Reshaping Egypt's Economic Geography : Domestic Integration as a
Development Platform

This report investigates Egypt's
regional economic growth, explores the causes for
geographically unbalanced development, and proposes policy
options to make unbalanced growth compatible with inclusive
development. Regional disparities in income and consumption
may be attributed to differences in natural endowments and
geographical location, but unbalanced growth is mostly due
to economies of scale, spillover effects, and the lower
transaction costs that result from agglomeration. In Egypt,
despite rapid progress in most welfare indicators in lagging
regions, there are still substantial gaps in consumption and
opportunities between growth poles and the rest of the
country. Adopting integration as a development platform is
not simple because spatial disparities are spanned in three
dimensions: urban/rural dichotomies, the upper Egypt/lower
Egypt duality, and the differences between large
metropolises and the rest of the country. This typology of
instruments underlies the menu of options presented in this
report as the basis of domestic spatial integration as a
development platform to achieve more balanced and equitable
development without sacrificing growth. This report first
identifies the gaps in consumption and in opportunities,
showing the stark contrasts between regions and how they
evolve through time. It then explores the causes of the
gaps, revealing a multiplicity of factors and exposing the
complexity of the problem. Finally, the bulk of the report
presents the policy options to address the integration challenges.