There is a strong body of international evidence that firms are more productive when they cluster near one another geographically. This column reports new findings on the substantial productivity benefits of such agglomeration in Egypt. The results have important implications for policy, including the value of establishing specialised industrial zones for promising business clusters with high growth potential.
Firms that want to start exporting have to be able to innovate and upgrade their use of technology in the face of fierce competition in international markets. As this column explains, highly skilled production and non-production workers are essential. In other words, engaging in international trade creates the need for a bias towards skills.
Despite significant reforms taken by the Egyptian government to liberalise markets and enhance the business environment, political factors continue to affect firms’ capacity to export. This column reports research on the impact of the overall investment climate on Egyptian exports in the manufacturing sector.