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Egypt's Political EconomyPower Relations in Development$
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Nadia Ramsis Farah

Print publication date: 2009

Print ISBN-13: 9789774162176

Published to Cairo Scholarship Online: September 2011

DOI: 10.5743/cairo/9789774162176.001.0001

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The Role of the State in Development

The Role of the State in Development

(p.17) 1 The Role of the State in Development
Egypt's Political Economy

Nadia Ramsis Farah

American University in Cairo Press

This chapter examines the theoretical controversy raging between the proponents of neoliberalism, who advocate the complete withdrawal of the state from the economy, and the proponents of the “developmental state,” that is, a state that intervenes in underdeveloped economies to nurture a capitalist class that will later be able to carry out independently the functions of capital accumulation and development. An analysis of the economic role of the Egyptian state during the last two hundred years demonstrates that every time the state intervenes in the economy, the rate of economic growth increases rapidly. A reduction or cessation of state intervention usually results in a slower economy, high unemployment, and increasing poverty rates. Worth noting is the articulation of state intervention in the economy with periods of high state autonomy, that is, a situation in which the state is autonomous from the power of all social classes. This kind of state autonomy has occurred only twice in Egypt during the last two hundred years: under the Muhammad 'Ali state and during Nasser's time. State autonomy is not a permanent state of affairs, however, since eventually state autonomy erodes and diverse interest groups penetrate the state. In Egypt, erosion of state autonomy led ultimately to the domination of the system by special interest groups, a decline in the economic role of the state, and the deterioration of development.

Keywords:   neoliberalism, state development, Egyptian state, state intervention, economic growth, state autonomy

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