“Ever since the revolution, there’s been no work… I have three kids and I can’t even provide for them.” (Kenyon, 2011) Abu Saud Mustafa was interviewed in June of 2011, just following the string of revolutions caused by the “Arab” spring, which then resulted in the over-throwing the Egyptian President Hosni Mubarak. Mustafa an artist who sold papyrus sheets drawings that once sold for $15 dollars now only sell for $2 or $3. (Kenyon, 2011) It became clear to those living in Cairo at the time that the economic outlook was bleek. What once was a thriving tourist destination has now become nothing more then a city in the headlines. Corruption, unemployment and a significant economic downturn factored into this outlook so much that even the government worried about market instability. With the unemployment rate up to 12 per cent and investment dramatically decreasing, the government had every right to worry. (Khalaf, Saleh and Allam, 2011) The ousting of Mubarak shifted a number of things within the Egyptian economy, but it most dramatically affected the confidence of investors within the economy. Many Egyptian businessmen have moved into Europe and other countries for fear that they might be brought up on corruption charges in despite their innocence. (Khalaf, Saleh and Allam, 2011) Fear with in the public sector caused by the revolutions drive for justice against corruption significantly reduced market production and therefore lead to a shrink in the economy.
Despite the surge of movement of Egyptian investors out of the country, numerous foreign governments have pledged tens of billions of dollars in financial support to the future of the Egyptian economy. Although this pledge of investment in the “long-term development” of Egypt will pan out to be significant in the long run, the short run economy will not see a significant change. (Khalaf, Saleh and Allam, 2011) As economists believe that in the short run prices are ‘sticky’, a pledge of money to the economy, especially a pledge to help the “long-term” development of the country, does not immediately affect the prices within that economy. Although prices are not affected and the short run looks bleak, the long-term development is potentially more important than the short run. The plans for the long run offer a sort of stability and a look at the future of an economy.
The interim government in place has taken a few steps to enhance the economic state of Egypt but despite this there is only so much that a government with little economic experience can do. While raising the public sector wages by 15% was a much-needed action, their decisions with relation to fiscal policy are less then impressive. After proposing a budget to plug a deficit of 10.6 per cent and negotiating loans with various banks, Egypt then turned down the loans and trimmed back the budget all together. (Khalaf, Saleh and Allam, 2011) This left the Egyptian people wondering about the future of their economy.
The significance of the fall of Mubarak to Egypt comes not just in the change in the corruptive power of the government but also a change in the potential for success that exists in the Egyptian economy. Due to it’s large and diversified domestic market Egypt has the potential to become a “powerhouse” within its region. The ousting of Mubarak allows for further economic production within the economy by opening up the market for new goods and allowing for additional production. As the financial times states, “the country has been held back by bad economic management, excessive bureaucratic control and poor education.” (Khalaf, Saleh and Allam, 2011) With this chance for a new form of control over the economy there comes a chance for an increase in the economic status of Egypt within the Middle East.