THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Egypt

Ranked 117th of 149

At a glance

Ranks

117 th on the Legatum
Prosperity Index™

105th
101st
117th
92nd
88th
93rd
146th
134th
131st

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Egypt performs best on Health and Education and scores lowest on the Personal Freedom sub-index.

Visit our Rankings table to see how Egypt compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Egypt has the third smallest prosperity deficit in North Africa, falling some distance behind Morocco and Tunisia and narrowly behind Algeria. While Egypt’s prosperity deficit remains significant, a period of relative political stability since 2013 has seen the deficit close by 27%.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Over recent years, Egyptian prosperity has been associated with political and social unrest. Declining prosperity from 2009 to 2011 led to the 2011 revolution in which president Hosni Mubarak was ousted during the Arab Spring. Prosperity then stabilised at a low level from 2011 to 2012. However, in the second election with more than one candidate in the country’s history, Mubarak was replaced by Mohammed Morsi in 2012, who was then ousted in a military coup in 2013. Prosperity contracted sharply from 2012 to 2013, but the coup was the start of a political transition that ended with the election of the House of Representatives in December 2015. Over this period, Egyptian prosperity rose by 13 ranks globally.

Prosperity score (level of Prosperity) in Egypt and North Africa
After years of relative decline, and following the 2013 political transition, Egyptian prosperity is converging on the North African average

The pre-2013 period of decline was driven by decline in the Economic Quality, Governance, and Safety & Security sub-indices and it was these same sub-indices that drove Egypt’s rising prosperity post-2013. In terms of Economic Quality, the Egyptian economy started to recover in 2014-15, as the government boosted infrastructure spending and restored macroeconomic stability by gradually replacing universal subsidies with a more targeted transfer programme, taking measure to control its wage bill and increase tax revenues. As such, GDP growth picked up and more Egyptians felt comfortable with their level of household income and satisfied with their living standard, although poverty rates remain high. Egyptian anti-monopoly policy has improved and the prevalence of non-tariff trade barriers has reduced, improving the economy’s trading position. This economic reform has been supported by changes to Egypt’s governance.

While Egypt suffers from many governance issues, including the deterioration in its democracy level since 2012, it has improved its performance across many other areas of the Governance sub-index since the political transition. Corruption is perceived to have declined while government effectiveness, judicial independence, and the rule of law have also improved. Many more Egyptians have confidence in the honesty of national elections and in the national government now than they did before 2013. It is important to stress that these are improvements from a low base. Corruption remains widespread throughout government. General Sisi issued a decree granting the president the power to dismiss heads of state auditing bodies, undermining their independence and enabling corruption. In terms of rule of law, while the Supreme Judicial Council, a supervisory council of judges, nominates most members of the judiciary, the Justice Ministry still has the power to re-assign and transfer judiciary members.

Safety & Security and Personal Freedom ranks (global ranks of Safety & Security and Personal Freedom) in Egypt
While Egypt’s Safety & Security has improved since the 2013 political transition, its Personal Freedom remains among the lowest in the world

While terrorism-related deaths and Egypt’s Political Terror Scale remain at an elevated level, Egypt’s overall Safety & Security has improved by 19 ranks since 2013. This is largely on account of improvements in its individual-level component variables. More Egyptians have access to adequate food and shelter now than they did in 2013. More Egyptians feel comfortable walking alone at night and self-reported theft has gone down. These improvements stem from a time when General Sisi greatly expanded authorities’ powers with sweeping counter-terrorism laws and the torture and forced detainment of people by the Interior Ministry’s National Security Agency. There have also been mass trials targeting Muslim Brotherhood members in military courts. It is interesting to see that these measures were designed to improve Safety & Security, however, they have a detrimental effect on measures like political terror. They also have a significant effect on the Personal Freedom sub-index, which in itself is important for national prosperity. Strengthening personal freedoms is important and, more than any other sub-index, Personal Freedom holds the potential for the largest gains in prosperity.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.

Special Analysis

Special Analysis

OVERALL

After years of declining prosperity, Egyptians grew increasingly prosperous between 2013 and 2016. This improvement is largely due to reversing the trend of decline across its Governance, Safety & Security, and Economic Quality sub-indices. Despite this progress, Egypt ranks among the least prosperous countries in North Africa and the world. Liberalising Personal Freedom, which remains among the world’s worst, is one route to prosperity.

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Areas of Success
Areas of Success

Egypt has improved its prosperity substantially between 2013, the year of its political transition, and 2016. This improvement is largely due to reversing the trend of decline across its Governance, Safety & Security, and Economic Quality sub-indices.

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Areas of Little Change
Areas of Little Change

Personal Freedom and Social Capital have hovered around the same low level since 2007. More broadly, Egypt’s prosperity story is one of two halves: decline in the first, improvement in the second. What this means at the end of the day is that Egyptian prosperity in 2007 looks a lot like Egyptian prosperity in 2016.

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Areas of Improvement
Areas of Improvement

One area that calls for improvement is Personal Freedom. It has ranked in the bottom 10 since 2007, but since 2013 has ranked within the bottom three countries globally. Strengthening performance in the Personal Freedom sub-index is where the prosperity gains can be greatest, and does not necessarily come at the cost of declining Safety & Security.