In recent years, the nation of Egypt has faced considerable turmoil, with religious conflicts and other disruptions of the public order resulting in coups and counter coups. While there are many underlying causes for the problems Egypt has recently experienced, to an extent it might be possible to lay some of the blame at the feet of the ongoing globalization movement around the world. Globalization hasn't had an enormous impact on Egypt, as it has most other countries. Scholars differ about the nature of that globalization that is taking place around the world, and in particular in nations like Egypt. This essay will examine globalization in Egypt from the perspective of of the theories propounded by Thomas L. Friedman in his book The World Is Flat.
Friedman and Globalization
In the aforementioned book, Friedman discusses his views of globalization, which revolve around his idea that the endgame of globalization will be a situation in which all nations around the world have roughly the same degree of national development. When speaking of development, Friedman is referring not only to economic development and stability that will boost personal income and allow for a decent way of life (in this case for all Egyptians), but also to government and national stability, technological advances, improved educational opportunities and the chance for individuals to obtain the necessary skills and opportunities they need to expand their own businesses.
This would mean that businesses in Egypt would be able to take advantage of the opportunities inherent in the international economy and that individuals would be able to prosper and thrive in a globalized economy where everyone has access to the same opportunities and resources. In his envisioning of globalization and its effects, Egypt cannot be viewed currently as being on a level playing field with other countries around the world or even other countries within the region. This is because it has not been able to provide its people or its business community with access to the opportunities and resources that other nations enjoy. This is because it does not have a stable government, economy or military. In short, Egypt lacks all the necessary characteristics to make it what Friedman refers to as a "flat" country. Instead, it is highly unstable.
In his book, Friedman argues that the process of globalization that is currently going on (and that has been going on for some decades) is in effect leveling the playing field in the international community, particularly in regard to economics and business. In his view, this would eventually give all countries the same degree of technological and economic development, since they will have equal international opportunities and influence. Of course, Friedman acknowledges that something like this cannot happen overnight. It is a gradual and ongoing process that he divides into three separate stages. He refers to these stages as Globalization 1.0, Globalization 2.0, and Globalization 3.0.
Globalization Stages
Friedman describes the first stage of Globalization 1.0 as relating to a nations economic power, government and level of security. Globalization 1.0 features are things that allow a country to prosper and advance, and without which further advancement is impeded. In his view, these are foundation principles and concepts that every nation has to have in order to work its way toward the later stages and the "flat" world that Friedman envisions. Nations that have completed the Globalization 1.0 stage will then be able to proceed on to the next stage.
Friedman's Globalization 2.0 stage relates to business entities and major corporations within a given country. Nations that have highly successful and modern businesses will be able to move out into the international business environment and economy. Furthermore, such a presence and footprint in the world's economic community provides a nation with greater power and influence in its conduct of its international relations. It also creates a positive impression of that nation. In this stage, lines of distinction existing between different nations and societies are eliminated and all nations (at least all the ones that have reached this stage) exist on an equal level in terms of globalization.
Globalization 3.0 takes this a step further by removing the disadvantages that individuals within a nation face. Individuals living in in a nation that has reached Globalization 3.0 will live in the "flat" world in which they will have the same educational opportunities as anyone else in the world, prestige on the international level, a living wage, a reliable and strong government that protects their safety and their rights and ability to communicate with others around the world freely and without restriction.
However, as of yet Friedman's flat world and fair and equitable international playing field do not exist for most countries, including Egypt. Egypt (like the vast majority of countries around the world) has yet to complete stage one, let alone stages two or three. Certainly, globalization in Egypt has not advanced to the point where individuals living there can view themselves as being on a level playing field with people living in Europe or the United States. There are many reasons for this.
Egypt's Corporate and Financial Situation
It should be acknowledged first that Egypt has a fair share of natural resources and has the potential to provide a comfortable life for all of its citizens. Certainly, businesses have been doing fairly well over the last two decades in Egypt, with agriculture, tourism and even manufacturing being on the rise. On the surface, this would seem to suggest that Egypt has a high potential for economic expansion and global advancement.
Perhaps surprisingly, the corporate system (and specifically corporate governance) in Egypt is largely based on French traditions, rather than Islamic law or Sharia. International corporations and the international corporate system has had on Egypt even prior to what is currently referred to as "globalization." It should also be mentioned that securities law in Egypt has been significantly influenced by both Britain and the United States. In fact, corporate governance matters and laws regarding capital markets have become of increasing interest as Egypt is make greater efforts to enter the global marketplace. For this reason, Egypt has been participating in international forms on the subject in order to improve their existing system.
It should also be noted that capital markets and stock exchanges have existed in Egypt for very long time, with the first stock market exchange being established in Cairo in 1883. At one time, the stock market in Egypt was one of the largest stock markets in the world. During the 1990s, the number of companies listed on the Egyptian stock market grew rapidly, and by the end of 2000 it stood at more than 1000 in total.
As far as trade is concerned, Egypt has benefited significantly from FDI (foreign direct investment). While Egypt's imports and exports have risen significantly since the early 90s, this rise has been even more pronounced since 2004. While the average annual increase in exports prior to 2004 was approximately 5%, after that date it was roughly 24%. Imports rose by roughly the same amount. This was a consequence of the 2004 reforms designed to encourage trade as a part of Egypt's overall globalization efforts. However, Egypt has made a trade deficit throughout all of these years. The goods imported largely involved raw materials, machinery, semi finished items and other materials used by factories to produce goods. However, because of FDI in Egypt, there was still a surplus of revenue coming into the country.
National Instability
However, it's also quite clear that Egypt's economic growth has been stunted by the nation's inability to establish long-term stability. Nothing is more damaging to business activities (both within a nation and on the international stage) than the perception that the government is not maintaining order and protecting business interest. For example, the fact that the Egyptian government has been forced on several occasions to implement a national state of emergency makes clear just how unstable the country is. This demonstrates that Egypt has yet to achieve even Globalization 1.0.
The first state of emergency in Egypt was quickly followed by hundreds of deaths among protesters who opposed the then president, Mohammed Morsi (Lakhal 137). This state of emergency was established because of the inadequate security within the country and the total lack of order. This inadequate security within Egypt affected not only the government itself, but Egypt's economy and the nation as a whole. Furthermore, with each new change of government that has taken place in Egypt, the nation has seen even greater instability and lack of security. This has the effect of driving down business prospects and the idea that Egypt is a safe place for foreign investment.
The Government of Egypt
It seems clear that Egypt does not possess the necessary qualities and characteristics required for Globalization 1.0. Beyond its wholly inadequate governmental structure and its instability, Egypt's economy had been on the decline for many years. Even prior to the most recent upheavals of Egypt, the nation's economy had fallen so far that Pres. Mubarak had requested $30 billion in foreign aid from the United States in order to prop up his regime by improving the economy. Ultimately, although the Congress eventually approved further aid, the effort failed and a new regime arose in Egypt (Richter et al., 2011, Online).
Under Friedman's Globalization theory, it seems obvious that Egypt's inability to achieve Globalization 1.0 means that it has no chance whatsoever under current circumstances of completing stage 2. While it should be pointed out that Egypt has done certain things that could be described as partially completing both of these first two stages, in the end it has not fully completed them or even done so to be any large degree. In other words, there has been a lack of significant advancement and development within Egypt. Moreover, in an ever more global economy, Egypt's inability to achieve these stages is seriously hampering its economy.
It is extremely difficult for companies based in Egypt to carry out international operations because of the lack of a stable government or thriving economy within Egypt. Without this foundation, they often lack the tools and resources necessary to reach out onto the global stage. To list a few of the problems these corporations face, they lack the educated workers, sophisticated technology, modern communication and financial resources necessary for operating in the global economy.
Globalization has been an ongoing process for Egypt, although the existing tariffs and trade barriers have made this process more difficult (Sullivan 1999, 45). These restrictions (as well as the growth hindering policies of the central bank) make it very difficult for companies to profit through global trade and investments.
Given the resources that Egypt has at its disposal, it possesses everything it needs to be a major player in international trade and business. Certainly, other countries would be interested in the manufactured goods and agricultural resources that Egypt could provide. However, the inability of companies operating in Egypt to freely trade with other companies and countries outside of Egypt makes it virtually impossible for them to be leaders in virtually any area of business, particularly on an international level. Obviously, if Egypt is unable to achieve either Globalization 1.0 or Globalization 2.0 it certainly cannot achieve Globalization 3.0 (with the attendant benefits this would imply for its citizens).
Friedman himself has acknowledged that when the globalization model is applied to Egypt, it fares very poorly. In a New York Times article in which Friedman discussed globalization and Egypt (Friedman 2016, Web), he stated,
“Egypt has a very flabby, overweight government and a very weak civil society. That’s why when the government collapsed — you got the Muslim Brotherhood taking advantage of the revolution, not strong-rooted democratic movements.”
In conclusion, Friedman's globalization theory makes it clear that Egypt is very far from being in a position to take advantage of the benefits of globalization. It has yet to achieve given the first stage of his globalization theory, let alone the second or third. Egypt seems to be (as Friedman himself has acknowledged) stock in the process of attempting to achieve the first stage, which requires a strong and stable government. Education might well be the key to solving many of Egypt's problems and allowing it to move beyond this stalemate. Certainly, Egypt seems to be attempting to avoid the development of its population and leap ahead to the benefits enjoyed by nations like the United States, who exist at the Globalization 3 level. This in all likelihood is simply not possible until they accomplish the first and second levels.
References
Friedman, T. L. (2015). Tell Me How This Ends Well. Retrieved February 21, 2016, from http://www.nytimes.com/2015/04/01/opinion/thomas-friedman-tell-me-how-this- ends-well.html?_r=0
Lakhal, S. Y. (2014). Morsi's Failure in Egypt: The Impact of Energy-Supply Chains. Middle East Policy, 21(3), 134-144.
Richter, P., Cloud, D. S., & Hennessey, K. (2011, Feb 09). U.S. backs off threats on aid. Chicago Tribune Retrieved from http://search.proquest.com/docview/849778445? accountid=2163
Sullivan, P. (1999). Globalization: Trade and investment in egypt, jordan and syria since 1980. Arab Studies Quarterly, 21(3), 35-72.
