Egypt and International Business

Last Updated: 16 May 2021
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Egypt is a fast economically growing country located in North Africa and bordering the Mediterranean Sea. It is an attractive place for tourists, businessmen and investors and this can be attributed to its rich ancient civilization, diverse cultures and traditions which have made it a very popular place in Africa and the Middle East. As much as Egypt takes pride in its culture, it is also a developed business region with most of the population found in the urban areas. Agriculture, tourism, and petroleum products contribute largely towards its economic growth.

Culture and Trade

What are the cultural differences within Egypt? Egypt is well known for its ancient civilizations which date back thousands of years. It has diverse cultures which include Christianity, Islam and Hellenism. These cultures plus the influence of western civilization makes the country unique. Sinni Muslims and Christians are the major religions that shape peoples attitudes and behavior. Egypt is rich in art and history and globally it is viewed as a cultured nation. The ancient Egyptian culture is well represented by the famous historical sites and the artifacts that are kept in galleries and museums.

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As history says it, the Pharaohs were the ones who ruled the land and were very rich as they adored golden jewelry. “Through this we can say that Egypt is a land blessed with precious metals which has boosted its economy (Asante, 2002). ” And the clothing that was worn back in the day was woven of fine silk as founding the royal tombs. Moreover, the Egyptians believed in a supernatural being that guided them and endowed them with the wealth they have. Egypt is also seen as one of the places where education began as seen on the writings on the pyramids and tombs and ancient Egyptian literature has been well documented and preserved.

The modern Egyptian culture is a rich blend of the different cultures plus the rich traditions that they inherited from their ancestors. “Modern Egypt does refer to a particular language or religion but is comprised of many people who participate in one general Arabized culture (Asante, 2002). ” Egypt has advanced especially in the tourism sector and this can be attributed to the ancient culture. How does the Egypt’s Political System affect the countries mode of business? Cairo is Africa’s largest city and the capital of Egypt. This is the Central place of the Egyptian Government.

The Egyptian Government plays a huge role in the country as it ensures the country is stable and runs well democratically. The prime Minister is in charge of the country and has the duty to make the necessary economic reforms that influence the growth and development of the country. There are different political parties in Egypt and they are all geared to bringing in positive change to the country which they will do by criticizing where the government has gone wrong and the places that need amendment so that the government is kept on toes and does the right thing.

This will influence business because they will have to form policies that are favorable with the people and create an enabling environment for the local industries to perform better and supply the necessary goods to the citizens and even a surplus that will be sold to other countries as exports thus improving the countries balance of trade. Embassies of different countries are also found in the country and this fosters good relationships with the representative countries and this makes it easier for the Egypt to trade with other countries as they can negotiate business transactions and create a wider market for the countries goods.

They will also gain because they will attract foreign businesses in to the country and this means more revenue for the company. The government is also responsible for ensuring that its citizens are well educated so that they can acquire the necessary skills to run businesses in the country to do this, there has to be proper learning institutions, health centers and infrastructure. The government’s duty is to ensure that it budgets properly so that these facilities can be built and properly maintained.

The government also influences fiscal and monetary policies thorough adjustments in some of the policy instruments and this will affect the rates of inflation and exchange rates. The changes can influence the economy positively and negatively and consequently affect the business operations. The laws and rules of the country are found in the country’s constitution. This therefore means that there is an effective legal system that seeks to address the problems that arise in the country.

This is helpful in business as it ensures that disputes that arise in trade are settled in a acceptable standard and those who break the laws of business contract stand to be penalized. The Type of Economical System in Egypt and how it affects the countries mode of business Depends of agriculture, tourism, petroleum exports and media The Socialist economic system which was used in the 1950s and 1960s shaped the structure of the economy. The economy was mainly controlled and governed by the government and as years progressed, macroeconomic reforms enabled private businessmen to also engage in economic activities.

The reforms in the system have changed for better as now the country can engage in international trade and also allow investors to operate in their country. The government therefore uses monetary policies to stabilize prices in the economy and create a good environment for production and trade. For it to keep up with the changing times and the advancements in technology, it has invested in infrastructure and communication facilities. It also knows the areas where it can benefit especially in tourism and petroleum and that are why it is making an effort to ensure that they keep on getting better.

The government is however focused on ensuring that there is steady investment and increases its tax base so that it can operate smoothly. Is Egypt a stable country? Egypt has a stable economy and it keeps on growing. Agriculture is one sector that it relies on. This is because it has favorable climatic conditions and water that is got from the irrigation initiatives on the Nile which enable the country to produce different types of crops. This is also enhanced by their access to energy in the form of crude oil and natural gas.

These petroleum products thus provide the country with the extra cash it needs and makes the country more prosperous as compared to other countries in Africa and the Middle East. What are the major types of international trade? The major types of international trade are bilateral and multilateral. Bilateral trade is the trade between two countries. This is where two countries sit down and make formal business contracts through mutual understanding so that they are able to do business freely.

Bilateral trade makes it easier for the two countries to develop policies that will be suitable to both of them and will enhance long term trade. An example of a bilateral trade in Egypt is the way it sells its products to the US and the US also buys products from Egypt. Multilateral trade is the trade among many countries. This is usually more common among countries in the same trading block such that the can sell the commodities to the country or form policies as a group that will enable them to market their products. An example is where Egypt is a member or OPEC.

This therefore enables it to sell petroleum products to other countries at prices that are set by the organization. What are the methods of import/export? Exports are supposed to bring in revenue to the country while exports create expenses on the part of the government. Despite of the expenses, people need to be supplied with goods that will be beneficial to them. There are several methods of importing and exporting. Egypt is located near the sea so it can utilize sea transportation especially in linking with European countries and Middle East countries.

In far off areas like the US, it uses air transport especially when transporting agricultural products for instance cotton. What are the major products/services? The country relies on imports to supplement some of the things it uses and to get products that it does not produce as home. Some of the good s that are imported include: chemicals, livestock, wood and beverages but the major goods that are imported include machinery to be used in firms and industries so as to enhance production and equipment which will be used in the development of infrastructure.

Egypt on the other hand has been able to produce more crops for export through its irrigation schemes. Thanks to such initiatives, it has been able to produce raw cotton for export and also textile. It also exports crude oil to other countries especially those in the region and also the minerals and metals. Tourism is a form of an invisible export as well as a service which has brought the country many returns. Who are the primary countries that trade with Egypt? Policies were developed that made it possible for Egypt to trade with other countries as well as improve its economic situation.

Egypt conducts trade with other Arab countries but it has embraced the goods and services that are produced by western countries so as to enhance its trade. Other than the Middle Eastern countries, Egypt exports goods to Italy, United States, United Kingdom and Germany. Nowadays, majority of its imports come from Germany, Italy, United States of America and France. Therefore, the primary countries that Egypt trades with are Germany. Italy, the United States and other Asian countries like S. Korea and Japan.

Is Egypt in a trade deficit or prosperity at this point and time? At this point in time, Egypt is operating at a trade deficit. The introduction of foreign aid to pay debts the country owed other countries and the open-door policy gave raise to the deficit problem. This is because the countries exports did not yield the expected returns as they ought to and imports increased as this trade was not restricted. Over the years they have tried to solve the problem but the government still continues to subsidize some of its commodities especially food and fuel.

Thus they are increasing their spending instead of cutting down and this is not helping much in solving the problem. In addition, there have been corruption allegations and this means that the funds they get through aid are not used as they are supposed to. Such scenarios are increasing the trade deficit instead to reducing it.

Monetary Section

What is the current monetary system? Egyptian pounds (LE? ) and piastres (EGP) are used in the exchange of goods and services and they represent the country’s currency. 100 piastres make a pound. This has evolved from the use of banknotes and gold in earlier years. The current monetary system The banking system is used as it enhances trade in the region. The government through the Central Bank of Egypt controls the way in which the banks operate and also how money circulates in the economy. This is because they will form and implement monetary policies that influence the rates of interest which determine the amount of money that is in circulation at one time. This means that they control the levels of inflation which can affect businesses as well as individuals.

“This is because when businesses shut down because of less money and recession, then people will be unemployed and they will not be able to purchase commodities (Handy & IMF, 1998). ” The central bank therefore ensures that the inflation rates are kept constant so that the economy is stable. It also foresees that the decisions passed are in line with the country’s objectives, vision and goals. What role has the FDI played in the recent monetary development of Egypt Foreign Direct Investment (FDI) involves the investment made by a company in another country other than their own.

Egypt being a country with a competitive workforce, located in an area that is endowed with natural resources, a rich culture and companies with growth potential, such qualities have made it attractive for businessmen from other countries. FDI therefore, has continued to play a major role in the economic progress of Egypt. FDI has enabled businesses to grow because they have the necessary capital that they need to ensure that they meet their expenses. Many people who were unemployed now can work in various businesses and the projects which were stagnant have progressed.

The government has also benefited because they get money from such establishments which they use to pay off their debts. “It has been useful to the people because it has enabled them get them access goods that other countries use on time and they do not have to rely on imports(Eur, 2002). ” This has definitely improved its balance of payments. FDI is further made attractive by making the locals as well as foreigners assured of their rights and privileges and this is written in the law. What role is the nation playing in the Foreign Exchange Market? Foreign exchange largely determines how goods are traded between countries.

When the rates change, they can increase or decrease the amount paid for goods and services both on imports and exports. “The investments banks, banks as well as the government of Egypt are constantly monitoring the process to ensure that the range is stabilized between periods and when it changes, it is in favor of the country (Ibrahim & Ibrahim, 2003). By doing this, they will be able to gain from tourism and investment. ” Describe in detail the standard of living for the “common person” in Egypt. Is the standard of living improving, remaining steady or declining?

The average person in Egypt struggles to survive and meet their basic needs like any other person across the globe. The living standards have deteriorated in the last couple of years and this can be attributed to the unequal distribution of resources. “The rich people have enough money to purchase luxurious commodities, live in proper houses and send their children to good schools (Hershlag, 1980). ” The less privileged on the other side who are the majority live in densely populated regions and do not have access to the basic facilities such as water and health care.

They have to constantly fight against certain negative forces like corruption so that they get decent jobs and some services. Most of the businesses are situated in urban areas like Cairo and Alexandria and this has led to the migration of people from the rural areas to urban areas. Moreover, when reforms are made, they ten to favor the rich while the poor keep on suffering. When inflation hits the country, the people who are affected the most are the poor and middle class.

Despite the problems that face the common man, we can say that the standard of living is improving because the middle class is becoming larger as the days pass. People have become more educated and skilled in certain areas such they are becoming entrepreneurs and starting their own businesses thus making themselves better. People have also been sensitized so that they avoid cases of corruption and this has made organizations to be more accountable and this has enabled funds to be used the way they ought to. More needs to be done but at least it is a step in the right direction so that the lives of the people are improved.

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Egypt and International Business. (2018, Mar 13). Retrieved from https://phdessay.com/egypt-and-international-business/

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