Political and Economic Conditions

8/16/2019 Political and Economic Conditions

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Political and Economic Conditions

International Business Management

EMBA – Cohort 7

Presented to: Dr. Hanan ElZeiny.

Presented By: Aram Mohamed !ah"a

The international business and trade environment is the backbone of global

economy. Trade agreements to buying and selling goods and services

internationally give manufacturers in various countries the opportunity to expand

beyond the domestic market. Trading across national borders increases sales,

creates jobs, balances seasonal fluctuations and provides a variety of products

and services. As the global economy continues to strengthen, international trade

continues to be in demand.

And it’s too important to study the political and economic conditions to


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determining the expected risks and reduce its effect, and if we talk about Egypt

from the nvestor point of view we will found!

Political situation:

The Egyptian army ousted "resident #osni $ubarak in %ebruary &'(( after

massive protests destabili)ed his government. The *upreme +ouncil of the Armed

%orces assumed power pending election of a new civilian government. The

parliament was dissolved in une &'(& after the *upreme +onstitutional +ourt

ruled that one-third of its members had won their seats illegitimately. $ohamed

$orsi of the $uslim rotherhood’s %reedom and ustice "arty won the une &'(&

presidential election and granted himself sweeping new powers in /ovember. This

led to his ouster in mid-&'(0. 1omestic instability and political uncertainty have

hurt tourism and foreign investment, both of which are important sources of

foreign exchange. There have been limited market reforms, but the government

still heavily subsidi)es food, energy, and other key commodities.

#ule o$ la%:

+orruption is pervasive at all levels of government and has eroded trust in the

economic system. The rule of law has been highly unstable across the country,

and the judicial system’s independence is poorly institutionali)ed. udicial

procedures tend to be protracted, costly, and subject to political pressure.

"roperty rights are not protected effectively, and titles to real property may be

difficult to establish.

&imited 'o(ernment:

The top individual income and corporate tax rates are &2 percent. 3ther taxes

include a property tax and a general sales tax. The total tax burden is (0.4

percent of 51". 5overnment spending is 0& percent of the domestic economy,

and public debt, now over 4' percent of 51", continues to rise. nternational

support has buoyed delicate public finances amid political instability.

#egulatory e$$iciency:

6aunching a company and organi)ing new investment remain burdensome.

"revious regulatory reforms have failed to create real momentum for dynamicentrepreneurial growth. n the absence of a well-functioning labor market,


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informal labor activity persists. Among energy-importing countries, Egypt has one

of the highest levels of electricity and fuel subsidies7 in &'(&, outlays for

subsidies soared by 8& percent.

)*en Maret:

Egypt’s average tariff rate is a relatively high 9.0 percent. "olitical unrest

discourages new foreign investment. nvestment flows have slowed significantly

due to the challenging economic and political situation. The state-dominated

financial system has been under stress, with negative impacts from the global

economic slowdown exacerbated by domestic turbulence. anking-sector reform

programs have been stalled or derailed.

Over the 20-year history of the ndex, Egypt’s economic freedom score has

risen over : points, reflecting advancements in fiscal freedom and trade freedom.

#owever, overall improvement has been held back by considerable deterioration

in other areas, particularly the rule of law as measured through property rights

and freedom from corruption. The country’s uneven reform progress has largely

stalled in recent years, and scores for investment freedom and financial freedom

have fallen back as well. Egypt is now on a downward path of economic freedom,

registering its lowest score in (& years in the &'(8 ndex.

Egypt’s lack of progress in advancing economic freedom has trapped many of its

citi)ens in poverty and economic stagnation. As noted in earlier editions of the

ndex, institutional reforms are critically needed to ensure Egypt’s transition to a

functioning market economy under an effective rule of law

Documents

Political and Economic Conditions