Development and Poverty Reduction Strategies in Egypt

Using consumption/expenditure based poverty lines, the 1995/6 estimated poverty measures indicate an overall headcount index of 22.9 percent, which is slightly higher in rural areas. Measuring poverty over the period 1981 - 1996, the study indicates a steady rise in poverty in urban Egypt while the headcount measure is shown to have declined in rural Egypt. Trends in inequality and poverty are attributed to the pace and quality of economic growth and to the role of the state. In implementing the reform package beginning in 1991, the government of Egypt maintained a gradual structural adjustment program, a strategy which may have lessened the adverse social implications that resulted. While economic growth enlarges opportunities to reduce poverty, the potential impact depends on its responsiveness to changes in mean incomes holding distribution constant. The paper shows that in Egypt, poverty is highly growth elastic, and thus poverty reduction will improve with higher rates of growth provided the growth process does not lead to an increase in income inequality.