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Egypt Since 1800: A Study in Lop-sided Development*

Published online by Cambridge University Press:  03 February 2011

Charles Issawi
Charles Issawi
Affiliation:
Columbia University
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Extract

One of the main points at issue between economists from advanced and those from underdeveloped countries is the role of foreign trade in economic development. The former see in the expansion of foreign trade the main motive power of development, while the latter pin their hopes on other sectors, notably manufacturing. The answer would seem to be that foreign trade is a necessary but not a sufficient condition of development. Economic growth of underdeveloped countries can be achieved most smoothly if they can build up a substantial export trade that is sufficiently closely linked to the rest of the economy to exert upon it some form of multiplier effect so that a rise in exports leads to a more general and diffused expansion. In other words, over a long period of development, foreign trade is the engine that provides the motive power, but this engine cannot move the economy unless it is provided with adequate transmission lines. Or, to change the metaphor, other branches of the economy can be vivified and developed by grafting on to them some of the capital created and the skills generated in foreign trade.

Type
Articles
Information
The Journal of Economic History , Volume 21 , Issue 1 , March 1961 , pp. 1 - 25
Copyright
Copyright © The Economic History Association 1961

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References

1 On the last point, see the very interesting analysis in Hirschman, Albert O., The Strategy of Economic Development (New Haven: Yale University Press, 1958), Ch. vi.Google Scholar

2 Six good studies have recently been made of Mohammad Ali's economic policies: Shukri, Mohammad Fuad and associates, Bina dawlat Mohammad Ali [The structure of the state of Mohammad Ali] (Cairo, 1948)Google Scholar; al Hitta, Ahmad, Tarikh al ziraa al misriyya fi ahd Mohammad Ali al Kabir [The history of Egyptian agriculture in the reign of Mohammad Ali the Great] (Cairo, 1950)Google Scholar; Helen Anne Rivlin, The Agricultural Policy of Mohammad Ali (in press); al Shafi, Ali, Al ashghal al amtna al Kubra fi ahd Mohammad Ali [Major public works in the reign of Mohammad Ali] (Cairo, n.d.)Google Scholar; al Gritly, Ali, Tarikh al sinaa fi Misr [History of industry in Egypt] (Cairo, n.d.)Google Scholar; and Fahmy, Moustapha, La révolution de l'industrie en Egypte et ses consequences sociales (Leiden: E. J. Brill, 1954)Google Scholar. All these books contain bibliographies. For conditions prevailing up to 1800, see Gibb, H. A. R. and Bowen, H., Islamic Society and the West (London: Oxford University Press, 1950 and 1957)Google Scholar; and France, Commission des Monuments d'Egypte, Description de l'Egypte (Paris, 1809–1822).Google Scholar

3 It is difficult to determine the extent of the increase in cultivation. Al Hitta (Tarikh, pp. 9 and 83) puts the cultivated area at 3,054,710 feddan in 1813, about 3,500,000 in 1835, 31856,226 in 1840 and 4,160,169 in 1852. (A feddan is equal to 1.038 acres or 4,201 square metres.) On the other hand, Rivlin (Agricultural Policy, Chapter ii) points out that during the French occupation (1798–1801) the cultivated area was 4,038,177 feddan and that by 1844 the area of village land, which probably included a small amount of uncultivated land, was 4,293,164 feddan, an increase of only 254,987; over the same period of time the amount of taxed land decreased by 400,862 feddan. Her conclusion is that “any improvements made by Mohammad Ali were qualitative rather than quantitative.” Of course the two sets of figures can be reconciled on the very reasonable assumption that cultivation shrank greatly in the chaotic period following the withdrawal of the French troops.

4 Crouchley, A. E., The Economic Development of Modern Egypt (London: Longmans, Green and Co., 1938)Google Scholar. For fuller details see Charles-Roux, François, Le coton en Egypte (Paris: Armand Colin, 1908)Google Scholar and Sami, Amin, Taqwim al Nil [Almanach of the Nile] (Cairo, 1916–36)Google Scholar. Until the end of 1835, the kantar equaled 43⅔ okes; since then it has been equal to 36 okes, that is, 99 lbs. or 45 kilograms.

5 Crouchley, A. E., “The Development of Commerce in the Reign of Mohammad Ali,” L'Egypte contemporaine (Feb.-Mar. 1937).Google Scholar

6 al Hitta, Ahmad, Tarikh Misr al igtisadi [Economic History of Egypt] (Cairo, 1957), p. 174.Google Scholar

7 Fahmy, La révolution, pp. 84–85.

8 Estimates of Egypt's population at this period are unreliable and show considerable variations. Volney put the total in the 1780's at 2,300,000. For the year 1800, Jomard gives the figure of 2,489,000 and Chabrol that of 2,400,000; Jomard's estimate is discussed in El-Darwish, Mahmoud, “Analysis of Some Estimates of the Population of Egypt before the XIXth Century,” L'Egypte contemporaine (March 1929)Google Scholar; Chabrol's estimate is judged to be too low by Gibb (Islamic Society, I, 209). For 1821, Mengin gave a figure of 2,536,000. For 1836 Cadalvène gave one of 2,213,000; Duhamel one of 2,500,000; Clot one of 3,000,000; and Mohammad Ali one of 3,500,000. In 1840, Bowring stated that the official estimate was 3,200,000 but that in “the opinion of the best informed” the number was from 2,000,000 to 2,500,000. In 1846 a census of houses showed a total of 4,543,000, but this figure is also not too reliable.

9 Heyworth-Dunne, J., An Introduction to the History of Modern Education in Egypt (London: Luzac and Co., 1938), pp. 104–287.Google Scholar

10 Gritly, Tarikh, p. 97.

11 See Landes, David S., Bankers and Pashas: International Finance and Economic Imperialism in Egypt (Cambridge: Harvard, 1958)Google Scholar. This detailed study of the decade 1858–1868 throws much light on the whole period between the death of Mohammad Ali and the British occupation.

12 Bowring, John, “Report on Egypt and Candia,” in Parliamentary Papers, 1840, xxi, p. 63Google Scholar. An Egyptian pound is equal to £1–0–6.

13 For the year 1800, Bréhier gave the figures of £E. 269,000 for imports and £E. 288,000 for exports (as quoted by Crouchley, Economic Development, p. 266). In 1784, Volney (Oeuvres [Paris, 1825], II, 166) estimated Egypt's exports at not over 15 million livres (or £. 600,000) on the assumption that exports to France, which amounted to 3 millions, constituted at least one fifth of the total; according to him, Egypt's imports from France amounted to 2½ million livres. In this context, it is worth noting that Crouchley (ibid., p. 269), apparently misled by Brehier, quotes the figure of 15 million as representing total trade. Volney also reproduces a report prepared by the Chamber of Commerce of Marseilles putting French exports to Alexandria in 1784 at 2,311,637 livres and French imports at 2,465,630 livres (Oeuvres, II, 339–40).

Masson, Paul, in his Histoire du commerce français dans le Levant an XVIIIe siècle (Paris: Hachette, 1911), pp. 595–99Google Scholar, gives the following figures for average annual French imports from Egypt: 1715–30, 2 million livres; 1730–43, 2 million; 1749–55, 2–5 million; 1764–69, 2.7 million; 1769–74, 3.56 million; then followed a decline because of anarchy in Egypt, and in 1787–89 the average was 2.68 million.

French exports to Egypt averaged 2 million until 1750, rose to over 3 million in 1764–76, and fell back to 2.76 million in 1787–89. Ibid.

France was by far Egypt's most important trading partner among European countries. Raynal put Egypt's trade with France in 1776 at 7.1 million livres, with the whole of Europe at 12.89 million and with the whole world at 80.4 million, or £3.2 million, but his estimate for non- European trade is exceedingly rough. Raynal, Abbé, Settlements and Trade of the Europeans in the East and West Indies (London, 1787), V, 152.Google Scholar

14 The 1838 figure is from MacGregor, John, Commercial Statistics (London, 1847), II, 251Google Scholar; the others are from Crouchley, Economic Development.

15 Crouchley, A. E., “The Visible Balance of Trade since 1884,” L'Egypte contemporaine (March-April, 1935).Google Scholar

16 See Schlote, Werner, British Overseas Trade (Oxford: Basil Blackwell, 1952) for indices of British export, import, and wholesale prices.Google Scholar

17 Between 1876 and 1883, the mortgage debt of farmers rose from, £E. 500,000 to £E. 7,000,000. Lord Dufferin, in a report to Lord Granville dated 6 Feb. 1883, quoted by I. G. Levi, “La distribution du credit en Egypte,” L'Egypte contemporaine (Feb. 1918). By 1914, mortgage debts stood at about £E. 60 million.

18 For these ties see Gibb, Islamic Society, I, 260; and for their dissolution, Baer, Gabriel, “The Dissolution of the Egyptian Village Community,” Die Welt des Islams, n.s., VI (1959), Nos. 1–2.Google Scholar

19 A. E. Crouchley, Economic Development, pp. 132, 152–3.

20 L'Egypte: aperçu historique et géographique (Cairo: Imprimerie de l'lnstitut Français, 1926), pp. 312–15Google Scholar; Wiener, L., L'Egypte et ses chemins de fer (Brussels, 1932), pp. 71–88Google Scholar, and several articles in L'Egypte contemporaine (Jan. 1933).

21 Crouchley, A. E., The Investment of Foreign Capital in Egyptian Companies and Public Debt (Cairo, 1936), pp. 29–37.Google Scholar

22 Ibid., p. 74.

23 For sidelights on this, see Douin, G., Histoire du règne du Khedive Ismail (4 vols.; Rome: Instituto poligrafico dello stato, 1933–38), I, 239Google Scholar; and Rifaat, M., The Awakening of Modern Egypt (London: Longmans, Green and Co., 1947), p. 102Google Scholar. As an indication of the rise in mass consumption during the latter half of the period, it may be noted that imports of coffee increased from an average of 3,600 tons in 1885–89 to 6,900 in 1910–12, of tobacco from 3,100 to 8,700 tons, of cotton textiles reckoned by weight from 13,000 to 21,000 tons and of cotton textiles reckoned by length from 4.3 to 61.2 million metres. Egypt, Annuaire statistique, 1913. None of these imports displaced domestic production. There is also good evidence that consumption of wheat increased considerably.

24 The total number of foreigners rose from about 3,000 in 1836 to over 68,000 in 1878 (J. Heyworth-Dunne, An Introduction, p. 343) and to 147,000 in 1907. For a vivid picture of the immigrants, see Landes, Bankers and Pashas, ch. iii, entitled “Klondike on the Nile.”

25 In addition to the public works mentioned above, Ismail set up some sugar and textile units and a few other factories, enlarged, with private capital, a shipping company founded by his predecessor and sponsored a mixed trading company. All these enterprises were eventually [The Age of Ismail] liquidated or disposed of to private interests. See al Rafi, Abdel Rahman, Asr Ismail (Cairo, 1948) I, 188–90Google Scholar, and II, 12–13, and Landes, Bankers and Pashas, passim.

26 Annual Report for 1905, Cd. 2817.

27 For a descriptive list of early Egyptian engineers and natural scientists, see Rafi, Asr Ismail, I, 264–78.

28 See Issawi, Charles, “The Entrepreneur Class,” in Fisher, Sydney N., ed., Social Forces in the Middle East (Ithaca: Cornell University Press, 1955).Google Scholar

29 See Egypt, Ministry of Public Works, Irrigation and Drainage in Egypt (Cairo 1950)Google Scholar. Total expenditure on capital irrigation works from 1927 to 1937 inclusive amounted to £E. 32.5 million. Hamdy, M. M., “A Statistical Survey of the Development of Capital Investment in Egypt since 1880” (Ph.D. thesis, University of London, 1943).Google Scholar

30 This was achieved by extending perennial irrigation, thus making it possible to grow three crops in a two-year cycle on a given patch of land.

31 National Bank of Egypt, Economic Bulletin (Cairo), No. 1 (1960).

32 Ibid., No. 1 (1957).

33 ibid.

34 All the cotton offered by Egypt has sooner or later succeeded in finding export markets, but in some years the crop was cleared only by a drastic reduction in the premium which, because of its superior quality, it normally enjoys over other staples.

35 For details, see United Nations, Economic Development in the Middle East 1954–1955 (New York, 1956), pp. 113–16Google Scholar. The dam will also provide flood control and 8 billion kilowatt hours of electricity per annum.

36 Stamp, Dudley, Land For Tomorrow (Bloomington, Ind., 1952).Google Scholar

37 See Issawi, C., Egypt at Mid-Century (London: Oxford University Press, 1954), pp. 109–11, for costs and returns of main crops.Google Scholar

38 In addition to the general factors accounting for population growth in underdeveloped countries, one specific to Egypt may be mentioned, viz. cotton. For cotton requires not only much labor but also much child labor, and therefore is best suited to a dense and growing population.

39 The government has just begun to show an interest in birth control, and recently opened a few clinics. The effects of such measures on population growth can, however, make themselves, felt only very slowly.

40 United Nations, Dept. of Economic Affairs, Economic Developments in the Middle East, 1945 to 1954 (New York, 1955). P. 27.Google Scholar

41 Per capita income, in 1913 prices, has been put at £E. 7.6 in 1880–97, £E. 12.4 in 1913, £E. 12.2 in 1921–28, £E. 8.2 in 1930–33, £E. 9.6 in 1935–39, and £E. 9.4 in 1940–59. A El Sherbini and A. F. Sherif “Marketing Problems in an Underdeveloped Country—Egypt,” in L'Egypte contemporaine (July 1956). While such estimates are subject to caution, they seem well in line with other available information.

42 Craig, J. I. and Karim, M. Abdel, Cereals Consumption in Egypt (Cairo, 1947)Google Scholar; Issawi, C., “Population and Wealth in Egypt,” Milbank Memorial Fund Quarterly (New York) (Jan. 1949)Google Scholar; idem, Egypt at Mid-Century, pp. 85–86.

43 Cleland, Wendell, The Population Problem in Egypt (Lancaster, Pa.: Science Printing Press, 1936)Google Scholar. An earlier warning had gone unheeded. “If the rate of increase elicited at last census is maintained, it is not difficult to show that, in 50 years time, the population will be about 29 millions. The cultivable land will then be 7.7 millions of feddans cropped twice a year and so equivalent to some 15.4 million feddans of land. … Now 4.4 million feddans at present barely support 13.1 million of people; will 8.7 (sic) million feddans support the 29 million of 1967? Yes, if the yield of the crops is improved; no, if it is not.” Craig, J. I., “The Census of Egypt,” L'Egypte contemporaine (April 1917).Google Scholar

44 Gritly, Tarikh, p. 78.

45 For details, see C. Issawi, Egypt at Mid-Century, p. 37, and A. A. I al Gritly “The Structure of Modern Industry in Egypt,” L'Egypte contemporaine, 1947.

46 A list of manufacturing enterprises operating in 1916 shows that the total number was 15 and total employment about 30–35,000. René Maunier, “L'exposition des industries égyptiennes,” L'Egypte contemporaine (Nov. 1916). The sugar industry accounted for the bulk of employment.

47 See United Nations, Economic Developments in the Middle East, 1945 to 1954, pp. 40–41.

48 For details see United Nations, The Development of Manufacturing Industry in Egypt, Israel and Turkey (New York, 1958)Google Scholar. Figures on employment in establishments with 10 persons or over tend to exaggerate the rate of growth since total industrial employment rose by only 53 per cent from 248,000 to 379,000. However, increased mechanization and better organization have greatly raised labor productivity, and available data on output fully support the statement that industrial production increased more than threefold between 1927 and 1954.

49 For details on all these changes, see United Nations, Economic Developments in the Middle East, 1945 to 1954, pp. 25–57; also the reports by the United Nations on the same subject for the years 1954–55,1956–57, and 1957–58.

50 United Arab Republic, Al taqaddum al sinai fil iqlim al misri [Industrial progress in the Egyptian region] (Cairo, 1959), p. 67.Google Scholar

51 For full details on the Plan, see ibid. In addition the Soviet Union has opened credits equivalent to about $370 million for aid in building the High Dam.

52 al Din Said, Gamal, Iqtisadiat Misr [The economics of Egypt] (Cairo, 1951), p. 245.Google Scholar

53 C. Issawi, Egypt at Mid-Century, p. 83.

54 Ibid., p. 241. The existence of surplus agricultural labor in Egypt, or indeed in other countries, has been denied by very distinguished economists. However, in addition to the arguments adduced in the above-mentioned citation, the following may be found cogent. In the last forty-five years the Egyptian rural population almost doubled but agricultural output showed little increase, in spite of the above-mentioned improvements (fertilizers, better seeds, expansion of perennial irrigation, etc.), which have probably offset any soil exhaustion that may have taken place. Cotton production in 1953–1955 was some 5 per cent below that of 1912–1914, while the output of the five leading grains and pulses (wheat, maize, rice, beans and barley) was less than 20 per cent above that of 1913–1915, the earliest period for which figures are available. Now considering that in 1913 the average, and therefore presumably the marginal, productivity of Egyptian agricultural labor was already very low, its present marginal productivity must be close to zero, or perhaps even zero.

55 Ibid., p. 163.

56 United Nations, The Development of Manufacturing Industry, p. 69.

57 In these circumstances, it may well be questioned whether there are any short-term, purely economic arguments in favor of industrialization. The answer is that capital investment in industry is justified wherever the “value added” by labor using that capital is greater than the value added by a corresponding amount of labor using an equal amount of capital would have been in agriculture. In a country like Egypt, where new land can be brought under cultivation only at great cost and where intensification of agriculture has been carried very far, this may well occur even if all machinery, fuels and raw materials used in manufacturing have to be imported.

It will be noticed that this argument focuses on the scarce factor, capital, and not on the abundant factor, labor. No assumption regarding zero productivity of labor in agriculture is made. Where, however, this does hold true, as it may in Egypt, there are also powerful arguments for using labor in public works designed to create “overhead capital.” The long-term economic, as well as the social and political, arguments for industrialization are well known and, in the opinion of the present writer, cogent.

58 For the reason pointed out by several economists, namely that capital tends to be attracted by abundant resources, not cheap labor, for the latter implies low incomes and narrow markets.

59 United States Department of the Interior, Annual Report on Saline Water Conversion (Washington, D.C.); United Nations, New Sources of Energy and Economic Development (New York, 1957)Google Scholar; idem, Integrated River Basin Development (New York, 1958)Google Scholar, Appendix 5; and University of Maryland, Bureau of Business and Economic Research, Fresh Water from the Sea (College Park, Md., 1958)Google Scholar.

60 Recently, a set of lectures was given in Cairo on this subject. See Raj, K. N., Employment Aspects of Planning in Underdeveloped Economies (Cairo: National Bank of Egypt, 1957).Google Scholar