On Greece and Egypt’s Path to Globalization

Alexander Suer, Jake Carlson, Isabelle Reynolds, and Caleb Lay

Introduction

Greece and Egypt are old countries catching up to the modern world. Both have the

advantages of antiquities and a Mediterranean climate to fuel their tourism industries, attracting

millions from around the globe each year. However, tourism must be leveraged with other

industries to protect from instabilities like those that have rocked both countries in the past decade.

Greece has opportunities through its membership in the European Union, as it can draw wealthy

western tourists and trade efficiently with Europe. Egypt is a major center of the Arab world,

hosting Cairo, one of the world’s largest cities. Its large population can fuel economic growth

with proper guidance. Both countries have tremendous untapped potential that can be utilized with

the right implementation. This paper will analyze the present situation in Greece and Egypt before

outlining policy recommendations to their governments to promote greater growth and integration.

Greece

Academics provided a wide range of solutions for Greece while it struggled through its

financial crisis. Dr. Uzma Shujaat summed up the basic needs for a healthy Greek economy,

writing that economic stability requires “importing less, exporting more, promoting tourism and

attracting foreign investment.”1 In 2012, during the midst of the Greek financial crisis, Shujaat

argued that Greece should take the opportunity to “[reform] its domestic economic institutions in

order to promote innovation as well as entrepreneurship.”2 Such actions include reducing the size

of the public sector and reducing regulatory hurdles to allow for less-constrained competition.

Culturally, Greece has a weakened sense of unity with the rest of Europe. In two studies

headed by Dr. Katerina Petkanopoulou, it was shown that Europeans, including Greeks,
“[disidentified] with Europe” when they perceive economic inequality.3 These perceptions flared

with the Greek economic crisis. The studies suggest that cultural harmony can only be

accomplished through economic unity. Cultural integration could be hastened with policies

focusing on shrinking the gap between Greeks and citizens of other, wealthier EU member states.

Recommendations

Greece should capitalize on its temperate Mediterranean climate and many antiquity sites. It

has already taken steps to improve access to these sites through recently built highway systems.

Its ministries also fund the development of potential tourist locations.4 Greece could also utilize

its relatively lower cost of living to attract companies. However, Greece is hindered by a

cumbersome government. Due to strong labor laws, there are significant additional costs to

employers beyond just wages. Greece could reduce its regulatory complexities to start new

companies and hire workers. Furthermore, Greece could reduce some of their labor protection laws

to make it easier for companies to expel underperforming workers. Currently, most of Greece’s

outside investment is facilitated through the service sector,5 but Greece needs to be wary of

attempting to attract too much heavy industry because it will compete with tourism for land.

Greece’s mountainous terrain has minimal flat land for development. Nearby heavy industry will

spoil the landscape and potentially ruin the rural atmosphere of nearby tourist attractions. The

importance of sustainable tourism will need to be balanced with other economic needs.

Greece should also be careful in managing outside investments so that it does not sell or lease

too many of its assets to a single foreign entity, and instead hedges the many competing interests

to its own benefit. Chinese investments and operations can be a boon if managed carefully. Trade

with China reduces dependence on the West, and vice versa. Chinese management of industries

and trade facilities, such as the port of Piraeus, can bring in major outside expertise. However, the
risk is that China and other economic superpowers, such as the rest of the EU and the USA, may

use their local assets as leverage to coerce Greece. Greece can mitigate this by diversifying

investors to ensure competitive international investment. If Greece offers opportunities to outside

factions, it can attract incoming private investments that will raise the quality of life for its citizens.

Greece should also continue to have a budget surplus to pay off its debts. The government

should avoid overspending in the future so that it has room for future expansionary fiscal policy.

Currently, the global economy is continuing to grow. Therefore, Greece should use the time to

recover from its debts so it can borrow when it inevitably faces global economic headwinds and it

does not fall to the same economic crises that set back integration during the global financial crisis.

Egypt

Egypt is funding many projects to spur economic growth so that it can become a developed

economy. The central government has signed contracts to modernize its northern passenger

railroads.6 Tourists can travel farther from major international airports with better public

transportation. Furthermore, high quality passenger service is prestigious. Egypt is also

attempting to modernize its state-owned textile industry.7 Streamlining one of Egypt’s major

exporting industries8 will help strengthen its ties with the global economy. Furthermore, Egypt is

attempting to preserve the older neighborhoods of downtown Cairo.9 Conservation efforts will

ensure that historical tourism will remain sustainable in the future.

Recommendations

Egypt can continue to foster its tourism industry around its historic locations. However, it can

also take steps to decentralize the government and encourage private investment. Egypt currently

is in an infrastructure investment boom. However, it should be cautious and ensure that companies

have long-term plans to occupy the newly created space and not leave an empty husk. For the
private sector to boom, the rule of law needs to strengthen, and the public sector must shrink.

Egypt will attract more investment if intellectual and physical property rights are highly respected.

Companies must be assured that their investments will not be nationalized. Currently, the Egyptian

army owns many businesses directly and indirectly. Competing against state owned corporations

is difficult. Privatizing industries will encourage competition and foster economic growth.

Egypt also needs to take steps to enforce the rule of law. The best way to do this is to increase

the involvement of the populace in lawmaking and enforcement. If the populace feels like they

helped shaped the rules of their society, they are more likely to follow them. Furthermore, the law

needs to be more thoroughly enforced, particularly in regard to tax evasion. From 2016-2017, the

Egyptian government estimated that “the Tax Authority only collected 40% of the taxes that should

be paid by individuals and businesses,” costing the country $22.3 billion.10 Foreign direct

investment will follow when rules and regulations are clearly established and enforced.

Egypt needs to make efforts to rein in its informal economy, which is three times larger than

its formal economy.11 Prices need to be clearly defined so that buyers and competitors can make

informed decisions. Furthermore, when sellers are subjected to quality control regulations, buyers

have can be more confident in their purchases. Increasing transparency in the marketplace will

help integration by reducing barriers to foreign companies entering the Egyptian economy.

Egyptian entrepreneurs will also be exposed to the regulatory norms of the west, which will make

expanding into international markets easier as they do not have to drastically change their methods.

Following the political turmoil that was prevalent in Egypt for the first half of the past decade,

Egypt’s economy has slowly been able to rebound over the more the stable years that followed. It

is imperative the Egypt maintains this stability for an extended period of time to keep tourism and
spending within the country and provide an attractive marketplace for foreign direct investment.

Without these periods of stability, the flow of money into and within Egypt will surely slow.

Egypt will continue to benefit from being one of the centers of the Arab world. Egypt could

lead the Arab world from developing to developed economies. Agriculture in Egypt’s fertile delta

and tourism from historical sites along the Nile can fund developments in industry and education.

Egypt’s vast population could be trained to provide services designed specifically for the Arab

world. Many electronic services are tailored for Western or Chinese users and designed based on

their cultural norms. Egyptians could create new services specifically designed for Middle Eastern

and North African cultures or help preexisting companies tailor their products to the region. The

world is moving towards a post-industrial service-based economy, and Egypt needs to educate its

populace so that it has services to sell. An outward perspective focused bridging the West and the

Middle East will prevent Egypt from falling into stagnation.

Conclusions

Greece and Egypt will succeed if they can sustainably expand their tourism and service

sectors. Both countries can draw visitors from around the world with their vast and rich histories.

They also have the potential to expand into other markets as well. Both should consider reducing

the public sector to allow their private sectors room to grow. Greece should learn from the

financial crisis and keep the national deficit to a minimum during times of economic expansion.

Greece should also focus on drawing Europeans to capitalize on its membership of the Schengen

Area. Egypt can draw from its vast population to create products and services designed specifically

for the Arab world. Greece and Egypt have the means to return to the forefront of the global

community. Once they solve their local challenges and engage with their regional partners, the

world will be at their fingertips.

 References

1
Shujaat, Uzma. "The Emerging Dynamics of EU-Greece Relations: Future Prospects." Journal of European Studies
28, no. 2 (12, 2012). https://search-proquest-com.proxy.libraries.uc.edu/docview/1317166045?accountid=2909.
2
Ibid.
3
Petkanopoulou, Katerina, Ángel Sánchez-Rodríguez, Guillermo B. Willis, Xenia Chryssochoou, and Rosa
Rodríguez-Bailón. “Two Countries in Crisis: Economic Inequality in the EU and Disidentification With Europe in
Spain and Greece.” Journal of Cross-Cultural Psychology 49, no. 6 (July 2018): 888–906.
doi:10.1177/0022022117751201.
4
“For a Sustainable Tourism Industry.” For a Sustainable Tourism Industry - Tourism. Accessed January 1, 2020.
https://www.mfa.gr/usa/en/about-greece/tourism/for-sustainable-tourism-industry.html.
5
“Foreign Direct Investment.” ENTERPRISE GREECE. Hellenic Republic - Ministry of Foreign Affairs. Accessed
January 3, 2020. https://www.enterprisegreece.gov.gr/en/greece-today/why-greece/foreign-direct-investment.
6
BuildGreen. 2017. "Thales to modernise 180km railway line in Egypt." Business Insights: Global.
7
Russell, Michelle. 2018. "Egypt to invest $1.3bn to modernise textile sector." Buissness Insights: Global.
8
Ibid.
9
Egypt Today. 2018. "Officials discuss efforts to modernize Khedival Cairo." Business Insights: Global.
10
Zaher, Hassan Abdel. “Bitter Options for Egypt as Tax Evasion Persists.” AW. Accessed January 1, 2020.
https://thearabweekly.com/bitter-options-egypt-tax-evasion-persists.
11
Ibid.