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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Implicit taxation of agriculture: the cause of development failure in Egypt
Author:Grabowski, RichardISNI
Periodical:African Development Review (ISSN 1017-6772)
Geographic term:Egypt
Subjects:development economics
agricultural policy
Abstract:Egypt has been unable to sustain rapid economic growth in the past, nor has it been able to generate employment opportunities at a fast enough rate to keep unemployment from rising. This paper argues that this has been the result of significant implicit taxation of the agricultural sector. This policy has been an obstacle to the structural transformation of the Egyptian economy, has increased the capital intensity of production in the urban sector, and slowed down overall economic growth. The Egyptian experience is contrasted with that of South Korea and Taiwan, all three countries being labour abundant and land scarce. Egypt has implemented a policy that was biased against agriculture, which tended to slow down structural change. With structural change slowed, employment opportunities in the modern sector are likely to grow slowly. This is due to the capital intensive nature of firms in the formal sector. Such an analysis, useful for understanding the experience of a North African country, can also be applied to countries in sub-Saharan Africa persistently engaged in policies biased against agriculture. Policy reform combined with investment in agriculture is likely to lead to rapid labour intensive growth. Bibliogr., sum. [Journal abstract, edited]