pressure in Egypt. Besides evaluating the relative and absolute impacts of these interventions on household food and nutrition security, we also examine their impacts on households’ preferences for in-kind versus cash transfers. We implement a clustered randomized control trial through which we randomly assigned communities into: (i) “nutrition-sensitive” food box, (ii) traditional “staple-heavy” food box, and (iii) control group. We find that the nutrition-sensitive food distribution cushioned falls in dietary quality and food security of targeted households relative to the control group while the impact of the traditional and staple-heavy food distribution appears to be negligible. The nutrition-sensitive food boxes increased beneficiary households’ dietary diversity by about 9 percent while also increasing energy, protein, and iron intake by 12, 13, and 19 percent, respectively. We also find that experience with the food boxes increases households’ preference for in-kind transfers, more so among households experiencing high inflation rates and among those households not covered by other food and cash transfer programs. Receiving food boxes increases preference for in-kind transfer by about 9-11 percentage points. Our findings have important implications for the debate on the efficacy of alternative interventions to support poor households as food prices rise and the relative efficacy of in-kind and cash-transfers. The lack of effectiveness of the staple-heavy food boxes suggests that the design and content of in-kind transfers are crucial when considering this policy option, including compared to cash.

Impact evaluation report of Egypt’s Forsa Graduation Program

1. Forsa, which means “Opportunity” in Arabic, is a new economic inclusion program of the government of the Arab Republic of Egypt. Implemented by the Ministry of Social Solidarity (MoSS), one major goal of the program is to graduate beneficiaries of Takaful to economic self reliance by enabling them to engage in wage employment or small-scale productive enterprises. 2. The Forsa program began in 2023, after significant delays. Obstacles to implementation in cluded the Covid-19 pandemic, nationwide inflation subsequent to the Ukraine-Russia war result ing in funding challenges for asset purchases, and administrative challenges with procurement approvals by the Ministry of Finance. Forsa implementation was conducted under MoSS super vision by local non-governmental organizations (NGOs). While a few NGOs received their first payments in the first quarter of 2022, most NGOs received their first payments in October 2022, delaying program implementation to February 2023. According to the MoSS, in the second half of 2023, households receiving assets through the program increased from around 3,000 (9%) to 10,302 (29%) out of a target of 35,000 households through 49 contracted NGOs and two private hiring firms, and the number of participants receiving a job has increased from 3,324 (23%) in August to 5,392 (38%) by end of November of 2023 out of a target of 14,314 households through 22 NGOs and two private firms.

Egypt’s Haya Karima Initiative: An assessment of its rural and economywide impacts

Egypt’s Haya Karima (HK) Initiative aims at improving the quality of life in the country’s rural communities through interventions related to human development, infrastructure, and economic sectors. This presidential initiative, whose name translates to “Decent Life” in English, has four strategic goals, all targeting Egypt’s rural population: building human capital, improving quality of life, improving the standard of living for the most vulnerable, and providing decent and productive job opportunities. The initiative is aligned with the UN Sustainable Development Goals (SDGs) and the objectives of Egypt Vision 2030. HK aims to not only curb material poverty but also multidimensional poverty by expanding the umbrella of comprehensive social protection, with a focus on education, health, infrastructure, and employment. It also focuses on achieving the goal of geographical equity by addressing regional disparities that affect rural areas such as Upper Egypt. Here, we describe a recently completed study that assesses the economywide effects of the first phase of HK. The analysis was done by the International Food Policy Research Institute (IFPRI), in collaboration with Egypt’s Ministry of Economic Planning and Development (MPED) under the project Evaluating Impact and Building Capacity (EIBC), funded by the United States Agency for International Development (USAID).

Smallholder farmers’ participation in profitable value chains and contract farming: Evidence from irrigated agriculture in Egypt

The participation of smallholder farmers in high-value and profitable value chains as well as contract farming remains low in Africa. This paper aims to identify observable and unobservable constraints that explain joint participation in profitable value chains and contract farming. We use a multivariate probit model to estimate potential complementarities between the cultivation of these various value chains (vegetables, fruits, spices, herbs, and cereals), and participation in contract farming. We identify several important observable factors that reinforce and hence limit smallholders’ participation in both low and highvalue chains as well as contract farming. For example, we find suggestive evidence that mallholders in Egypt face a trade-off between ensuring food security to their households and maximizing profit, and land plays a major factor in moderating this trade-off. We find that farmers with limited land resources are more likely to devote a larger share of their land to low-value crops such as cereals while this pattern weakens with increasing land size and slightly reverses for high-value crops such as spices and herbs. This suggests until some level of land resources, food security goals may dominate profit motives while this reverses after ensuring that food security goals are achieved. Younger and wealthier farmers are more likely to participate in the cultivation of high-value crops such as spices and herbs as well as contract farming. We also document strong complementarities between participation in high-value value chains and contract farming. Particularly, farmers who cultivate high-value crops are more likely to be engaged in contract farming. Intuitively, this implies that addressing smallholders’ binding constraints, including risk and access to land, can encourage participation in profitable value chains and contract farming. Our findings offer suggestive evidence that may serve in targeting smallholders to join profitable value chains in Egypt and other comparable contexts.

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Impact evaluation report: Egypt’s Forsa graduation program

Forsa, which means “Opportunity” in Arabic, is a new economic inclusion program of the government of the Arab Republic of Egypt. Implemented by the Ministry of Social Solidarity, the program aims to graduate beneficiaries of the national cash transfer program, the Takaful & Karama Program (TKP), to economic self-reliance by enabling them to engage in wage employment or sustainable economic enterprises. The 2021 World Bank Economic Inclusion report (Andrews et al. 2021) highlights a recent increase globally in such graduation or economic inclusion programs, which now reaches around 92 million beneficiaries from 20 million households across more than 75 countries. This rapid growth has necessitated an increasing demand for evidence on best practices in graduation program implementation. The newly designed Forsa program is based on the graduation approach, but with innovations drawing from theories of behavioral economics as well as creating a network of active youth volunteers for economic empowerment to reduce costs compared to the standard BRAC-inspired model. Forsa also expands the graduation model to include the option of wage-employment, rather than only focusing on self-employment. Evidence on the impact of job training programs linked to wage employment on both job retention and future earnings is mixed (McKenzie 2017), although most such programs do not include cash assistance. This impact evaluation of the Forsa program in Egypt is intended to contribute to the global evidence on effective graduation program design as well as provide immediate policy-relevant guidance for the Ministry of Social Solidarity. The impact evaluation will measure the degree to which Forsa is successful at increasing household consumption and will investigate which participant groups and program features demonstrate the greatest improvements in household welfare and economic activity.

Impact evaluation report: Egypt’s Takaful Cash Transfer Program: Second round report

Egypt introduced the Takaful and Karama Program (TKP), a pair of targeted cash transfer schemes in 2015. In 2018, the International Food Policy Research Institute (IFPRI) completed the first round of impact evaluation of TKP, based on household survey data collected after the first 15 months of the program. In the period between the first-round evaluation and the data collection for this report in January 2022, Egypt faced an enormous economic shock in the COVID-19 pandemic with a complete loss of tourism, which before the crisis was responsible for 12% of GDP and 10% of employment (IMF, 2021). A follow-up evaluation was designed to assess whether impacts estimated from the first round have been sustained and whether longer duration of treatment has led to impacts on additional outcome variables. This follow-up impact evaluation was conducted using a regression discontinuity (RD) design similar to the first round but using a different sample of households much more tightly concentrated around the 4500 thresholds to address concerns about the smaller discontinuity. We find that households invested in assets, particularly productive assets and Takaful households reduced their debt burdens. There were no measurable impacts of the Takaful program on household consumption or poverty, which may be partially explained by changes in household demographics. We also find that Takaful improved school enrollment and attendance and contributed to household’s ability to cope with shocks.

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Forsa pilot program and evaluation plan [in Arabic]

Forsa, which means “Opportunity” in Arabic, is a new economic inclusion program of the government of the Arab Republic of Egypt. Implemented by the Ministry of Social Solidarity, the program aims to graduate beneficiaries of the national cash transfer program, the Takaful & Karama Program (TKP), from being dependent on transfers from TKP to economic self-reliance by enabling them to engage in wage employment or sustainable economic enterprises. The most recent World Bank Economic Inclusion report (Andrews et al. 2021) highlights a recent increase globally in such graduation or economic inclusion programs, which now reach around 92 million beneficiaries from 20 million households across more than 75 countries. This rapid growth is raising demand for evidence on best practices in graduation program implementation. Egypt’s experience with Forsa can contribute to such guidance.

Cluster-based development in Egypt: A study of external shocks to the leather and medicinal and aromatic plant sectors

The Egyptian government has prioritized the idea of cluster-based development-that is, the geographic concentration of specialized firms, such as in this case, those producing similar or related products. The establishment of such clusters, however, presents significant challenges, bottlenecks, and obstacles. Based on primary field work, this paper focuses on two case studies of the impacts of shocks on business clusters. The first study involved the relocation of an established leather cluster from Cairo to a newly created industrial park, Robbiki Leather City, which was promoted by Egypt’s Ministry of Trade and Industry. Although the relocation partly solved the existing issues of water contamination, new challenges emerged relating to increased production and transportation costs, and unforeseen impacts on the community. The second study assessed the short-term impact of the COVID-19 pandemic on a business cluster producing medicinal and aromatic plants. Overall the MAPs sector was resilient to the outbreak and there are opportunities to offset any negative impacts of the pandemic by taking advantage of new markets for Egyptian MAPs stemming from supply disruptions in other countries; increased global demand for MAPs due to their pharmacological and health properties; and increased international demand for organically grown MAPs. Findings indicate that it is essential for governments to develop responses to the challenges-and especially barriers-to the development of business clusters, while simultaneously supporting and creating incentives for the cooperation, entrepreneurship, and collective action needed for business clusters to thrive and grow. As anticipated, challenges and obstacles-whether overarching or in response to shocks-are unique to specific sectors, contexts, and times, and hence need to be dealt with as an ongoing facilitation process.

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A 2019 Nexus Social Accounting Matrix for Egypt

The Central Agency for Public Mobilization and Statistics (CAPMAS) is pleased to present an updated social accounting matrix (SAM) for Egypt. This SAM combines information from national datasets from many institutions, including the Central Bank, the Ministries of Finance and Agriculture, and various statistical bureaus. It also makes extensive use of data from the Economic Survey and Household Income and Expenditure Survey (HIECS), which is produced by CAPMAS. With this data it becomes possible to provide a detailed update of the socioeconomic status of Egypt. The SAM also allows for more timely analysis of developmental issues and a better understanding the potential economic impacts of changes. The SAM is the main dataset used for economywide modelling of scenarios and simulations. Such modeling has proven to be a powerful evidence-based analytical tool for informing making and for assessing the impact of different interventions, especially during the COVID-19 crisis.

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Food subsidies and cash transfers in Egypt: Evaluating general equilibrium benefits and trade-offs

Most Egyptians receive food subsidies, which are the cornerstone of the country’s social protection system. The government recently attempted to reduce subsidies, with limited success, and introduced a cash transfer program targeting the poor. We use a dynamic general equilibrium model of the Egyptian economy to evaluate the growth and distributional impacts of subsidy reforms and cash transfers. We find that the welfare of poor households would be enhanced by a smaller, but better targeted food subsidy program, and that, if the cost savings from reforms are channeled into investment, faster economic growth would eventually outweigh any short-term welfare losses. However, most of the gains from subsidy reforms accrue to nonpoor households. Combining subsidy reforms with cash transfers leads to the largest welfare gains for the poor, while leaving the welfare of nonpoor households largely intact. The latter is crucial to maintaining support for ongoing subsidy reform efforts.

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Impact of COVID-19 on Egypt’s dairy and artichoke value-chains: Qualitative findings from rapid value chain assessments

The COVID-19 crisis is having strong impacts on the Egyptian economy, but these impacts differ strongly across sectors.1 Based on scenarios run using a Social Accounting Matrix (SAM) multiplier model of Egypt’s economy, COVID-19 is estimated to have resulted in an 8.6 percent decline in Egypt’s GDP during the 4th quarter of FY 2019/20 (April to June). The services sector was hit hardest, falling by 10.9 percent, followed by industry, which contracted by 8.3 percent. Agriculture was the most resilient sector, although there are large differences in the relative impact of COVID across agricultural subsectors.

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Land scarcity impedes sustainable input intensification in smallholder irrigated agriculture: Evidence from Egypt

Increasing population pressure and population density in many African countries are inducing land scarcity and land constraints. These increasing land constraints are expected to trigger various responses and adaptation strategies, including agricultural intensification induced by land scarcity, as postulated by the Boserup hypothesis. However, most empirical evaluations of the Boserup hypothesis come from rainfed agriculture and mostly from Sub-Saharan Africa (SSA), where application of improved agricultural inputs remains historically low. Agricultural intensification practices as well as the relevance of the Boserup hypothesis in irrigated agriculture and in contexts where application of improved inputs is high remains unexplored. Furthermore, while much of the debate on the topic in Africa has focused on how to boost agricultural intensification, there is scant evidence on whether evolving agricultural intensification practices in some parts of Africa are sustainable, yield-enhancing, and optimal. In this paper we investigate the implication of land scarcity on agricultural intensification and the relevance of the Boserup hypothesis in the context of Egypt, where agriculture is dominated by irrigation and input application rates are much higher than SSA. We also examine whether evolving agricultural intensification practices induced by land scarcity are agronomically appropriate and yield-enhancing. We find that land scarcity induces higher application of agricultural inputs, mainly nitrogen fertilizers, sometimes beyond the level that is agronomically recommended. More importantly, land scarcity increases overapplication of nitrogen fertilizer relative to crop-specific agronomic recommendations. This implies that land constraints remain as important challenges for sustainable agricultural intensification. Finally, we find suggestive evidence that such overapplication of nitrogen fertilizers is not yield-enhancing, but, rather, yield-reducing. We also document that land scarcity impedes mechanization of agriculture. Our findings have important implications to inform appropriate farm management and sustainable intensification practices. Furthermore, our results can inform long-term responses to land scarcity.

Food policies and their implications on overweight and obesity trends in selected countries in the Near East and North Africa region

Regional and global trends in body weight show that the Near East and North Africa (NENA) region countries, especially the Gulf Cooperation Council (GCC) member countries, have the highest average body mass index and highest rates of overweight and obesity in the world. There exist several explanations that expound the high rates of overweight and obesity in most NENA countries, including the nutrition transition, urbanization, changes in lifestyle, and consequent reduction of physical activities. This study examines the implication of food policies, mainly trade and government food subsidies, on evolving nutritional transitions and associated body weight outcomes. We examine the evolution of trade (food) policies, food systems, and body weight outcomes across selected countries in the NENA region – Egypt, Jordan, and Iraq. In particular, we investigate the implications of important trade (food) policies in shaping diets and food systems as well as their implications on public health outcomes, mainly the rising levels of overweight and obesity in the NENA region. We provide a simple conceptual framework through which trade policies (tariff rates) and domestic government food policies (subsidies) may affect food systems and nutritional outcomes. An important and innovative feature of this study is that it compiles several macro- and micro-level datasets that allow both macro and micro-level analyses of the evolution of trade (food) policies and associated obesity trends. This approach helps to at least partly overcome the data scarcity that complicates rigorous policy research in the NENA region.

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Too much of a good thing? Evidence that fertilizer subsidies lead to overapplication in Egypt

As part of a national policy to ensure a certain level of food self-sufficiency in strategic crops, the government of Egypt subsidizes nitrogen fertilizer directly by distributing quotas of subsidized fertilizers to farmers and indirectly by subsidizing natural gas used by local fertilizer factories. The implication of this subsidy on farmers’ fertilizer demand and productivity remains unknown. Using a detailed agricultural survey collected from smallholder farmers in Upper Egypt, we show that nitrogen fertilizer application rates are substantially in excess of crop-specific agronomic recommendations. We exploit eligibility criteria and other sources of variation to show that farm plots with easier access to the subsidy tend to use more subsidized nitrogen fertilizer and less phosphate fertilizer. Easier access to the subsidy increases use of total nitrogen fertilizer per unit of land, mainly because of the increase in subsidized nitrogen fertilizer. In particular, the fertilizer subsidy program in Egypt is associated with significant overapplication of nitrogen fertilizer. Such overapplication of fertilizer is expected to adversely affect soil, water, and environmental health. Our findings have important policy implications for Egypt and other African countries known for input subsidy programs. As Egypt is currently moving on from the successful implementation of a comprehensive macroeconomic reform program towards sector-level reforms, our results suggest that eliminating fertilizer subsidies is a good place to start.

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Cash transfers and women’s control over decision-making and labor supply in Egypt

NOTE: Revised December 2021 Women’s control over decision-making within their family, particularly regarding the use of household income, can play an important and long-lasting role in shaping their well-being and that of their children. Cash transfer programs often target women in order to increase their control over household resources. Empirical evidence on the effectiveness of this approach is mixed and suggests the importance of local context. We present evidence on the effect of cash transfers on women’s control over decision-making in the MENA region, where little evidence is available and where cultural norms around women’s roles differ from more-studied regions. Using a regression discontinuity approach, we identify the impact of Egypt’s “Takaful” national cash transfer program on women’s control over decision-making and labor supply. Receiving cash transfers mostly reduced women’s reported ability to influence household decisions, particularly regarding child healthcare. The loss of control over decision-making was greater for women with less than primary education. Other effects of the program include a decline in women’s employment and an increase in men’s involvement in spheres of decision-making usually controlled by women. These results are robust to changes in model specification. We present suggestive evidence from mediation analysis that the negative effects on women’s control over decision-making was directly related to these declines in employment and increase in men’s involvement in female spheres. The negative findings are not wholly supported by complementary qualitative work in which women reported more positive perceptions of the program’s impacts.

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Ex-post adjustment for measurement error in child stunting calculations: An illustration from Egypt

This study provides estimated ranges for the magnitude of bias caused by measurement error in stunting rates in young children, a widely used proxy for long-term nutritional status.

First regionalized social accounting matrix for Egypt: A 2015 nexus project social accounting matrix

The Central Agency for Public Mobilization and Statistics (CAPMAS) is pleased to present the first regionalized social accounting matrix (SAM) for Egypt. This SAM marks a major milestone in “localizing” development research and policy in Egypt and is expected to be most valuable for the development, implementation, and assessment of Egypt’s national and local development plans, like Egypt’s Sustainable Development Strategy 2030. In addition to standard SAMs, which combine many national datasets from institutions such as Central Banks, Ministries of Finance and Agriculture, and Statistical Bureaus, this regionalized SAM makes extensive use of sub-national level information such as the Economic Survey and Household Income and Expenditure Survey (HIECS) produced by CAPMAS, regional GDP estimates by the Ministry of Planning, Monitoring and Administrative Reform, and the Agricultural Bulletins with information at the Governorate level produced by the Ministry of Agriculture and Land Reclamation. With this data it becomes possible to provide a detailed, socioeconomic status update for different regions within Egypt. As such, the disaggregated SAM allows for analyzing developmental issues at regional level and to better understand the potential impacts of policy changes at the local level.

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Characteristics of smallholder farm households in Upper Egypt: Implications for nutrition-sensitive agricultural interventions

This paper characterizes smallholder farm households in Upper Egypt based on data from a comprehensive farm household survey. The results from the descriptive analysis in combination with findings from the global literature provide recommendations on how agricultural projects can be leveraged for improving nutrition. The importance of focusing on nutrition is underlined by relatively high undernutrition and overnutrition rates among the surveyed farm households: almost 18 percent of children under five years of age are stunted and almost 25 percent of them are at risk of being overweight. Agricultural interventions can impact nutrition through six main pathways, which are: 1) providing direct access to food from own production; 2) providing a source of income from which food and other nutrition needs can be met; 3) affecting food prices; 4) affecting women’s social status and empowerment; 5) affecting women’s time use from participation in agricultural work; and 6) affecting women’s health and nutrition from engagement in agricultural activities. The surveyed farm households purchase in the market most of the foods that they consume, cultivating crops primarily for commercial sale. This finding suggests that access to food markets and the level of food prices are key determinants of food and nutrition security among smallholder farm households in Upper Egypt. The survey analysis also identified potential levers for increasing agricultural productivity, including promoting more efficient use of water, fertilizers, and pesticides and improving farming practices to narrow the productivity gap between small-scale farmers and medium and large-scale farmers. As the role of women in agricultural activities in Upper Egypt is limited, the gendered pathways for leveraging agriculture for improved nutrition are less relevant. However, to achieve positive impact on people’s diet or nutritional status that goes beyond income and price channels, programs that reach farm households in Upper Egypt should include education and behavioral change communication activities, including on themes related to breastfeeding, dietary diversity, physical activities, and sugar intake. For such activities to be effective, it is important to consider the low literacy levels in the population.

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Beyond the business case for agricultural value chain development: An economywide approach applied to Egypt

This paper goes beyond the “business” case for agricultural value chain development and presents an economy-wide framework to make the “development” case. We show that there are several key transmission channels that determine the economy-wide impacts of promoting various value chains, including forward and backward economic linkages, price responses, and net employment effects. These impacts all matter for household incomes, poverty, and dietary diversity. Results for Egypt show that agricultural value chain development generates economy-wide growth as well as growth in the agri-food system, but the impacts on employment suggest that agricultural growth can create new (and better) jobs in and beyond the agri-food system, but not necessarily more jobs. The results also show that productivity-driven agricultural growth in all crops is pro-poor and improves nutrition. However, potential adverse effects of livestock-led growth show that growth acceleration in single sectors can be negative, highlighting the importance of a systems analysis or, in our case, an economy-wide analysis. It is clear that no single sub-sector is best at achieving all the development outcomes examined. Moreover, the ranking of value chains by their development outcomes differs across sub-national regions. As such, results from this paper may provide useful decision support for the government and its development partners to select value chains depending on their priority development outcomes.

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Research guide for water-energy-food nexus analysis

The project titled “The Water-Energy-Food Nexus: Global, Basin and Local Case Studies of Resource Use Efficiency under Growing Natural Resource Scarcity“ (2015-2018), which was supported by the Federal Ministry for Economic Cooperation and Development, Germany, and was undertaken as part of the CGIAR Research Program on Water, Land and Ecosystems. The project set out to develop research methodologies and insights globally as well as for the Eastern Nile Technical Regional Organization (ENTRO) of the Nile Basin Initiative (NBI) and Egypt, Ethiopia and Sudan to support efforts for enhanced water, energy and food security and environmental sustainability. The toolkit describes both qualitative and quantitative methods that have been used in the research project. It is not meant to be an exhaustive list of information and tools related to the analysis of the water, energy and food (WEF) nexus. The overall focus of the tools has been on economic analysis of the linkages across water, energy and food--to complement other studies and method developments that focus on biophysical linkages across the WEF nexus. The toolkit is aimed, primarily, at researchers interested in the analysis of the water, energy and food nexus. However, the studies summarized here also provide insights for practitioners implementing Nexus projects.

Farm households in Egypt: A typology for assessing vulnerability to climate change

Using governorate-level national data and household survey data, we build a typology of farm households in Egypt that allows us to describe how different farm households behave in response to policy and environmental changes affecting their resources, welfare, and opportunities in output and input markets. One of the major contributions of this study is the building of a unique dataset that combines various data sources at different levels of aggregation, providing the information needed to model the farm typology. We used this dataset as the input of a multi-step procedure that includes the use of principal components and cluster analyses to identify 14 household types. To illustrate possible uses of the typology, we look at the vulnerability of the different types of households to projected changes in temperature, water availability, and water demand from crops due to climate change, and discuss which farmers, production systems, and regions will be most affected by climate shocks. We assumed that increased temperatures by 2050 would result in increased water demand and reduced yields for most crops due to heat stress and harsher growing conditions. We define three climate change scenarios that differ in the expected water flows of the Nile into the Aswan High Dam. Results of simulations using a household model suggest that Egypt is likely to experience a significant reduction in output, agricultural labor demand, and cultivated area because of climate change, although the severity of this outcome will depend on the magnitude of changes in the Nile’s flow. Most affected by these changes will be small and average households producing field crops. Our results suggest that to mitigate the risks and possible future impacts of climate change, the country will need to: Move away from policies supporting production of cereals and water-inefficient crops towards diversification of production into water-efficient high-value crops; facilitate the access of skilled resource-poor producers to capital and markets; and create opportunities for off-farm employment and income for smallholders that are using resources inefficiently.

An agricultural policy review of Egypt: First steps towards a new strategy

The latest population census in Egypt shows that there are more people now living along the narrow strip of land by the Nile than ever before, 95 million (CAPMAS 2017). The country’s rapidly growing population, its limited water resources, and its dependence on food imports all reinforce the importance of an integral agricultural policy. With the recent series of economic reforms that saw the flotation of the Egyptian pound, the imposition of a value-added tax, and decreases in energy subsidies, Egypt has a unique opportunity to focus on sector-level policies, including those within agriculture. This paper reviews agricultural and other related policies and their impact on the overall economic performance of the agricultural sector in Egypt. This stocktaking of policies is to serve as the basis for developing a more comprehensive agricultural strategy and policy framework that aligns sectoral policy objectives with policy measures in an effective and consistent manner. The paper is intended to serve as a reference for policymakers, researchers, and institutions. It highlights agriculture’s place in the Egyptian economy and examines water and irrigation policy and the provision and distribution of agricultural inputs, research, and extension, and reviews the price and procurement policies for key crops. Other public policies and their impact on agriculture are also evaluated via a look at the food subsidy system, land rent and tenure, land reclamation, and trade policies. The concluding section of the paper presents a summary of key messages and proposed questions for further research.

Clusters as drivers of local industrial development in Egypt: Which are the promising sectors and locations?

Clusters – the geographic concentration of specialized firms that are working in similar or related activities and are interdependent – have played an important role in the industrial development of many countries, including in Europe, the Americas, and Asia. A large part of these successes can be explained by the ability of clusters to build on existing strengths of local communities, such as social capital and abundant labor, to overcome common constraints to economic expansion, such as weak financial markets and institutions. Realizing the potential for cluster-based development and the long history of clusters in the country, the Egyptian Government has made cluster-based industrialization a key pillar of Egypt’s sustainable development strategy to 2030. The timing for a cluster-based industrial development model for Egypt seems favorable as macroeconomic reforms in recent years have made Egypt’s economy more competitive and the country’s young labor force provides a comparative advantage for labor-intensive sectors. The objectives of this paper are to take stock of existing clusters in Egypt; to identify a set of promising “organic” clusters; and to make high-level recommendations for the further expansion of agribusiness and handicrafts clusters based on an innovative analysis of economic census data, a review of previous cluster studies in Egypt, and information obtained from expert interviews and a stakeholder workshop. Our findings suggest focusing cluster development efforts on Upper Egypt, which has a comparative advantage in several sectors, especially in labor-intensive sectors. However, the current cluster density in Upper Egypt is low, particularly in rural areas. Expanding the number and density of clusters there will likely require improvements in infrastructure, institutions, and services. The most promising clusters identified through the analysis include medical and aromatic plants, sugarcane, and tomatoes in the agribusiness sector; ready-made garments and carpets in the handicrafts sector, and furniture. These are all promising organic clusters based on their high market demand, export potential, labor intensity, and historical roots. We develop several recommendations for the agribusiness and the handicrafts sectors, especially highlighting the important facilitating role that local governments should play in cluster-based development by providing necessary basic public goods and services. In-depth case studies for specific, promising clusters should follow to help local governments and entrepreneurs to fully harness the unique opportunities that clusters can provide for local industrial development and job creation in Egypt.

Impact evaluation study for Egypt's Takaful and Karama cash transfer program: Part 1: Quantitative report

This report of the evaluation study provides a greater focus on measuring the impact of the larger Takaful program and also attempts to measure the impact of the much smaller Karama program. In addition, IFPRI will conduct a qualitative assessment of the Takaful and Karama program focused on learning about the experience with the program among the poorest beneficiary households. This qualitative assessment will also draw lessons from the quantitative survey to provide another report on the experience of very poor households. The remainder of this report is organized as follows Chapter 2 provides an overview of the Takaful and Karama Program. Chapter 3 summarizes the impact evaluation design. Chapter 4 describes the evaluation survey and sample. Chapter 5 provides context for the program by using the survey data to summarize the characteristics of beneficiary and non-beneficiary households and describe beneficiaries’ experience with program implementation. Chapter 6 presents the impact estimates for Takaful and Chapter 7 the estimates for Karama. Chapter 8 uses data from a separate representative sample of households collected during the survey to assess the targeting performance of the program. Chapter 9 concludes and discusses implications for social policy in Egypt.

Impact evaluation study for Egypt's Takaful and Karama cash transfer program: Part 2: Qualitative Report

This qualitative evaluation of the Takaful cash transfer program was conducted between January and April 2018 by a team of researchers trained in qualitative methods. The evaluation sought to further delve into and explain dimensions of the Takaful transfers’ impact on beneficiaries that were previously under-investigated in the quantitative survey. In so doing, the quantitative components’ findings were also further contextualized and clarified. This qualitative component’s main goals, therefore, were to explore the differences between the transfers’ impact on ultra-poor households and households near the threshold, the differences in how the two household types use the transfer, and the impact of the transfers on intrahousehold decision making with special focus on women.

Impact evaluation study for Egypt's Takaful and Karama cash transfer program: Synthesis report- Summary of key findings form the quantitative and qualitative impact evaluation studies

Since March 2015, the Government of Egypt has been providing cash to poor households through the Takaful and Karama program. The program is run by the Ministry of Social Solidarity (MoSS). Takaful supports poor families with children under 18 years of age, while Karama supports the poor elderly and disabled. For Takaful, the amount of cash that households receive depends on the number of children and their school level, while the Karama transfer is a set rate per individual. In 2018, Takaful will also begin requiring households in the program to make sure their children attend school and participate in health screenings. The program was evaluated by IFPRI, an international research organization, using both quantitative statistical methods (simple questions asked to many households during a survey) and qualitative methods (more in-depth questions asked to fewer households in longer interviews). The main goal of this evaluation was to measure and explain how the transfers affected the welfare of households in the program. In addition, the evaluation describes how well the program selection criteria work for identifying poor households.

Phasing out energy subsidies as part of Egypt’s economic reform program: Impacts and policy implications

In order to address long-standing economic challenges, in 2016 the Government of Egypt (GOE) put in place a major economic reform program to restore macroeconomic stability and to promote inclusive growth. As a result, there are early signs that the economy is rebounding and Egypt’s economic outlook is becoming more favorable. However, it is less clear how the ongoing reform program is affecting households, especially the poor. To shed light on this question, this paper uses an economy-wide model to estimate the distributional impacts of the energy subsidy cuts in 2014, 2016, and 2017, the currency devaluation at the end of 2016, and the expected complete phasing out of energy subsidies over the coming years.

Linking the economics of water, energy, and food: A nexus modeling approach

We use an innovative methodology to model the socioeconomic linkages between water, energy, and food in the East Nile Basin. Based upon a theoretical nexus framework, the methodology is expanded into a quantifiable modeling suite that under-lies the analysis of each of three country case studies. The advantages are that, despite resource shortages being a challenge, the modeling suite aids in devising policies and strategies that formulate these sectoral interdependencies and provide the evidence-based research results necessary for their design in a way that exploits synergies existing across sectors, countries, and regions (Al-Zubari n.d.). This paper lays out the methodology and gives an example of an application and scenarios by focusing on three countries in the East Nile Basin. This methodology paper will be followed by three individual country case studies that highlight the water, energy, and food nexus for each.

Addressing transboundary cooperation in the Eastern Nile through the Water-Energy-Food Nexus: Insights from an E-survey and key informant interviews

The Nile is the lifeblood of northeastern Africa, and its roles for and interdependency with the national economies it traverses and binds together grow as it moves from source to sea. With rapid economic development—population growth, irrigation development, rural electrification, and overall economic growth—pressures on the Nile’s water resources are growing to unprecedented levels. These drivers of change have already contributed to stark changes in the hydropolitical regime, and new forms of cooperation and cross-sectoral collaboration are needed, particularly in the Eastern Nile Basin countries of Egypt, Ethiopia, Sudan, and South Sudan. As direct sharing of water resources is hampered by unilateral developments, the need has increased for broader, cross-sectoral collaboration around the water, energy, and food sectors. This study is conducted to assess and understand the challenges of and opportunities for cooperation across the water-energy-food nexus nationally in Egypt, Ethiopia, and Sudan, as well as regionally across the Eastern Nile. To gather data, the paper uses an e-survey supplemented with key informant interviews geared toward national-level water, energy, and agriculture stakeholders, chiefly government staff and researchers. Findings from the survey tools suggest that most respondents strongly agree that collaboration across the water, energy, and agriculture sectors is essential to improve resource management in the region. At the same time, there is ample scope for improvement in collaboration across the water, energy, and food sectors nationally. Ministries of water, energy, and food were identified as the key nexus actors at national levels; these would also need to be engaged in regional cross-sectoral collaboration. Respondents also identified a wide range of desirable cross-sectoral actions and investments—both national and regional—chiefly, joint planning and operation of multipurpose infrastructure; investment in enhanced irrigation efficiency; joint rehabilitation of upstream catchments to reduce sedimentation and degradation; and investment in alternative renewable energy projects, such as wind and solar energy.

The role of agriculture and the agro-processing industry for development in Egypt: An overview

In order to complement the ongoing macroeconomic and safety net reforms in Egypt, it is important to foster additional sector-specific economic growth, especially in sectors that are good at creating jobs and reducing poverty. One sector that may help foster socioeconomic development in coming years is agriculture and related agro-processing industries. This paper shows that agriculture in Egypt continues to play a relatively important role in the economy compared to other mid-dle income countries. The sector’s stable growth performance has proved to be a reliable contributor to economy-wide output growth over the past decades. The underlying productivity gains have prevented the country’s food import depend-ency ratio from rising in spite of rapidly growing food demand.

A disaggregated social accounting matrix: 2010/11 for policy analysis in Egypt

The Central Agency for Public Mobilization and Statistics (CAPMAS) is pleased to present a disaggregated version of the Egypt SAM for 2010/11. This new SAM builds on the previous SAM 2010/11 built and published by CAPMAS with the support of the International Food Policy Research Institute (IFPRI). The value added of this new disaggregated version of the SAM is its focus on the agricultural sector and different types of households. By disaggregating the single agricultural sector into 22 agricultural sub-sectors and the single household of the previous SAM into 20 household groups, defined by expenditure decile and rural or urban residence, the disaggregated SAM now allows for analyzing agricultural issues at the detailed crop level and to better understand the potential im-pacts of policy changes for both better off and more vulnerable households.

Prioritizing development policy research in Egypt: An innovative approach to inform IFPRI’s Egypt Strategy Support Program

This paper presents an innovative approach to prioritizing development policy research in Egypt with the specific objective of informing the research agenda of the Egypt Strategy Support Program of the International Food Policy Research Institute. The key steps in this process were: 1) a review of relevant priority setting methods and existing government strategies, 2) pre-selection of research themes, 3) selection of national and international experts, 4) design and conduct priority setting workshop; and 5) priority matrix construction and paper writing.

Harnessing the sun and wind for economic development? An economy-wide assessment for Egypt

Le Maghreb face aux nouveaux enjeux mondiaux: Beyond the Arab awakening, Policies and Investments for Poverty and Food Security

Does Food Security Matter for Transition in Arab Countries?

Expectations are high that transition in Tunisia, Egypt, Libya, and Yemen will bring about more freedom, justice, and economic opportunities. However, experiences from other world regions show that countries in transition are at high risk of entering conflicts, which often come at large economic, social and political costs. In order to identify options on how conflict may be prevented in Arab transition countries, this paper assesses the key global drivers of conflicts based on a dataset from 1960 to 2010 and improved cross-country regression techniques. Results show that unlike in other studies where per capita incomes, inequality, and poor governance, among other factors, emerge as the major determinants of conflict, food security at macro- and micro-levels emerges as the main cause of conflicts in the Arab world. This “Arab exceptionalism in conflict” suggests that improving food security is not only important for improving the lives of rural and urban people; it is also likely to be the key for a peaceful transition.

Taxation policy and gender employment in the Middle East and North Africa Region: A comparative analysis of Algeria, Egypt, Morocco, and Tunisia

Empirical evidence suggests that women are more vulnerable to chronic poverty and gender inequality is likely to condition the impacts of policies on the rest of the economy and consequently on poverty itself. While gender-responsive budgeting has made significant headway into economic policy, taxation has lagged behind. Because tax policy is the most economically direct way by which governments can influence individual behavior, requests have been made for gender-responsive tax policy that promote gender equality. This study applied to Algeria, Egypt, Morocco, and Tunisia aims to contribute to this debate by assessing the induced gender employment bias of current taxation policies in these countries. It explores the pattern of male and female employment and discusses the indirect tax distortions across sectors within each country and between countries. The possible impact of the indirect tax distortion on male and female employment is quantitatively assessed using a gender-focused computable general equilibrium model. The analysis reveals that indirect taxes, in particular import duties, are biased for female employment in Algeria and Egypt, but not in Morocco and Tunisia. Female labor–intensive industries in Algeria and Egypt are highly protected in the benchmark and are not competitive internationally so that removing protection would increase competition with cheaper import substitutes and cause the sector to contract and lay off workers. In contrast, the same female labor–intensive industries are less protected in Morocco and Tunisia. Hence, removal of indirect taxes in these countries would result in quasi-neutral effects between male and female salary and wage earnings. The taxation policies in the Middle East and North Africa region have changed over the last decade and may undergo significant changes in the coming years. In light of this unpredictability, an assessment of the tax-related relative price bias on men and women constitutes a crucial step toward providing adequate guidance to planners, policymakers, and other stakeholders.

Which trade integration scheme can best help Sub-Saharan Africa develop and export more processed agricultural goods?

Trade integration of Sub-Saharan African (SSA) countries' agriculture is pointed out as a powerful driver of agricultural growth, especially if it increases processing of agricultural products. But there is no consensus on which negotiations for increased trade integration to put first. Static effects of regional and multilateral tariff reduction shocks are simulated with the Modeling International Relationships in Applied General Equilibrium computable general equilibrium model in order to compare them and test their coherence with the objective of enhanced value-added in agriculture. A new method is tested to treat existing data issues in the GTAP 7 database that usually lead to overestimations of gains from some trade integration.

Impacts of global change on the Nile basin: Options for hydropolitical reform in Egypt and Ethiopia

This paper analyzes drivers of global change and their impacts on the current and future availability and accessibility of water resources in the Nile Basin. Drivers include changes in demography, climate, the socioeconomy, and politics, all of which are likely to increase the demand for freshwater and thus competition over its use across riparian countries. As a result of historic bilateral agreements, Egypt, as the most downstream country, uses the lion's share of the Nile's waters, which makes reallocation particularly difficult. Egypt is nearly totally dependent on water from upstream countries but considers any change of the status quo a threat to its national (water) security. Ninety-six percent of Egypt's water originates outside its territory—86 percent in Ethiopia. This paper assesses the special upstream-downstream relationship in the Nile Basin and the potential for change as a result of global change. It hypothesizes that under global change, not only will water availability in the Nile Basin change but so will the current hydropolitical situation in the basin. In any case, meeting the challenges in the Nile Basin depends on cooperation among countries and regulation of competing interests and demands. Avenues for hydropolitical reform, including the Nile Basin Initiative, and the role of China and other donors or investors are discussed. The findings—that global change might well bring down the old hydropolitical regime—are confirmed by recent developments, in particular, the signing by five upstream countries of a new framework agreement for management and development of the Nile Basin.

A multi-level analysis of public spending, growth and poverty reduction in Egypt

Egypt is a lower middle-income country with a per capita gross domestic product (GDP) in 2003 of US$3,949 measured in international dollars, or purchasing power parity (World Bank 2005a). In the decade from 1975 to 1985, Egypt enjoyed rapid economic growth... however... Egypt still lags behind many middle-income countries in key social indicators. Further reforms are necessary to reduce poverty, especially if Egypt is to achieve the United Nations’ Millennium Development Goal (MDG) of halving the number of poor between 1990 and 2015. Government expenditures are an important means of promoting economic growth, reducing poverty, and improving income distribution... The overarching objective of this report is to use a multi-level analysis approach to assess both the effects of various government expenditures on growth and poverty reduction and the trade-offs between these two goals in order to determine policy options toward the achievement of the MDGs. The study involves analyses and simulations at household, sectoral, and regional levels, and at macro-levels using alternative analytical tools. While the analyses at each level were carried out independently, the report provides a synergy of the findings... The report concludes with a synthesis of the different levels of analysis.

Defining a trade strategy for southern Mediterranean countries

The objective of this paper is to analyze the best trade approach for Southern Mediterranean countries (Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Syria, Lebanon and Turkey) that helps them increase market access and develop trade policies which will facilitate the most efficient economic development. The study uses, the MacMap-HS6 database on market access and the Modeling International Relations under Applied General Equilibrium (MIRAGE) model of the global economy. While most South Mediterranean (SM) countries are very protectionist, they enjoy a fairly good access to world markets, either due to product specialization or to preferences granted by the European Union in the industrial sector. Today, these countries are simultaneously opting for multilateralism, North-South regionalism, and South-south regionalism. Are these options substitutes of each other? As this study suggests, that is not the case. A South-South integration of these countries is not enough trade – creating, while a North – South Free Trade Agreement with Europe is significantly trade – diverting, particularly in the case of SM countries’ agricultural imports. In order to examine the dynamics between multilateralism and regional strategies, the ‘structural congruence’ of these different trade regimes is measured and a new indicator is proposed.

The dragon and the elephant: Agricultural and rural reforms in China and India

China’s and India’s rapid rise in the global arena has not only captured the attention of the world but has also set into motion a rethinking of the very paradigm of economic development....Today, China and India together account for 40 percent of the world’s population. Both have implemented a series of economic reforms in the past two and half decades: China initiated this process at the end of the 1970s, while India began in the early 1990s. These reforms have led to rapid economic growth, with a growth rate of 8–9 percent per annum in China and 6–7 percent per annum in India. Despite similar trends in the reforms, the two countries have taken different reform paths; China started off with reforms in the agriculture sector and in rural areas, while India started by liberalizing and reforming the manufacturing sector. These differences have led to different growth rates and, more importantly, different rates of poverty reduction. They also have fundamentally different implications for growth and poverty reduction in the future. What can we learn from the process of economic reform in these two countries?... A number of studies looking into key aspects of reform and their relationship to outcomes, presented at two international workshops held in New Delhi and Beijing, try to offer some answers to these questions. These papers are currently being prepared by IFPRI for publication, and this discussion paper is a synopsis presented as a forerunner to the book.

Dietary diversity as a food security indicator

Household food security is an important measure of well-being. Although it may not encapsulate all dimensions of poverty, the inability of households to obtain access to enough food for an active, healthy life is surely an important component of their poverty. Accordingly, devising an appropriate measure of food security outcomes is useful in order to identify the food insecure, assess the severity of their food shortfall, characterize the nature of their insecurity (for example, seasonal versus chronic), predict who is most at risk of future hunger, monitor changes in circumstances, and assess the impact of interventions. However, obtaining detailed data on food security status—such as 24- hour recall data on caloric intakes—can be time consuming and expensive and require a high level of technical skill both in data collection and analysis. This paper examines whether an alternative indicator, dietary diversity, defined as the number of unique foods consumed over a given period of time, provides information on household food security. It draws on data from 10 countries (India, the Philippines, Mozambique, Mexico, Bangladesh, Egypt, Mali, Malawi, Ghana, and Kenya) that encompass both poor and middle-income countries, rural and urban sectors, data collected in different seasons, and data on calories acquisition obtained using two different methods. ....[D]ietary diversity would appear to show promise as a means of measuring food security and monitoring changes and impact, particularly when resources available for such measurement are scarce.

Weighing what's practical: proxy means tests for targeting food subsidies in Egypt

Despite achieving a significant cost reduction over the past two decades, the absolute cost of food subsidies in Egypt is still high relative to the benefits received by the poor. There is scope for better targeting food subsidies, in particular those for rationed cooking oil and sugar, both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policies for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits. Targeting the high-subsidy green ration cards to the poor and the low-subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households. An International Food Policy Research Institute (IFPRI) research team in Egypt, in collaboration with the Egyptian Ministry of Trade and Supply, developed a proxy means test for targeting ration cards. This paper describes the process of moving from the optimal income-predicting model to the final model that was both administratively and politically feasible. An ex-ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households. An effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system and, at the same time, lower the total budgetary costs of rationed food subsidies. Moreover, the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in Egypt.

Avoiding chronic and transitory poverty: evidence from Egypt, 1997-1999

This paper uses a panel data of 347 households in Egypt to measure changes in household consumption between 1997 and 1999 and to identify causes behind the changes. Per capita consumption decreased for the households during this time and, while not dramatic, it occurred at all points along the distribution. Over the two-year period, the number of households that fell into poverty was over twice as large as the number of households that climbed out of poverty. About two-thirds of overall poverty was chronic (average consumption over time was below the poverty line), and almost half of all poor were always poor. We use quantile regression methods to identify the factors that explain total, chronic, and transitory poverty. While our analysis ably documents the extent of transitory poverty, it does not explain well the determinants of this type of poverty. The predominantly chronic nature of poverty in the sample, and our ability to identify associated characteristics, strengthens the case for targeting antipoverty interventions such as food subsidies.

Less poverty in Egypt? explorations of alternative pasts with lessons for the future

In this paper, the impact of alternative development strategies on growth and poverty is assessed in an economywide framework, using Egypt as a case study. The analysis is guided by the following question: By pursuing a development strategy different from the one actually pursued since the late 1970s, could Egypt’s government significantly have improved the status of its poor? To address this question, a dynamic, recursive, Computable General Equilibrium (CGE) model is used to simulate Egypt’s economy for the period 1979-1997. The model is built around a Social Accounting Matrix (SAM) for 1979. The results indicate that pro-poor redistribution of land and human capital assets could have been a particularly effective tool had Egypt prioritized more strongly to improve the welfare of the poor and reduce inequalities. Such policies could have been implemented without any noticeable negative impact on growth or aggregate welfare. The results also suggest that, for Egypt, there was no contradiction between more rapid growth, largely a function of more rapid productivity growth, and improved welfare for the poor. The present analysis confirms the finding of earlier analyses that, compared to pro-manufacturing policies, pro-agricultural policies have a more positive impact on household welfare in general and the poor in particular. There is a significant synergy between a pro-agricultural shift in productivity growth, improved market access for agricultural exports, and reduced transactions costs in foreign trade.

The impact of alternative development strategies on growth and distribution: simulations with a dynamic model for Egypt

Addressing longer-term issues of economic development in Egypt, the paper employs a dynamically recursive computable general equilibrium (CGE) model to assess the outcomes associated with two types of development approaches over the period 1998-2012. One is a targeted sector development approach, and the second is a more broad-based development approach. The results indicate that, when agricultural exports remain relatively low, promoting the Egyptian textile sector is a win-win scenario in terms of rapid growth and equity. In addition, adopting policies that maintain agricultural prices leads to rapid growth and a general improvement of the distribution of income among households. A crucial policy objectives for achieving rapid and egalitarian growth for the Egyptian economy is the ability to secure improved access to international textile markets and the successful expansion of agricultural exports.

The determinants of employment status in Egypt

Egyptian labor market is moving from a period of high overall unemployment to one where unemployment is increasingly concentrated among specific groups whose access to the private-sector labor market is limited. Educated young women are more adversely affected than their male counterparts by the transition to a private-sector-led economy. There is no systematic link between youth unemployment among new entrants and poverty unless it is the head of the household who is unemployed. An economic policy environment that is favorable for labor-intensive, export-oriented industries would help absorb the new entrants into the labor market, and the prospect is particularly good for young female workers. Policymakers should consider a reduction in the female-specific employer mandates (such as the existing provision for a generous maternity leave) that raise the cost of hiring women.

Adjustment of wheat production to market reform in Egypt

In response to slow growth in the agricultural sector and as part of a general shift towards a more market-oriented economy, the Government of Egypt started liberalizing the agricultural sector in 1987. Controls over wheat production and marketing were eliminated and wheat producer prices were brought closer to international levels. As a result, there has been remarkable increases in wheat crop area and yields, causing wheat production to triple from 1986 to 1998. This study analyzes the results of a survey of 800 Egyptian wheat farmers in order to address three issues that are of interest to agricultural reform policy in Egypt. First, what are the patterns in wheat production and marketing that have emerged following the economic reforms? Second, why is the government unable to purchase more than a small portion of national wheat production? Third, how does wheat supply and input demand respond to wheat and input prices? The survey indicates that Egyptian wheat production is based on small-scale farms, yet these farms are highly commercialized and the use of inputs such as labor, fertilizer and irrigation, is intensive. The government has problems reaching its wheat procurement target because most of the wheat produced is consumed in the rural areas and farmers prefer to sell to traders because of better prices and location. Econometric analysis of the survey data suggests that wheat farmers respond significantly to crop and input prices. The estimated own-price supply elasticity is 0.3, implying that the use of price policy alone to pursue wheat self-sufficiency would be costly and ill-advised.

The political economy of food subsidy reform in Egypt

Egypt has a large food subsidy program that has created a relatively effective social safety net, but it has also drained budgetary resources and proved to be poorly targeted toward the poor. Discussions about reforming the system to improve its effectiveness have run into extreme political sensitivities surrounding the issue of food subsidies. Egypt, therefore, well illustrates the quandaries that policymakers and others contemplating food subsidy reform face in developing countries. This study examines the political economy of food subsidy reform in Egypt and discusses the economic and political advantages and disadvantages of nine possible reforms. The study concludes that the reforms that have the greatest chance of success are those that reduce the access of the wealthy while increasing the access of the truly needy, but the timing, sequence, and trade-offs of such reforms have to be taken into account before they are implemented.

A general equilibrium analysis of alternative scenarios for food subsidy reform in Egypt

This paper uses a Computable General Equilibrium (CGE) model to simulate the short-run effects of alternative food- subsidy scenarios. Savings from reduced subsidy spending are used to reduce direct taxes uniformly for all household types. The model uses a 1996/97 database with detailed household information. The simulated impact of targeting or eliminating oil and sugar subsidies is small: disaggregated real household consumption changes by ±0.3 percent. It is progressive if the subsidy is targeted to the needy (the bottom two quintiles in rural and urban areas) and regressive if it is eliminated. The targeting of all food subsidies is pro-needy, in part due to important indirect effects. It raises the consumption of the needy by 0.5 percent with, on average, little change for the nonneedy. The strongest gains are recorded for the rural needy (consumption increase by 1.0 percent). Food subsidy elimination is regressive: the needy suffer a consumption loss of 1.1 percent. If the government savings instead are transferred to the needy, the impact is reversed: consumption increases by 4.2 percent for needy households while the nonneedy register a small loss. The overall policy implication of the paper is that there is scope for reducing food subsidy spending without hurting the low-income groups.

Determinants of poverty in Egypt, 1997

Poverty profiles are a useful way of summarizing information on the levels of poverty and the characteristics of the poor in a society. For Egypt, while there has been some work on a descriptive analysis of the characteristics of the poor, to our knowledge, there is no precursor to an empirical modeling of the determinants of poverty using nationally representative data. In this paper, we have sought to extend the descriptive analysis of the Egypt poverty profile presented in Datt, Jolliffe, and Sharma (1998) by modeling the determinants of poverty, using data from the 1997 Egypt Integrated Household Survey. A key conclusion of our study has to do with the important instrumental role of education in alleviating poverty in Egypt. Increasing average years of schooling, as well as improving the level of parents education, is indicated to have large impacts on average living standards and poverty levels.

A profile of poverty in Egypt: 1997

This paper presents a profile of poverty in Egypt for 1997. It assesses the magnitude of poverty and its distribution across geographic and socioeconomic groups, provides information on the characteristics of the poor, illustrates the heterogeneity among the poor, and helps identify empirical correlates of poverty. The poverty profile is constructed using data from the recently completed Egypt Integrated Household Survey, a nationwide, multiple-topic household survey, carried out by the International Food Policy Research Institute in coordination with the Ministry of Agriculture and Land Reclamation and the Ministry of Trade and Supply. Reference poverty lines that take into account regional differences in food and nonfood prices, age and composition of poor households, and food and nonfood consumption preferences are used to determine incidence, depth, and severity of poverty. The characteristics of the poor are analyzed. These characteristics include household composition, dwelling type, educational attainment and access, labor force participation and distribution, child immunization levels, payment transfers, agricultural landholdings, and access to community facilities.

Agricultural wages and food prices in Egypt: a governorate-level analysis for 1976-1993

The trend in real agricultural wages in Egypt is described well by an inverted U-shaped curve with a peak around 1985. But the rise and fall of real wages masks a complex dynamic process by which nominal wages adjust in response to changes in food prices. We use governorate-level panel data for 1976–1993 to explore the nature of this adjustment process. Our results indicate that nominal wages adjust slowly. There is a significant negative initial impact of rising food prices on real wages, though wages do catch up in the long run.

The mixed-complementary approach to specifying agricultural supply in computable general equilibrium models

In Computable General Equilibrium (CGE) models, it is typically assumed that agricultural resources are smoothly substitutable in neoclassical functions, with flexible prices generating market equilibrium in a setting with full resource employment. Such a specification is often inadequate, especially for analyses of agricultural supply issues. With more disaggregation, the use of smooth, twice-differentiable, production or cost functions to specify agricultural technology is increasingly unrealistic. The purpose of this paper is to show how CGE models formulated as mixed-complementarity (MC) problems can incorporate more realistic, specifications of agricultural supply, drawing on the extensive literature on mathematical programming models applied to agriculture. We extend a stylized standard neoclassical CGE model to a CGE-MC model that includes Leontief (activity-analysis) technology, endogenous determination of the market regime for agricultural factors (unemployment or full employment), and inequality constraints on agricultural factor use. In an analysis of reduced agricultural water supplies in Egypt, we show how such a model can generate realistic results concerning water use and productivity that cannot be captured in a standard CGE model. The main conclusion is that, in analyses focused on agricultural supply issues, CGE-MC models that selectively incorporate features from the mathematical-programming literature offer a powerful alternative to standard models.

Cost of managing with less: cutting water subsidies and supplies in Egypt's agriculture

Using a mathematical-programming agricultural-sector model of Egypt, this paper analyzes mechanisms for allocating scarce water and for charging the farmers the Operation and Management (O&M) costs of irrigation and drainage, currently covered by the government. The effects of cost recovery are negative but minor. A crop charge (based on crop water consumption per land unit) and a volumetric charge both discourage consumption. The former is easier to implement but does not stimulate water-saving technical change. A 15% cut in agricultural water supplies (permitting a 79% increase in non-agricultural use) raise farmer incomes and has moderate negative effects on consumer welfare and production; a 30% cut causes disproportionately larger negative effects, including large increases in the agricultural trade deficit. Efficient market-based allocations yield higher production and avoid unequal water access, associated with the inefficient alternative of forcing half the farmers to cut their use. However, water sales to farmers at prices reducing demand by 15-30% lead to 20-35% declines in farmer incomes. This suggests the need to explore reforms endowing the farmers with tradable water rights.

Tiger or turtle?: exploring alternative futures for Egypt to 2020

A dynamic computable general equilibrium (CGE) model is used to explore alternative scenarios for 1990-2020 in areas critical for Egypt's economy -- productivity growth, investment, foreign trade, and water. The model is formulated as a mixed-complementarity problem, has a detailed treatment of agriculture, assumes competitive markets and determines efficient water allocation. A Turtle scenario extrapolates Egypt's recent poor productivity and low investment, while a "Tiger" scenario assumes East Asian performance. For the Turtle scenario, incomes are stagnant and a crisis emerges in the labor market. With rapid growth in export demand, investment and productivity, the "Tiger" scenario generates almost tripled per-capita incomes and full employment. Sensitivity analysis for the Tiger scenario suggests that growth in export demand is important, while tariff removal with no other policy changes has little effect. Increasing water scarcity hurts agriculture and labor absorption, but has little effect on overall growth."

Land, water, and agriculture in Egypt: the economywide impact of policy reform

The tax and subsidy system in Egypt in 1986-88 was very distorted, involving large, sectorally variegated, ouput taxes and subsidies. In agriculture, there were also major input subsidies and no charges for water. In this paper, an 11-sector, computable general equilibrium (CGE) model is used to capture this mix of policies, focusing on land and water use in agriculture and on the links between agriculture and the rest of the economy.

Impact of the structural adjustment program on agricultural production and resource use in Egypt

This paper uses an agricultural sector model to evaluate the effects of an ambitious and ongoing policy reform program on agricultural production and resource use in Egypt. The results show that Egypt has already gained from the policy reforms, but that much larger gains depend on increased exports of high value crops. Water is found to be emerging as an important constraint on agriculture, and it will be essential to establish more effective institutional and pricing mechanisms to encourage greater water use efficiency in the future. Because many of the new lands compete with the more productive lands of the Nile delta for water, the economic return to the development of new lands is also found to be low. The policy reforms are not likely to lead to substantial increases in agricultural employment, even if exports of high value crops could be increased. However, the model results also show that more employment intensive strategies could be designed that would involve little sacrifice in economic efficiency.

Macro and micro effects of subsidy cuts: a short-run CGE analysis for Egypt

Using a Computable General Equilibrium model for Egypt based on data for 1991/92, this paper analyzes the short-run impact of removing price-distorting subsidies for oil products sold domestically and for commodities covered by the consumer subsidy program. The model merges neoclassical and structuralist features. Two sets of simulations are conducted. The first involves raising the price of domestic oil products to international levels; the second simulates the impact of removing consumer subsidies. Each policy gives rise to an increase in government savings. The analysis is focused on imposing alternative macro closures in order to explore trade-offs between alternative uses for these savings: foreign debt repayment (adding to Egypt's net foreign assets), domestic investment, and government transfers to the households. The results indicate that both policies are contractionary, across all macro closures. The strongest fall in real GDP and other indicators resulted from paying back foreign debt. For the other two cases, the savings were used in a manner which simulated the domestic economy, with a trade-off between investing and improving current household conditions. On the micro level, the oil policy simulations showed a decline in domestic oil use by 6-8 percent (with an accompanying reduction in air pollution) and larger exports. For the consumer subsidy cut, the household consumption fall was relatively limited for food due to low income and price elasticities; most of the consumption cut affected other industrial goods and services. Sensitivity analysis suggested that one structuralist feature--mark-up pricing and excess capacity in much of the economy--had a strong impact on the results; when profit maximization and no excess capacity was assumed for most sectors, the changes in real GDP and other variables were much smaller.

Price competitiveness and variability in Egyptian cotton: effects of sectoral and economywide policies

This paper examines the role of price incentives in the observed decline in cotton production during the 1980s and in the apparent improvement in recent years. The following determinants (in an accounting sense) of the changes in the relative producer price of cotton during 1980-92 are quantified: (1) changes in the foreign price; (2) changes in the real exchange rate; and (3) changes in nominal protection and the marketing margin. An estimated model of the real exchange rate for Egypt is used to provide a further decomposition of the changes in the relative cotton price that isolates the effect of policy-related factors. The comparative effects of sectoral and economywide policies are analyzed based on three alternative policy regimes in terms of the average price and variability of annual price levels over the period 1971-1992. Government interventions are found to reduce both the long-run price incentive and short-run price variability in Egyptian cotton. Various approaches in dealing with commodity pice instability in the context of a more open trade regime are indicated.

Agricultural market reforms in Egypt: initial adjustments in local output markets

This study represents one of the first attempts to examine the process of adjustment within the farming and marketing sectors to the reform of agricultural markets in Egypt. Even though it is primarily based on rice sector data, it gives the following interesting insights into the initial responses to the reform process. First, farmers are reacting with higher output levels and marketed surplus, although the bulk of the expansion has taken place among farms larger than 5 feddans. Marketed surplus among smaller sized farms has hardly changed. Second, the reforms have brought about increased private sector participation in the distribution of foodgrains. However, the level of participation is significant only in terms of local trading. Third, private sector participation in the processing industry has increased in terms of milling capacity, due primarily to the large increase in the number of larger private sector mills. In terms of milled quantities, however, public millers still process the bulk of the output, and have even raised their milling share, while small private mills are losing market shares. Furthermore, millers continue to procure paddy rice and traders continue to process paddy rice, so that it would appear that specialization has not yet occurred in the two subsectors. Finally, concomitant to changes in output levels and marketing behavior are falling real farm foodgrain prices, except for wheat. At the same time, real farm wages and real fertilizer prices have also declined, offsetting some of the effect of falling output prices. Combined with the strong increase in output levels, this would suggest that farmers may be already gaining from the reforms, to the extent that changes in the other cost elements (land and equipment) do not exceed these gains.

Foodgrain market integration under market reforms in Egypt

Using urban price data for the period 1976 to 1992 and rural price data for the period 1982 to 1992, the study assesses the degree of market integration for wheat, maize and rice. The study finds that i) reforms have not destabilized foodgrain prices; ii) there is some indication that the degree of segmentation among food grain markets has decreased during the reform period, especially for rural wheat and maize markets; iii) urban markets exhibit a much higher degree of market segmentation, particularly for wheat; and iv) the extent of market integration in terms of the magnitude of market interdependence and speed of price transmission was until 1992 very limited. Urban markets seemed to have a lower magnitude of integration than those of rural areas and the speed of adjustment was higher among these markets, reflecting the better communication and infrastructure network in urban areas.

Agricultural market reforms in Egypt: initial adjustments in local input markets

The high use of modern inputs in Egypt's agricultural system well before the reforms has been very favorable to the development of private markets, particularly in the fertilizer sector. The level of adoption being very high, the usual demand constraints did not operate and traders' entry was facilitated by the size of the market....In the fertilizer sector, the reduction in subsidies has been initially accompanied by a reduction in use, but by 1993 fertilizer use has returned to its 1991 levels...The effect on crop production has been positive in most cases, with increases in production and yields. Higher nominal prices of fertilizers and pesticides did not translate into higher real prices. There is some evidence that the ratio between foodgrain prices and the prices of fertilizers, pesticides, and labor have gone up, pointing indirectly to some evidence concerning improvement in average farmer's income, to the extent that changes in the cost of other inputs like land and equipment do not exceed these gains.

The Egyptian rice market: a model analysis of the effects of government interventions and subsidies

Food subsidies and the government budget in Egypt