Abstract

Investment plays a critical role in Egypt’s economic growth, yet its dynamics remain shaped by persistent state dominance, crowding out private-sector development. This chapter examines the interplay between public and private investment, using econometric analysis to assess their impact on gross domestic product growth. Our findings suggest that while public investment initially stimulates economic activity, it increasingly displaces private-sector investment over time, leading to inefficiencies and reduced long-term growth potential. The dominance of state-owned enterprises, regulatory constraints, and high government borrowing further exacerbate these effects by limiting private access to markets and credit. Despite repeated reform efforts, including the more recent State Ownership Policy and privatization initiatives, the state’s footprint in the economy remains extensive. To achieve sustainable, private sector-led growth, Egypt must implement structural reforms with a whole-of-government approach to enhance competitive neutrality, improve access to finance, and foster a more predictable investment climate. The chapter underscores the urgent need to recalibrate economic policies, shifting from state-driven investment toward a more balanced, market-oriented approach that encourages private-sector participation and long-term economic resilience.