EGYPT

COUNTRY OVERVIEW

LOCATION AND SIZE.

The Arab Republic of Egypt is located in North Africa, bordering on the Mediterranean Sea to the north, Libya to the west, the Gaza Strip to the east, and Sudan to the south. With an area of 1,001,450 square kilometers (386,659 square miles) and a coastline of 2,450 kilometers (1,522 miles), Egypt is slightly more than 3 times the size of New Mexico. Egypt's capital city, Cairo, is located in the north of the country.

POPULATION.

The population of Egypt was estimated at 69,359,979 in July of 2000, an increase of 17,115,079 from the 1990 population of 52,244,000. In 2000, Egypt's birth rate stood at 25.38 per 1,000, while the death rate was reported at 7.83 per 1,000. With a projected annual growth rate of 1.5 percent between 2000 and 2015, the population is expected to reach 92 million by the year 2030.

Egypt's population is the largest in the Arab world, and is generally young, with 35 percent below age 14 and just 4 percent older than 65. Almost 50 percent of the population is below 20 years of age and 39 percent under 15, presenting a real challenge to government in creating job opportunities. The vast majority of the population—94 percent—is Sunni Muslim. Coptic Christians, and other smaller religious groups represent 6 percent of the population, while smaller minorities—primarily Nubians, Armenians, and other Europeans—make up approximately 1 percent of the population.

A large number of Egyptians—44.9 percent in 1998—live in urban areas. The capital city of Cairo and its suburbs is home to the largest concentration of Egyptians, with a population of almost 7 million. Other major cities include Alexandria, which has a population of 3.3 million, and Port Said, with 469,000 inhabitants. Migration from rural to urban areas presents a serious problem for policy planners due to the heavy stress it places on services in major cities. Egypt is over-populated and continuing population growth places a major strain on land and resources alike. Most Egyptians are concentrated in the Valley and Delta of the Nile River, areas that account for only one-third of the entire land surface of Egypt. The rest of the country is largely uninhabited desert.

Family planning policies were first adopted in the 1950s, but it was not until the mid-1980s that a government family planning body, the National Population Council (NPC), was established. The country's population policy has addressed multiple issues, focusing on the promotion of primary health care, encouragement of family planning in rural areas, and the reduction of infant and maternal mortality. The annual population growth rate has dropped dramatically in recent years, reaching 1.9 percent in 1998. The drop can be credited to carefully designed and well-financed family planning policies adopted since the mid-1990s by the government of President Mubarak. In 1995, the Family Planning Association (FPA) was formed to complement government health services and to provide family planning services through its clinics and voluntary organizations. In conjunction with the ministries of health and social affairs, the FPA also carries out programs to educate the general public about reproductive issues.

OVERVIEW OF ECONOMY

Egypt's economy improved dramatically in the 1990s as a result of several arrangements with the International Monetary Fund (IMF) and the move by several, mainly Arab, countries to relieve a large proportion of its debts. These decisions were primarily to reward Egypt for its stand with the U.S.-led coalition against Iraq in the 1990-91 Gulf War. Since that time, Egypt has managed to maintain positive growth rates. Inflation has been kept down, the country's budget deficit decreased, and its foreign reserves increased, while gross domestic product (GDP) has averaged annual growth of 4-5 percent. Despite the slow pace of privatization and new business law enactment mandated by the IMF reform program, the country has succeeded in attracting foreign investment by moving towards a market-based economy. Having successfully stabilized the economy since 1995, the government embarked on a privatization plan in 1997 aimed at expanding the role of the private sector.

In spite of this considerable economic progress, the Egyptian government continues to face serious challenges. Egypt's economic growth has slowed down since 1998, partly due to the economic crisis in Asia, but also as a result of huge government investment in large-scale infrastructure projects. The recession that affected Gulf economies in 1998 and 1999 also impacted Egypt's economy, with lower oil prices causing a drop in remittances —traditionally a major source of foreign currency—sent home by Egyptian workers in the Gulf region. Tourism receipts also fell in reaction to the wave of terrorist acts waged by Islamic militants in Egypt, thus causing a further decline in the levels of foreign exchange. The government's reluctance to relinquish its shares in state enterprises has further contributed to the slowdown in the Egyptian economy since 1998. Little progress has been made in deregulating the largely state-run economy, or in bringing about legislative reforms and structural overhaul, ranging from tariff reduction to wholesale reform of the collapsing education system.

Egypt entered the twentieth century as a British protectorate, heavily dependent on agriculture—mainly cotton production—which accounted for 90 percent of its exports in 1914. The British fostered the development of a small industrial base, mainly concerned with processing raw materials, but further industrial development was stifled by a British trade policy that focused on selling British products at the expense of local goods. Although Egypt was granted independence in 1922, Britain continued to control the country in an alliance with the Egyptian monarchy until 1952, when a group of young army officers overthrew King Farouk. In 1954, Gamal Abdel Nasser ousted the first president Muhammad Maguib and became a popular and influential leader.

Since gaining independence from Britain, Egypt has struggled to rid itself of the feudal economic system left behind by the British and to create an independent economy capable of standing on its own. By the end of the twentieth century, Egypt had not yet achieved a vibrant economy and remained heavily dependent on foreign aid and imported goods.

Today, Egypt is primarily a free-market economy with some state control. Despite occasional outbreaks of political violence, it has a reasonably stable multiparty system and is strongly supported by the United States and the European Union. The economy's main exports are crude oil and petroleum products, cotton, textiles, metal products, and chemicals. Agriculture today accounts for 17 percent of GDP, industry for another 32 percent, while the services sector provides 51 percent.

Egypt is the world's largest exporter of cotton and its textile industry is large. Other industries include the production of cement, iron and steel, chemicals, fertilizers, rubber products, refined sugar, tobacco, canned foods, cottonseed oil, small metal products, shoes, and furniture. Although the agriculture sector continues to employ almost one-third of the workforce, most of the arable land is used to cultivate cotton, and Egypt must import about half of its food requirements. Unemployment in 1998 was reported at 20 percent, and the income disparity between the highest and lowest strata of society remains high. By contrast, unemployment in the United States in 1999 was just 4.2 percent.

Since the 1950s, foreign aid has played a major role in Egypt's development processes. As a socialist country, Egypt received much financial and military assistance from the former Soviet Union between 1952 and 1970, but this ended in the 1970s after Egypt signed a peace treaty with Israel. Following Egypt's defeat in the 1967 war with Israel, the Arab states of Kuwait, Saudi Arabia, and Libya provided Egypt with US$221 million annually, increasing to a total of US__BODY__ billion annually between 1973-1979. Arab support, mainly from the Gulf states, was frozen in 1979 because of Arab opposition to Egypt's 1978 peace treaty with Israel.

From 1979, the United States emerged as Egypt's main source of economic aid. This was seen, in large part, as a reward for Egypt's warmer attitude toward Israel, as well as to assist the country in meeting the demands of the extreme economic and political challenges it was facing. Between 1979 and 1998, Egypt received US$815 million annually from the United States. Since 1999, the level of U.S. aid has gradually decreased, reaching US$727 million in 2000 and US$695 million in 2001. Aid levels are expected to decrease further, to US$400 million over a 10-year period. U.S. aid to Egypt has come in the form of development assistance for infrastructure programs, job creation, education, democracy and governance, and in incentives for enlarging the private sector.

Arab aid to Egypt resumed in 1987 with the restoration of diplomatic relations. In 1990, Egypt was rewarded for its pro-Kuwait stand during the Gulf War with the write-off of its US$7 billion in debt to the United States. Although support from Arab sources has declined since the end of the Gulf War in 1991, U.S. and European aid has increased in support of the Euro-Med free-trade zone, to be set up by the year 2010.

According to the U.S. State Department Country Commercial Guide for 2001, government bureaucracy is a major impediment to the conduct of business in Egypt. Red tape permeates all government ministries and the commercial court system. Corruption is also widespread at all levels of the public sector, largely as a result of low wages and difficult living conditions.

POLITICS, GOVERNMENT, AND TAXATION

Egypt has had 3 presidents since the 1954 revolution that brought popular president Gamal Abdel Nasser to power. Between 1954 and 1970, Nasser attempted to institute socialist economic principles on the Soviet model, and actively sought to industrialize an agriculture-based economy. Internally, Nasser dismantled the political and economic power of the landed class by nationalizing land previously owned by rich feudal landlords and distributing it to the poor. During those years, the government spearheaded a campaign to improve the lot of the working class and the peasants, who were offered free education and employment opportunities. Although the economy grew at an acceptable rate in the initial years, the failure of Nasser's socialist policies became evident toward the end of his rule, especially after the 1967 war in which Egypt lost parts of the Sinai desert to Israel. Military expenditure consumed about 25 percent of gross national product (GNP) under Nasser, while a rapidly growing population began to place additional pressures on the state.

Under President Anwar Sadat (1970-81), Egypt began its move toward a market-based economy. In April 1974, Sadat announced a new economic policy that came to be known as "infitah," or open-door policy. This policy brought the relaxation of currency regulations and led to a remarkable increase in foreign investment and a larger economic role for the private sector. In 1977, acting on the advice of the World Bank, Sadat lifted subsidies on flour, rice, and cooking oil and canceled bonuses and pay increases. These actions, in the face of growing disillusionment at the infitah policy, which allowed only a handful of people to accumulate wealth, led to a wave of popular protest across the country on 17 January 1977. As a result of the 2-day clashes in which 800 people were killed and several thousands more wounded, the government was forced to back down on the price increases while retaining 10 percent wage increases and other benefits for public sector employees.

In 1981, President Sadat was assassinated by fundamentalists of the Islamic Jihad group, who disagreed violently with his policies. He was succeeded by his vice-president, Hosni Mubarak, who was still holding office in 2001. The threat of growing popular dissatisfaction explains the economic reforms chosen by the Egyptian government since 1990. In 1991, Islamic groups began pressing for a strict Islamic state that would shun Western values and lifestyles. Their quest to overthrow the government includes demands for restrictions on freedom of expression, liberal education, and secular laws. These groups have resorted to violent means to overthrow the government, and have mostly targeted government installations and the tourism sector. The government has cracked down hard on the Islamists since 1994 but, although the threat from many of these groups has abated since 1998, they nevertheless have continued to be a source of much concern to the government and a serious impediment to foreign investment.

Since taking office in 1981, President Mubarak has demonstrated commitment to the program of economic reform that President Sadat charted for the country in the mid-1970s. At the time Mubarak came to power, the economy was faltering under the weight of massive foreign debt. Unable to meet its payments, the Mubarak government was forced to reschedule US$6.5 billion in debts to the IMF and the Paris Club (an informal group of official creditors comprising the world's largest countries) in 1987. It was not, however, until 1991 that the government, faced with a growing Islamic threat, began concentrating all its efforts on economic reform. The results of the reform program have been promising. According to the U.S. State Department Country Commercial Guide for 2000, the public debt has fallen from $40 billion to $30 billion, the Egyptian pound is stable, and inflation is under control. Further, foreign reserves reached an all-time high in 1997 and the budget deficit was slashed. Egypt's heavy debt burden accumulated during the 1980s had been reduced from $31 billion to $19 billion by 1998.

Politically, Mubarak allowed parliamentary elections in 1984. However, for most of the last 25 years, Egypt has been governed by a single party, the National Democratic Party. Although the national constitution describes Egypt as a "democratic, socialist state," in reality it is not much of either. While it is not a dictatorship, the government is an authoritarian one, given legitimacy by being elected. Egyptian voters elect a 448-member Majlis al-Sha'ab (People's Assembly), which, in turn, elects a president who wields wide powers during a 6-year term. The president appoints the vice-president and all ministers, and can be re-elected for additional terms. However, given that emergency powers—first put into effect shortly after the assassination of President Anwar Sadat—were extended for a further 3 years in February 2000, the current regime and the security forces behind it have far more power than the constitution allows.

There are a total of 13 legal political parties, the most important of which include the New Wafd (Delegation) Party, the Socialist Labor Party, the Umma Party, and the Socialist Liberal Party. However, since its creation by Sadat in 1978, the New Democratic Party (NDP) has maintained an unequaled nationwide party machine and an iron grip on the Assembly, and thus on the presidency. The ruling NDP won an overwhelming majority in the 1996 and 2000 parliamentary elections, as well as in the April 1997 local and municipal elections, although opposition candidates and many foreign observers alleged vote rigging and intimidation at the ballot boxes.

Since the late 1990s, the Islamic movement known as the Ikhwan al-Muslimin (The Muslim Brotherhood) has made substantial inroads into the political establishment, but is largely held at bay by the NDP. The Brotherhood is officially banned by Egyptian law, which prohibits political parties founded on a religious basis. However, Islamist candidates do campaign under the auspices of legal opposition parties, such as the Socialist Labor Party, a practice quietly sanctioned by the government. Although the official presence of the Brotherhood is still minor, it maintains a powerful grassroots movement and has captured control of nearly every professional organization in the country, including the influential Lawyers' Association.

The judicial system in Egypt has been fairly independent from the executive branch of government. Although freedom of expression is to some extent tolerated, the media—including newspapers, magazines, and periodicals—are subject to censorship. The government owns all domestic television and radio stations.

Between 1952 and the mid-1970s, the military emerged as the strongest institution in Egypt and, as a result, played a major role in its politics and economy. Egypt's large professional army, which numbers 450,000 personnel, was created in the 1950s as a deterrent force against Israel and today represents 1 percent of the population. However, unlike other developing countries, the military's role in Egypt has not been politically disruptive. Its political role, in fact, greatly diminished over the last 2 decades of the twentieth century, particularly as the country moved toward political liberalization in the mid-1980s. Although the military has opted to stay out of the government's confrontation with Islamic militants opposing the state, it continues to form the backbone of the regime and enjoys great privileges. Since the early 1990s, however, the military's economic involvement has expanded into 4 major areas: military industries and arms production, civilian industries, agriculture, and national infrastructure.

Taxes are a major source of state revenue, contributing approximately one-third of the government budget, and 16.6 percent of GDP. Taxes come in a variety of forms, including income tax, which accounts for 22 percent of the total tax revenue, and taxes on goods and services, which account for another 17 percent. Tax increases are expected in the coming years, but, aware of the potentially disruptive political implications of such a course, the government has been reluctant to burden the Egyptian populace with further taxes.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Egypt's infrastructure is relatively underdeveloped. The country is serviced by a network of over 64,000 kilometers (39,769 miles) of primary and secondary roads, 49,984 kilometers (31,060 miles) of which are paved. Despite the modernization of the road system in the 1980s, most roads remain in poor condition or under construction. With growing numbers of licensed automobiles in the 1990s, the road system, especially in urban areas, has become highly congested, and is a major safety concern. According to the EIU Country Profile, "Egypt reports the highest incidence of traffic fatalities in the world: 44.1 deaths per 100,000 kilometers driven in 1994." Egypt's aging state-owned railway system, which has 9,400 kilometers of tracks (5,841 miles) is old by regional standards and in need of upgrade. The sector is slated for privatization. Cairo's new metro system, opened in 1987, is one of the most heavily used systems in the world, carrying some 1.4 million passengers a day.

Egypt has a total of 90 airports. Egypt Air, the country's official airline, carries some 4.6 million passengers, roughly 25 percent of international air traffic, and an estimated total of 87,240 metric tons of freight annually, but has a poor service record and is generally unreliable. Egypt has 3 major ports, at Alexandria, Port Said, and Suez, and 3,500 kilometers (2,175 miles) of waterways, divided between the Nile and the canals.

Electrical power is supplied to Egyptians by the state-owned Egyptian Electricity Authority (EEA), which

has the capacity to produce 15,000 megawatts of power, 80 percent of which are from natural gas. Plans are underway to expand power production by an additional 1,950 megawatts by 2002. Power consumption has been growing at the rate of 5.6 percent year, and EEA plans to invest some US$4.5 billion in the coming years to boost the country's power generation capacity.

Telecommunication services in Egypt are thoroughly modern. Telephone service is provided by the state-owned Telecom Egypt. According to the EIU Country Profile for 2000/2001, the country has some 6.5 million lines, and has been adding new ones at the rate of 1 million per year. In 2000, Egypt had over 60 local Internet service providers.

ECONOMIC SECTORS

Egypt's economy is the second largest in the Arab world (after Saudi Arabia) and its economic sectors reflect its size. The service sector is by the far the largest and fastest-growing economic sector and accounts for almost 51 percent of GDP. Tourism, trade, banking, and shipping services on the Suez Canal constitute the main sources of service sector revenue. Both tourism and the Suez Canal were hit hard by Islamic violence in the 1990s, with tourism in particular suffering badly after the 1997 Luxor attack, in which 58 foreigners were killed by Islamic militants. The massacre is estimated to have cost the tourism sector 50 percent of its annual US$3.7 billion revenues in 1998, when foreign visitors stayed away from the country. The government has moved to aggressive promotion of domestic tourism to compensate for the loss of foreign tourism, and managed to restore more than 60 percent of the pre-1997 tourist traffic by late 1999. The sector's performance improved dramatically in the first 2 quarters of 2000, growing by 43 percent on the previous year. The prospects of recovery in the Suez Canal sector, however, have been less promising, with growth in that area rather slow, despite government plans to revive it.

Industry is the second-largest economic sector in Egypt, and accounted for 32 percent of GDP in 1999. Some 13 percent of the total labor force is employed in industrial activity, which is concentrated in Cairo and the Nile delta. Major industries include the production of petroleum and petroleum products, accounting for roughly 7 percent of GDP and providing a major source of foreign currency. The sector's contribution is heavily dependent on the performance of the world's oil markets, and fluctuates accordingly. The growth in domestic energy demands in the 1990s has placed constraints on Egypt's petroleum exports, leading to a downturn in net revenues. The construction industry has become one of the fastest-growing sectors of the economy, thanks in large part to huge government infrastructure and modernization projects. Overall, the industrial sector's contribution has increased as a result of the government's efforts towards privatization.

Even though arable land accounts for only 3 percent of the country's overall land area, agriculture remains one of the most important sectors of the economy, employing roughly 40 percent of the labor force. However, agriculture's contribution to GDP declined from 20 percent in 1986-87 to 17 percent in 1999, and the number of workers in the sector decreased steadily during the 1990s.

AGRICULTURE

Even though its contribution to GDP has declined considerably in the last 15 years, from 25.6 percent in 1985-86 to 17 percent in 1999, agriculture remains a significant contributor to Egypt's economy, accounting for 20 percent of commodity exports. In 1998, according to the CIA World Factbook for 2000, 40 percent of the labor force was employed in the agriculture sector.

Cotton has been the country's largest agricultural export product for many years. The proportion of land cultivated with cotton has dropped significantly over the last 4 decades, from 924,000 hectares in 1962 to 227,000 hectares in 2000-01. For most of the century, cotton has been heavily subsidized by the government. These subsidies, however, were lifted in the mid-1990s and, as a result of higher cultivation costs, cotton exports have dropped from 121,500 metric tons in 1993-94 to only 45,000 metric tons in 1996-97.

In an attempt to reverse this trend, the government moved to raise the purchase price of cotton above international market levels. This was coupled with a move to import lower-grade cotton in March 1996 to allow for the export of better-quality cotton, and the full liberalization of the cotton trade in 1998-99. Higher price incentives have led to increased production and higher export deliveries, but the cotton trade is threatened by dwindling acreage.

Wheat and rice outputs have grown dramatically since the early 1990s, particularly since 1994 when all subsidies for fertilizers, seeds, and pesticides were lifted. The result has been self-sufficiency in several important commodities. Today, 95 percent of the wheat and rice crops are used to satisfy domestic consumption but, despite increased output, Egypt continues to be a large importer of food, especially agricultural products. Imports of wheat rose by 8 percent in 1996-97 and have generally accounted for more than a quarter of total imports.

Egypt's agricultural sector remains one of the most productive in the world, despite the small area of arable land and irregular and insufficient water supplies. Farmers do not have to pay for water used in irrigation. Since the construction of the Aswan Dam on the Nile river, the sector's development has been hindered by the problems of waterlogged soil and soil with a high salt content. Drainage efforts have proved insufficient to counter the harmful effects of these 2 factors to the sector's performance. Since the mid-1980s, the government has attempted to reclaim the desert for cultivation, and has managed to successfully reclaim some 1 million acres of desert. Plans are underway to reclaim an additional 3.5 million acres by the year 2017 with the South Valley Development project near Lake Nasser. These efforts, however, are countered by the fast pace of urban and industrial expansion, which has been claiming an average of 31,000 acres a year.

INDUSTRY

MINING.

Egypt's main mining activity revolves around the extraction of crude oil. The country is not a major producer of oil, and its reserves are small by regional standards. According to the EIU Country Profile for 2000-01, oil reserves were estimated at around 3.8 billion barrels in July 2000; in comparison, Saudi Arabia has over 260 billion barrels of proven and unproven reserves. Until 1998, Egypt produced an average of 880,000 barrels a day of crude oil, the majority of which was refined domestically, but production has steadily declined since 1998, mainly due to the depletion of the main oil fields. In July 1998, production reached 840,000 barrels a day, but had declined to 787,660 barrels a day in 1999.

Despite declining production, however, oil remains a significant source of government revenue and export earnings. The decline in crude oil exports in recent years has been mainly due to rising domestic demand and depressed world oil prices in 1998. As a result, crude oil exports, which accounted for 55 percent of overall export earnings in 1992-93, accounted for only one-quarter of overall export earnings in 1998-99.

Most oil production is concentrated in the Gulf of Suez, which produces 79 percent of Egypt's oil. Oil exploration activity is also taking place in the Western Desert near the Libyan border, offshore in the Mediterranean, and in the Sinai Desert. Unlike their neighboring Arab countries, where the state maintains full control of the oil industry, Egypt's oil production is dominated by foreign companies, working in conjunction with the state-owned Egyptian General Petroleum Corporation. The bulk of oil exploration activity is undertaken by large foreign companies, mainly British Petroleum and the Italian company AGIP. In recent years, the government has awarded exploration rights to a number of small local companies, but their presence is minimal in comparison to the foreign giants.

According to the EIU Country Profile for 2000-01, Egypt is one of the largest producers of refined oil goods in Africa, producing 35 million tons of refined goods annually. Refineries are based in Suez and Sidi Keir. Output in the sector has increased since 1994, when the private sector was allowed to enter the refineries business.

In addition to the extraction of crude oil, Egypt has natural gas reserves estimated at 45 trillion cubic feet, while potential reserves were estimated at a further 75 trillion cubic feet in year 2000. So as to increase oil exports, the government has adopted a policy of promoting the use of natural gas for domestic consumption. Gas production is mostly concentrated in the Nile delta region and the Western Desert, and is mostly used for power generation. Natural gas production is expected to rise in the coming years as the government concludes several agreements with its neighbors, mainly Israel, Jordan, and the Palestinian Authority. In July 2000, the government signed an agreement with the Spanish electricity company Union Fenosa to supply almost 25 percent of Spain's annual natural gas consumption.

Most of Egypt's coal reserves are located in Sinai and are estimated at 50 million tons. Egyptian coal, however, is of poor quality, and previous plans to increase production have been abandoned due to the sector's lack of economic viability. Egypt also produces limestone and phosphates, which are mined near Bur Safaga and Quseir on the Red Sea, and iron ore is extracted at the Baharia oasis in the Western Desert. Other minerals, such as manganese, gold, zinc, tin, lead, copper, potash, sulphur, and uranium, can also be found in Egypt, but their mining is limited because of the high cost involved in their exploitation and transportation.

MANUFACTURING.

The manufacturing sector is an important and growing contributor to the Egyptian economy, with production dominated by large state-owned enterprises. Industrial activity grew rapidly in the 1970s and early 1980s as a result of the oil boom in the Gulf and the influx of large Arab investments in Egypt, recording an annual growth rate of 10 percent or more. Growth, however, has since slowed down, although the private sector has expanded since 1996, and its contribution has increased dramatically as a result of economic liberalization. By contrast, growth in the public sector's industrial production has declined sharply, mainly thanks to the legacy of centralization and inefficiency that characterizes state-controlled manufacturing industries. One example is textile manufacturing, once one of the largest industries in Egypt. The sector, which continues under state monopoly, has been largely inefficient, and beset by problems ranging from the lack of modern machinery to over-employment of workers. By contrast, the privately owned ready-made garment industry has been booming.

Egyptian companies produce a wide range of goods. Textiles and food processing account for the largest share of Egypt's manufacturing revenue. Other manufactured goods include furniture, ceramics, and pharmaceuticals. The termination of public sector monopoly over the production of automobiles in 1991 has led to a considerable growth in the car assembly sector. Egypt has a fledgling computer software industry that the government has encouraged. Heavy industries, including iron and steel production, are based in Helwan, outside Cairo, and in Dikheila, near Alexandria. Aluminum production is based in Nag Hammadi, while the production of chemicals is concentrated in Aswan. Since the 1970s, the government has attempted to encourage industrial production in non-agrarian regions in order to relieve the congestion in the main cities. As a result, 7 free zones (areas within which goods are received and stored without payment of duty) have been established throughout the country, and industrial production in those areas is subject only to minimal regulations.

The country's large defense industry employs around 75,000 workers. The sector assembles arms for export, mainly to the United States, and manufactures industrial goods for consumption in the civilian sector. Egypt has attempted to capitalize on one commodity where it maintains a significant advantage: cheap labor. The government has moved in recent years to develop an information technology industry, which has been growing at the rate of 35 percent annually. Plans were underway in 2001 to train software engineers and programmers to increase the fledgling industry's potential and to boost computer software export over a 3-year period from US$15 million to US__BODY__ billion.

CONSTRUCTION.

The construction sector is a major contributor to the Egyptian economy and one of its fastest-growing sectors. This growth, estimated at an average of 20 to 22 percent annually since the 1980s, is fueled by the ever-increasing demand for housing and by the state's large infrastructure projects. Among these projects are the Greater Cairo Wastewater Project, considered one of the largest sewerage developments in the world, and the US$88.5 billion South Valley Development project, which aims to create an alternative delta along the Nile and relocate urban communities so as to ease the severe congestion in the major cities.

Most of the material required for the construction sector is produced locally. Local cement production, amounting to 24 million tons annually and meeting more than 70 percent of domestic demand, is expected to increase over the coming decade due to heavy government investment in the sector. Private companies have also been allowed to compete in the production of cement, which continues to be dominated by state-owned companies. The construction industry is expected to continue its upward trend in the coming years as a result of continued government and private business expenditure, anticipated to reach 20 billion Egyptian pounds annually.

SERVICES

TOURISM.

Despite the drop in revenue as a consequence of political violence, tourism remains a significant contributor to Egypt's economy and the premier source of its foreign exchange earnings. The sector has huge potential, owing to the country's rich archeological heritage, such as the pyramids and other major attractions, as well as attractive tourist destinations on the Red Sea. The majority of visitors to Egypt, almost 61 percent, come from Western and Southern Europe. Tourists from other parts of the Middle East, especially from the Arab Gulf region, account for 19 percent of the total number, while Americans and Eastern Europeans each represent 6 percent of the total, and Asian visitors make up 5 percent.

The sector's growth has been stifled by periodic Islamic political violence, the absence of adequate facilities, and poor government management of state-owned tourist enterprises. The tourism industry suffered a sharp decline from October 1992, when the militant Islamic movements waged their war to discredit the state. The sector began to recover in 1995, with a record 4 million tourists visiting the country in 1996-97 and generating some US$3.7 billion in tourist receipts. This upward trend was reversed after the November 1997 massacre in which 58 tourists were killed while visiting the Luxor archeological site. The sector has managed to recover quickly, with some 4.8 million tourists visiting the country in 1999, spending some US$4 billion. According to the EIU Country Profile for 2000-01, tourism revenue is believed to have risen by 33 percent in 1999-2000, generating a record US$4.3 billion. Plans are underway to achieve a 12 percent growth in the tourism sector by the year 2005 by attracting some 9.5 million tourists annually over the next 5 years. The sector employs some 2.3 million people.

Major international hotels have a presence in Egypt. These include the Four Seasons, Sheraton, Hilton, and Marriott chains, among others, and there are major resort complexes, especially on the Red Sea. The most visible growth area of the tourist industry is the operation of Nile cruises. Dozens of cruise ships, many owned and operated by foreign companies, and particularly popular with British visitors, ply the river between Aswan and Luxor, stopping to take visitors ashore to the major cultural sites of Ancient Egypt. These cruises are accompanied by teams of licensed and highly qualified Egyptian guides.

THE SUEZ CANAL.

The other major component of Egypt's service industry is the Suez Canal, which links the Red Sea to the Mediterranean. The canal generates revenue from fees charged for shipping to pass through the canal. Some 13,490 ships passed through the Suez Canal in 1999. Twenty-five percent of the tankers that pass through the canal carry petroleum and petroleum products from the Gulf region to the United States, while the remaining 75 percent carry dry goods. According to the EIU Country Report for 2000, revenue from the canal has declined steadily since 1994, down to US__BODY__.7 billion in 1998, from US$2.1 billion in 1994. Despite the government's efforts to promote the Suez Canal, receipts have remained sluggish, largely due to competition from alternative routes and the effects of the economic slowdown in Asia. The government is currently attempting to deepen the canal to accommodate huge tankers, and has changed its pricing policies to make usage of the canal more lucrative to international traffic.

FINANCIAL SERVICES.

For an economy of its size, Egypt's banking system is underdeveloped. Most of the services provided by the banking sector remain basic, with the majority of transactions in the country still conducted using cash. Regulatory controls are inefficient, and the banking sector in general is not only overstaffed, but also suffers from a lack of well-trained or experienced employees. State-owned banks suffer from low capitalization and a high percentage of poorly performing loans.

The roots of the banking sector's inefficiency can be found in the nationalization policy implemented by President Nasser between 1957 and 1974. In that period, private banking was banned and only state banks were allowed to operate. State-owned banks still dominate the banking market, even though private banks were once again allowed to operate in 1974. In 1992, foreign banks were allowed to engage in local operations, reversing a policy that had restricted them to foreign currency business since 1974. But it was not until 1995 that foreign banks were allowed a majority ownership in local banks, a right denied them under the previous 1974 regulations. Efforts to reform banking and raise it to international standards are ongoing, with reform focused on improving the regulatory and institutional aspects of the sector. The government, however, has thus far been reluctant to cede control of the financial sector for both financial and political reasons. The privatization of the 4 state-owned commercial banks has been delayed on the pretext of popular opposition to such a move. The commercial banks provide banking and credit services to remote areas, and are profitable partners in the government's large development projects.

The banking sector is controlled by the Central Bank of Egypt, which sets banking and monetary policies through the control of interest rates, liquidity, and reserve ratios. The central bank also sets fees charged for the various transactions conducted in the sector. According to the EIU Country Report for 2000-01, there are currently 81 banks operating in Egypt, including 28 commercial banks, 32 investment banks, 2 real estate banks, 18 agricultural banks, and 3 specialized banks. The commercial banks are by far the most important, providing more than 75 percent of loans and accounting for more than 90 percent of deposits. As a result of the excessively large number of banks operating in the market, the Central Bank has placed a ceiling on the entrance of new banks, both Egyptian and foreign, into the market. The banking sector has been hit by a liquidity crisis that has affected the market since 1998, mainly as a result of indirect pressure from the government to limit credit to importers in order to control currency fluctuation. Interest rates have, as a result, remained high, averaging over 10 percent in the first 6 months of 2000.

Egypt has one of the oldest stock markets in the Middle East. Established in 1906, the Cairo and Alexandria stock exchanges were forced to close in 1961 as a consequence of President Nasser's nationalization drive. The 2 markets re-opened in 1986 in line with President Mubarak's privatization program. A 1992 law paved the way for the reorganization of the stock markets in Egypt, granting the Capital Markets Authority wider regulatory powers. A 2 percent capital gains tax was abolished in 1996 to encourage investment in the stock market. The 2 markets are now open to foreign investors, but interest in trading has declined over the last few years as a result of government mismanagement and eroding confidence in the country's political environment. According to the EIU Country Profile for 2000-01, the market grew by 157.9 percent in 1994, following the passage of the Capital Markets Law. The market's inconsistent performance since 1994 has been largely determined by the pace of the government privatization program.

INSURANCE.

Egypt has a large domestic insurance market, dominated by 4 state-owned companies that control almost 90 percent of the insurance market. Since May 1995, the lifting of restrictions that prevented foreign companies from being majority holders in domestic insurance companies has encouraged foreign activity in the Egyptian insurance market. The government is currently reviewing the viability of privatizing the 4 state-owned companies.

RETAIL.

The absence of large commercial centers other than Cairo and Alexandria has resulted in a poorly developed retail sector. While Cairo and Alexandria are home to a variety of retail stores, including fast food franchises such as KFC and McDonald's, the majority of towns in the interior of the country rely on small family-owned shops, farmer's markets, and temporary roadside stands.

INTERNATIONAL TRADE

Egypt has grown increasingly reliant on imports over a very long period of time, and has, as a result, maintained an external trade deficit for most of the past 6 decades. The deficit, however, grew considerably between 1974 and 1984 as a result of President Sadat's open-door policy that encouraged imports, and reached US$4.86 billion in 1980. This sharp rise was fueled by the infusion of large amounts of foreign aid following the signing of the Camp David peace accords with Israel in 1978 and the rise in oil revenue. Imports dropped for a brief period between 1984 and 1986, due to the shortage of foreign exchange coupled with debt repayments. Since 1986, imports have been on the rise, increasing from US$11.74 billion in 1995 to US$15.8 billion in 1999,

when exports totaled US$4.6 billion. Thus, with exports remaining steady at around US$4.5 billion, Egypt has continued to maintain its trade deficit. Since 1998, the government has attempted to discourage imports by tightening trade financing and controlling the amounts of foreign currency in the country. Coupled with higher oil prices, the policy of lowering imports succeeded in reducing the deficit in 2000. However, imports are likely to continue outpacing exports due to the widespread lack of most raw materials, especially those needed by the construction and industrial sectors.

Egypt imports a wide variety of goods, especially capital goods such as machinery and equipment, necessary for its economic and infrastructure development. Food has traditionally accounted for 20 percent of Egypt's imports, but chemicals, wood products, and fuels are also imported. Before 1973, one-third of Egypt's imports came from the former Eastern European bloc, or Comecon countries, as part of Egypt's alliance with the Soviet Union. After the signing of the Camp David accords, Egypt's new pro-Western orientation was coupled with a shift in trading partners. Today, the European Union, especially Germany, Italy, and France, supplies more than 40 percent of Egypt's imports, while the United States accounts for 15-20 percent of total imports.

Between 1960 and 1980, agricultural products made up the bulk of exports, accounting for 71 percent of the total. That percentage dropped significantly in the 1990s, reaching 20 percent of total exports in 1995, according to the EIU. On the other hand, the export of fuel, minerals, and metal rose sharply over that same period, from 8 percent in 1960 to 41 percent in 1995. The export of manufactured goods has also risen since the 1990s, from US$2.9 million in 1993 to US$3.4 million in 1998. This increase has been mainly the result of the growth in clothing and textile production, which accounted for 14 percent of total exports in 1998. The value of exports has been steady since 1997, reaching US$4.6 billion in 1999. The failure to expand exports has been blamed on a number of factors: state bureaucracy and red tape, lack of competitiveness in the exchange rate market, the shortage of modern technology, and low industrial capacity. Additionally, the inadequate marketing experience of Egyptian exporters has left them ill-equipped to compete successfully in the export business.

Egypt's main export partners are the European Union—chiefly Italy, the United Kingdom, and Germany—and the United States. Before 1973, Egypt exported some 55 percent of its goods to communist countries then in the sphere of influence of the Soviet Union. Since the early 1990s, Egypt has gradually regained its influential role in the region, which it had lost after the signing of the 1978 Camp David Accords, and its exports to neighboring Arab countries have increased.

Egypt has been a member of the World Trade Organization (WTO) since 1995. The effects of the implementation of membership requirements remain unclear. While the agreement secures better access to developing markets, there is rising concern about its impact on the protected sectors of the economy, namely the industrial and agricultural sectors. The lifting of state protection might make these sectors more competitive, but could also lead to a huge increase in the country's import bill.

MONEY

The value of the Egyptian pound has been fairly stable since 1991, thanks to the government's efforts to maintain a stable exchange rate against the U.S. dollar. Traditionally, the government's policy has rested on the principle of defending the Egyptian pound against the U.S. dollar and increasing the country's foreign reserves. However, since 1998, a policy designed to keep the supply of U.S. dollars tight by removing them from the market led to a 10-12 percent devaluation of the Egyptian pound against the dollar in the last 6 months of the year 2000. This setback occurred despite government assurances that the pound would not be devalued. As a result, the Egyptian pound's exchange rate has fluctuated since the beginning of 2000, moving from EP 3.4 to the dollar in January 2000 to EP 3.8 to the dollar by the end of the year.

The banking sector is expected to continue suffering from foreign currency shortages in 2001, as the supply of U.S. dollars remains tight. For the time being, the government appears to have allowed market forces to determine the exchange rate of the pound as a means of relieving the pressure caused by tight foreign currency supplies. The government is hoping that in the longer term, the tight foreign currency supply will be offset by a rise in foreign currency receipts from the tourism sector, a lower budget deficit, and decreased imports.

POVERTY AND WEALTH

Living standards in Egypt are low by international standards, and have declined consistently since 1990. According to United Nations figures, some 20 to 30 percent of the population live below the poverty line. Despite widespread poverty, however, uneven development has led to the emergence of an affluent class that controls most of the country's wealth and enjoys an elevated standard of living that includes shopping at centers that feature the best imported goods. Living in such Cairo suburbs as Garden City, al-Zamalek, and Nasr New City, the wealthy send their children to private schools and to universities abroad. Yet not far from these affluent neighborhoods, a significant number of poor Egyptians live in squalor, with poor and overcrowded housing, limited food supply, and inadequate access to clean water, good quality health care, or education. The extremes are reflected in the country's distribution of income: in 1996, the wealthiest 20 percent of Egyptians controlled 39 percent of the country's wealth, while the poorest 20 percent controlled only 9.8 percent of wealth.

Uneven development in Egypt has not only affected the urban population. Inequality in the distribution of wealth is dictated by geographical regions. Historically, the north of Egypt has been more prosperous and received more government attention than the predominantly rural south, which stretches from Beni Suef, 120 kilometers (75 miles) south of Cairo to the border with Sudan. The central government, which retains great power over the country, has always been based in the north, and has

therefore based major economic activity in that area. According to the EIU Country Profile for 2000-01, almost one-half of economic and social establishments in the country are based in the northern cities of Cairo and Alexandria. This uneven development has fueled a cycle of rural-urban migration from south to north that has only started to abate since the mid-1990s. Migration has only served to aggravate the state of underdevelopment prevailing in the south.

The economic reforms launched by the Egyptian government in the early 1990s have been double-edged, severely affecting the lower classes and threatening to further erode popular support for the government. Both the rural and urban poor have suffered from the long decline in the quality of social services provided to Egyptians. A lack of adequate resources for schools and hospitals has meant that these services have declined in quality over the years. Despite this deterioration, 93 percent of primary level students are enrolled in schools, and a government-funded health-care system ensures that all Egyptians have access to some form of health care.

As a result of high inflation, which, at its peak, reached 28.5 percent in 1989, the middle and lower classes have seen their living standards erode since the 1980s. The problem has been compounded by the government's reduction of subsidies on basic foodstuffs and certain budget controls on public services since 1991. The government's awareness of the political implications of the complete lifting of subsidies has slowed down the implementation of IMF-mandated price deregulation. In 1991, to soften the impact of these measures on the poor and those affected by privatization, the government established the Social Fund for Development, a US$613 million project funded by the European Union, the World Bank, and the United Nations Development Program (UNDP). The fund is a job creation project aimed at training and finding jobs for workers displaced as a result of privatization. However, poverty remains endemic in Egypt despite these efforts.

WORKING CONDITIONS

Since the 1970s, the Egyptian labor force has been growing at the rapid rate of 500,000 (2.7 percent) per year. In 2000, Egypt's labor force stood at 19 million. The official unemployment rate for 1999 was 7.4 percent. However, Egypt's unemployment rate is believed to be higher than the official figures. Independent estimates put unemployment at about 10 percent. Almost one-third to one-half of the labor force is believed to be under-employed.

Egypt's labor force generally lacks secondary education and proper job training, which explains why much of the younger workforce cannot expect high pay. Despite higher rates of school enrollment since the 1960s, illiteracy is still high, at 35 percent for men and 58 percent for women. The educational sector remains overburdened and understaffed, and shortages in technical skills are viewed as a major impediment to business operations.

Unemployment remains especially high among women and workers under 20 years of age. The government is hard-pressed to meet its commitment to create

jobs for the thousands of university graduates entering the workforce every year, a major challenge since the 1980s. The average waiting period for a job in the public sector is estimated to be 11 years.

Egypt has a long tradition of trade unions. Workers' unions have existed in Egypt since the British mandate and, although repressed by the British government, workers routinely organized strikes to protest working conditions. By 2001, the workers' movement was less effective. Workers have the right to join trade unions, but are not required to do so by law. Some 27 percent of union members are state employees. There are 23 general industrial unions and some 1,855 local trade unions; all of them are required by law to be members of the Egyptian Trade Union Federation (ETUF). Although semi-independent, the ETUF maintains close ties with the ruling National Democratic Party and has traditionally avoided confrontations with the government. The close connection between the ETUF and the ruling party has meant less protection for state-sector employees, but the federation has been far more successful in bargaining on behalf of private sector employees.

The Egyptian government supports workers' rights promoted by the International Labor Organization (ILO) and has set conditions governing industrial and human relations and established minimum-wage standards. The 6-day, 42-hour working week is the standard. The government-mandated minimum wage in the public sector is approximately US$33 a month, although the actual income a worker takes home is triple that amount, due to a complex system of added benefits and bonuses. The minimum-wage law is also observed in the private sector. In addition, the government provides social security benefits that include a retirement pension and compensation for on-the-job injuries. Wages have increased steadily over the last few years and are expected to increase again, since the 2001-02 budget has allocated US$10 billion for public sector workers' salaries and bonuses. However, it is only recently that the rate of increase in public wages has exceeded the rate of inflation.

Egypt has had a history of child labor problems. Poverty has driven many children younger than the minimum working age of 14, to join the labor force. Official estimates indicate that children under the age of 14 make up 1.5 percent of the total labor force. The number, however, is believed to be much higher, and it remains difficult to gauge the real extent of the child labor problem. The majority of working children (78 percent) work in agriculture. Children are also employed in craft shops, as domestic servants, and in the construction industry. The problem of child labor is worsened by poor enforcement of the law and the inadequacy of the education system.

The current labor laws make it difficult for employers to dismiss workers. Despite the protection offered by unions and the labor laws, however, working conditions are not ideal. Workers do not have the right to strike, and although strikes occur, they are considered illegal. The abundance of available labor has meant that workers are generally underpaid and are usually forced to work in overcrowded and often unsafe conditions. Government health and safety standards are rarely enforced, resulting in many workers seeking extra income through a second job or work in the informal sector, perhaps as street vendors. Thousands of Egyptians also seek employment opportunities in other countries, mainly in the Arab Gulf region. According to the latest census by the Egyptian government, 1.9 million Egyptians live and work abroad, and their remittances are a major source of foreign currency.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1798. The Emperor Napoleon Bonaparte invades and occupies Egypt, bringing Western influences to the country for the first time in its very long history, during which it has been variously under the rule of Greeks (Alexander the Great, 332 B.C.), Macedonians, Persians, Romans, Mamelukes, and Turks.

1801. An alliance of British and Turkish Ottoman Empire forces invades Egypt and expels the French. Ottoman army officer Muhammed Ali takes over control of the country, organizing the economy, the military, and the educational system according to Western standards.

1854. French engineer Count Ferdinand de Lesseps is granted the right by the Egyptian government of Mohammed Said to dig the Suez Canal, which will become one of the world's most strategically significant waterways.

1869. The Suez Canal is opened under the reign of the Khedive Ismail. Khedive enters into agreements with Britain which pave the way for British control of Egypt.

1882. Egypt enters a long period of British rule, and becomes dependent on imports of British manufactured goods and exports of Egyptian cotton.

1914. Egypt is formally incorporated into the British Empire as a protectorate during World War I.

1922. Egypt gains independence from Britain under monarch King Fuad.

1935. Fuad's son, King Farouk, assumes the Egyptian throne and signs the Anglo-Egyptian Treaty allowing the British to retain rights to the Suez Canal Zone.

1947. Egypt joins a joint Arab invasion of the newly created State of Israel, but Israel wins the war.

1952. Clashes break out between Egyptians and British in the Suez zone. Revolutionaries led by army officers Gamal Abdel Nasser and Muhammad Naguib lead an insurrection that forces the abdication and exile of King Farouk.

1953. Egypt is declared a republic in June, with Maguib as president. Nasser takes over as president in 1954 and ushers in an era of Socialism, during which Egypt allies itself with the Soviet sphere of influence.

1956. Nasser nationalizes the Suez Canal in July. In October, the Suez War breaks out as Britain, France, and Israel attempt unsuccessfully to seize control of the Canal.

1967. Egypt loses the Six-Day war against Israel.

1970. President Nasser dies and is succeeded by Anwar Sadat.

1973. Syria launches an attack on Israel, leading to the October War between Israel and an alliance of Arab States, including Egypt. Israel triumphs.

1974. President Sadat introduces his "infitah," or open-door economic policy, but the lifting of subsidies on basic foodstuffs leads to countrywide rioting.

1978. Sadat pays a historic visit to Jerusalem, and Israel's prime minister Menachem Begin pays a reciprocal visit to Cairo. In the United States in September, the 2 leaders meet for peace discussions brokered by President Jimmy Carter and sign the Camp David Accord, under which the Sinai, captured by Israel in the war, is returned to Egypt.

1981. Sadat is assassinated by Islamic extremists. He is succeeded by President Hosni Mubarak, who introduces new economic policies emphasizing the free market. The first parliamentary elections take place, and the government launches a program of economic reform.

1990-91. Egypt allies itself with the United States and Great Britain in the Gulf War against Saddam Hussein of Iraq. The United States rewards Egypt's support by canceling its massive debt.

1997. Mubarak's government begins a program of privatization, but the economy is badly affected when 58 foreign tourists are massacred by Islamic terrorists at the Luxor tourist site.

FUTURE TRENDS

Egypt entered the 21st century under a cloud of economic uncertainty. For much of the 20th century, Egypt's experiments with socialism left the economy in a shambles. The open-door policy, begun in the 1970s, set the stage for partial economic recovery, but it was not until the 1990s that the government embarked on a real reform and privatization program to address the country's woes. The economic reform program has been successful, with Egypt's business climate continuing to improve. The government appears committed to the path of reform started in the early 1990s, and if the longer-term structural reforms, especially privatization, are accelerated and fully implemented, then Egypt will be able to position itself as a leading economy in Africa and the Middle East.

Despite major reform efforts, however, economic growth has slowed down considerably since 1998. The public sector continues to be a major force in the economy. According to the EIU Economic Profile for 2000-01, the Egyptian government today accounts for one-third of total GDP, two-thirds of non-agricultural GDP, and two-thirds of manufacturing. In addition to the need to reduce its dominant role in the economy, the government is hard-pressed to meet several serious challenges that are crucial to the success of its economic reform program and, more importantly, its long-term political stability. These include addressing the unemployment problem and achieving social stability. To achieve that goal, Egypt will have to sustain a real GDP growth of about 6 percent, which would require dealing with the low levels of domestic savings and investment, increasing competition in the domestic economy, and stimulating export performance, as well as reducing dependence on foreign sources of income, primarily remittances and foreign assistance. Although aware of the possible political repercussions associated with its economic program, the government has done little to alleviate its impact on the majority of Egyptians, whose living standards have continuously deteriorated over the last decades. And it remains to be seen whether popular support for the government's economic reforms will outlast Egypt's enduring economic difficulties.

DEPENDENCIES

Egypt has no territories or colonies.

BIBLIOGRAPHY

Bush, Ray. Economic Crisis and the Politics of Reform in Egypt. Boulder, Colorado: Westview Press, 1999.

Economist Intelligence Unit. Country Profile: Egypt, 2000-01 .London: Economist Intelligence Unit, 2000.

Handy, Howard, et al. Egypt: Beyond Stabilization, Toward a Dynamic Market Economy. Washington, D.C.: International Monetary Fund, 1998.

Marr, Phebe, ed. Egypt at the Crossroads: Domestic Stablity and Regional Role. Washington, D.C.: National Defense University Press, 1999.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed July 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Egypt. <http://www.state.gov/www/about_state/business/com_ guides/2001/nea/index.html>. Accessed July 2001.

Waterbury, John. The Egypt of Nasser and Sadat: The Political Economy of Two Regimes. Princeton, N.J.: Princeton University Press, 1983.

—Reem Nuseibeh

CAPITAL:

Cairo.

MONETARY UNIT:

Egyptian Pound. One hundred piastres equals one Egyptian pound. Notes are in denominations of 1, 5, 10, 20, 50, and 100 pounds, and coins in denominations of 5, 10, 20, 25, and 50 piastres.

CHIEF EXPORTS:

Crude oil and petroleum products, cotton, textiles, metal products, and chemicals.

CHIEF IMPORTS:

Machinery and equipment, foodstuffs, chemicals, wood products, and fuels.

GROSS DOMESTIC PRODUCT:

US$200 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$4.6 billion (f.o.b., 1999 est.). Imports: US$15.8 billion (f.o.b., 1999 est.).