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Assessment of FDI Incentives in Egypt

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  • Nada Massoud

Abstract

The paper tests the hypothesis that the FDI incentives scheme that Egypt chose to adopt since the open door policy in 1974 did not have a significant effect on the volume of FDI inflows attracted to Egypt and placed budgetary burdens on the Egyptian tax-payers. The paper quantitatively estimates the effect of the incentives offered by Egypt to foreign investors in Law 8/1997, on the incremental increase in FDI inflows to Egypt and on the cost born by the budget to support these incentives. It is concluded that the policy on FDI in Egypt should have focused on deriving macroeconomic benefits from FDI rather than on attracting the FDI. Offering incentives, especially tax incentives, is not the way out to more benefits, but improving the availability of sufficiently qualified labor, focusing on the establishment of sound institutions, and opening up to international trade will make Egypt’s locational characteristics more favorable to potential investors.

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  • Nada Massoud, 2003. "Assessment of FDI Incentives in Egypt," Working Papers 0336, Economic Research Forum, revised 11 2003.
    • Handle: RePEc:erg:wpaper:0336
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    References listed on IDEAS

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    1. Dasgupta, Dipak & Ratha, Dilip, 2000. "What factors appear to drive private capital flows to developing countries? and how does official lending respond?," Policy Research Working Paper Series 2392, The World Bank.
    2. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    3. Milan Sedmihradsky & Stanislav Klazar, 2002. "Tax Competition for FDI in Central-European Countries," CESifo Working Paper Series 647, CESifo.
    4. Chen Chunlai, 1996. "Recent Developments in Foreign Direct Investment in China," Chinese Economies Research Centre (CERC) Working Papers 1996-03, University of Adelaide, Chinese Economies Research Centre.
    5. Louis T., Jr. Wells & Nancy J. Allen & Jacques Morisset & Neda Pirnia, 2001. "Using Tax Incentives to Compete for Foreign Investment : Are They Worth the Costs?," World Bank Publications - Books, The World Bank Group, number 13979.
    6. Chang, Ha-Joon, 2003. "Regulation of Foreign Investment in Historical Perspective," UNU-INTECH Discussion Paper Series 2003-12, United Nations University - INTECH.
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    Cited by:

    1. Sekkat, Khalid, 2012. "Manufactured Exports and FDI in Southern Mediterranean Countries: Evolution, determinants and prospects," CEPS Papers 6849, Centre for European Policy Studies.
    2. Brahim Elmorchid & Nouira Ridha & Khalid Sekka, 2013. "A Comparative Analysis of the Determinants of Foreign Direct Investment in The Arab World and in Asia," Working Papers 811, Economic Research Forum, revised Dec 2013.

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