Egypt

Egypt is situated in the northern region of Africa, bordering the international frontiers of the Mediterranean Sea to the north, Libya to the west, Sudan to the south, and the Red Sea to the east. It encompasses the Asian Sinai Peninsula and enjoys the rich flow of the Nile River. Egypt is a major player in Middle Eastern geopolitics, stemming from its strategic position as a transcontinental nation. Arabic is the official language, and English and French are widely understood by educated classes and used in business activities.

Egypt has a total area of 1.01 million sq. km. Since 1953 and after independence from British control, it became a republic and currently encompasses 26 gov-ernorates, with Cairo as the capital. The population was estimated at 81.714 million in August 2008; the great majority live near the banks of the Nile River, an area of about 40,000 sq. km making up only 5.5 percent of the total land and constituting Egypt's only arable agricultural land. Egypt's currency, the Egyptian pound (L.E.), is 5.331 to the U.S. dollar in August 2008. In terms of religion, Islam is practiced by 90 percent of the population; the remainder are Coptic/Christians.

Over time Egypt has embraced the Pharaonic, Greco-Roman, and Coptic civilizations, in addition to its historic role as a satellite for the Islamic civilization. It contains some of the world's most famous monuments, including the Pyramid complex and Sphinx. The southern city of Luxor possesses numerous ancient relics, such as the Karnak Temple and the Valley of the Kings. Egypt was the first country in ancient times to introduce writing with the creation of the hieroglyphic signs and letters used in recording historical episodes and activities.

It is endowed with rich natural resources such as iron ores, phosphates, manganese, limestone, lead, and zinc, in addition to petroleum and natural gas. Its main industries include textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, and cement. The economy depends mainly on income from agriculture—key agricultural products include cotton, rice, corn, wheat, beans, fruits, and vegetables. Egypt controls the Suez Canal, a navigable waterway that presents a sea link between the Indian Ocean and Mediterranean Sea.

After a harsh period of stagnation, Egypt's economy began considerable development in recent years after the adoption of more liberal economic policies by the government. The stock market boomed and gross domestic product (GDP) grew by about 6.9 percent per year in 2005–06, and topped 7 percent in 2007. Foreign direct investment (FDI) into Egypt also has increased considerably in the past few years due to recent economic liberalization measures. With favorable costs of land and labor as well as competitive prices of electricity and gas, the government offers generous incentives to invest in Egypt's private sector, including investment laws revolving around tax incentives, customs exemptions, and many new investor protections and guarantees.

FDI reached US$6.1 billion in 2005/2006, increasing 50 percent from 2004, and with a significant boost in 2006/2007, it set the stage to reach about US$10 billion in 2007. Egypt also takes part in a number of trade and investment agreements with different countries, such as COMESA and GAFTA [Page 575]with Libya and Sudan, QIZ with Israel, AGADIR with Jordan, Tunisia, and Morocco, and TIFA with the United States. It has a market capitalization amounting to 65 percent of GDP and recently had a 30 percent increase in non-oil exports; net foreign reserves recorded US$28.6 billion in May 2007, up from just US$14 billion in 2003/2004. Export sectors, especially natural gas, represent a promising potential for the economy.

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