This chapter provides an overview of Egypt’s innovation performance. It covers the macroeconomic context and the inputs and outputs of Egypt’s National Innovation System. It further presents how innovation can be leveraged for economic development in Egypt in the context of the digital transformation and the green transition.
OECD Reviews of Innovation Policy: Egypt 2026
Abstract
Egypt has shown commendable economic resilience, maintaining positive growth through global crises such as COVID-19. This demonstrates policy adaptability and macroeconomic responsiveness, including recent efforts to reduce inflation that need to be sustained going forward.
Structural economic limitations continue to constrain Egypt’s growth potential. Low value-added sectors still dominate the Egyptian economy, as exports are dominated by petroleum and petroleum products, followed by raw cotton, cotton yarn, and textiles. Over the past decade, significant growth was achieved, especially in chemical exports, considered a medium-technology industry, while high-technology exports remain at a very low level.
Foreign direct investment (FDI) inflows could be further developed, in particular towards knowledge-intensive sectors, pointing to the need for deeper regulatory reforms, greater policy transparency, and more competitive infrastructure – especially in innovation-intensive sectors.
Strategic sectors such as information and communication technology (ICT) services and pharmaceuticals manufacturing offer high potential for value-added growth and regional competitiveness. With a growing footprint in generics and vaccine production, Egypt can position itself as a Middle East and North Africa (MENA) pharmaceutical hub by strengthening quality standards, regulatory alignment, and international partnerships.
Human capital remains under-leveraged. Despite a strong academic and research base, Egypt faces a persistent brain drain, limiting its ability to retain skilled talent critical to innovation and advanced manufacturing. Targeted talent-retention programmes, incentives for returnees, and stronger local innovation ecosystems are essential to reversing this trend.
Gender disparities in workforce participation remain a major untapped source of economic growth. Addressing the “MENA paradox” through targeted labour reforms, childcare support, and anti-discrimination enforcement can boost productivity and inclusive innovation outcomes.
Egypt’s research and innovation system is gaining momentum, underpinned by increased public research and development (R&D) investment, a notable rise in internationally cited scientific publications and a vibrant startup ecosystem. These gains reflect growing institutional capacity and a national commitment to strengthening knowledge production and applied research.
Egypt has been struggling for the last half decade with inflation, currency devaluation, global supply chain disruptions, and fluctuations in global food prices and (OECD, 2024[1]). In June 2023, inflation peaked at over 35% and had fallen to 12% by August 2025. Large government expenditures have led to persistent budget deficits, which in turn pushed public debt levels to 95.2% of gross domestic product (GDP) in June 2023, before receding to 87% by June 2025 (International Monetary Fund, 2024[2]; IMF, 2025[3]).
Egypt’s government, committed to addressing macroeconomic challenges and rising public debt, expanded the International Monetary Fund (IMF)-backed Extended Fund Facility in 2024 to a total of USD 8 billion. This included a permanent shift to a flexible exchange rate system and debt reduction through fiscal consolidation (International Monetary Fund, 2024[2]).
Despite various challenges, Egypt has shown relatively higher resilient growth in GDP per capita than the MENA region (excluding high-income countries1) average, Brazil and Malaysia (see Figure 2.1). Between 2019 and 2023, annual GDP per capita growth rates averaged 2.9%, with the notable performance of 2020 during the global coronavirus (COVID‑19) pandemic when Egypt managed to maintain positive growth. (World Bank, 2024[4]). We note that the latest report by the International Monetary Fund reports an acceleration of GDP growth in FY 2024/25 to 3.6% (IMF, 2025[3]). Annual headline inflation declined in August 2025 to 12%, the budget recorded a primary budget surplus of 3.6% in FY2024/2025, and real GDP growth averaged 4.2% in 9MFY2024/2025, up from 2.4% in the previous comparative period according to the Egyptian government and the Central Bank of Egypt.
Annual percentage growth rate of GDP per capita
Note: The annual percentage growth rate of GDP per capita is based on constant local currency. GDP per capita is GDP divided by mid-year population. GDP at market price is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. The MENA (Middle East North Africa) region includes Afghanistan, Algeria, Djibouti, Egypt, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Pakistan, Syrian Arab Republic, Tunisia, West Bank and Gaza Strip and Yemen. The reporting period for Egypt and South Africa data is the fiscal year.
Source: World Bank, “World Bank national accounts data”, https://data.worldbank.org/indicator/NY.GDP.PCAP.CD (accessed 2 September 2025).
Another societal challenge in Egypt, while also holding major potential for economic growth, is its strong population increase. With around 114.5 million as of 2023, the Egyptian population is projected to rise to 162 million by 2050 (World Health Organisation, 2024[5]). Meanwhile, the share of the young aged 0-14 has been declining since the 1990s, to 33% in 2022, slightly above the MENA average (30%) but lower than most countries in the African Union. Although this suggests a gradual demographic transition, its effects will unfold over a long-time horizon. In the short to medium term, the share of the working age population is expected to continue increasing, creating both opportunities and pressures to generate sufficient employment and productive economic activities (United Nations, 2024[6]). This underscores the importance for Egypt to exploit the potential created by a high labour force participation before the dependency ratio, i.e. the share of the old-age population relative to the labour force, will constitute an additional burden on public finances.
While gender inequality has improved, there remains significant scope for further progress. The gender gap in educational attainment is gradually closing, with female enrolment in universities reaching near parity in 2023/24, with 49.5% of all enrolments (CAPMAS, n.d.[7]). However, only 37.5% of an age class of females actually enrol in higher education, compared to a MENA average of 60.6% (World Bank, n.d.[8]). Despite these educational advancements, women continue to stagnate in participation in the labour force, with only 18% being active in 2023, compared to 73% for men (World Bank, 2025[9]). This phenomenon, commonly referred to as the “MENA paradox”, reflects a trend seen across many countries in the region where educational gains for women do not translate into proportional increases in workforce involvement.
Foreign direct investment (FDI) plays a critical role in fostering innovation and economic development, particularly in emerging economies like Egypt, by introducing capital, advanced technologies, managerial expertise, and new business practices (Borensztein, 1998[10]; Ahn et al., 2024[11]; Keller, 2021[12]). In Egypt, FDI has stagnated at under 2% of GDP over the past 15 years, below the 3–5% typical of comparable emerging economies (Figure 2.2). FY 2023/24 saw a one-time surge to 9th place globally, largely driven by the Ras El Hekma megaproject (USD 35 billion). For the first nine months of FY2024/25 FDI amounted to USD 9.8 billion of which non-oil FDI represents USD 9.1 billion, with a target of USD 12-15 billion until the end of 2025 (CBE, 2025[13])).
While recent data indicate a notable rise in non-oil FDI inflows, reflecting progress in diversification efforts, the oil and gas sector has accounted for around 60% of total investment, highlighting the continued importance of extractive industries in Egypt’s FDI profile. Other key sectors include the financial industry, manufacturing, real estate, and construction. Overall, services have seen inflows of almost USD 6 billion, of which financial services received the most at USD 2.13 billion, followed by the ICT sector at USD 836 million. With USD 3.3 billion, the manufacturing sector has attracted net inflows of around 50% less. Total FDI stocks reached nearly USD 150 billion in 2022/23 (UNCTAD, 2023[14]).
As a percentage of GDP
Source: UNCTAD, Investment statistics database, https://unctad.org/topic/investment/investment-statistics-and-trends, (accessed on 05 March 2026).
FDI contributes to technological spillovers, enabling domestic firms to modernise, adopt innovative production techniques, and enhance competitiveness. Egypt has also promoted investment through special economic zones (SEZs) such as the Suez Canal Economic Zone (SCZone) and the Golden Triangle Zone (GTZone), offering streamlined administrative proceedings, tax exemptions, and proximity to ports. These initiatives aim to attract investment in higher value-added and innovative industries, including ICT and green technologies (OECD, 2020[15]). Quarterly revenues reached around USD 2.4 billion in 2023. A green fuel industrial cluster is being developed with an estimated USD 43 million investment, which underlines the efforts made by the SCZone leadership to diversify into higher value-added promising industries (Box 2.1). There are also other types of zones under the Investment law that can be used to help promote investment in innovation-related projects, including public and private Free zones, Investment and Tech Zones, Special Economic Zones, Qualified Industrial Zones. These zones offer incentives to different types of projects to encourage investment in specific activities or areas (OECD, 2020[16]).
A new FDI Strategy has been released in September 2025 by the Ministry of Investment addressing these concerns, while encouraging investment in priority sectors and fast-tracking implementation of the State Ownership Policy (SOP) to increase the private sector’s role in the economy and increase government divestment.
Nonetheless, although investors continue to cite challenges such as regulatory inconsistency, transparency gaps, and skilled-labour shortages, Egypt has implemented substantial reforms to strengthen the investment climate. Recent measures include simplifying business registration, digitizing permitting and government services, upgrading investor service centres, modernizing residency and work-permit systems for foreign talent, and enhancing protections under Investment Law No. 72 of 2017. These efforts aim to create a more predictable, transparent, and competitive environment for both domestic and foreign investors.
The new foreign direct investment (FDI) strategy for 2025–2030, released in September 2025 and drafted with the World Bank support, aims at reinforcing the country’s role as a regional investment hub and attracting higher-value projects. It focuses on diversifying sources of capital, improving economic governance and aligning sectoral policies with Egypt’s investment framework, and detailed implementation and monitoring measures would follow.
The strategy targets 13 sectors – eight ready for immediate promotion and five requiring further reforms. The sectors include ICT, renewable energies, chemicals, agribusiness and food processing, tourism, garments and textiles, logistics and electronics, as well as “aspirational” sectors (sectors needing reform): green hydrogen, pharmaceutical and medical industries, data centres, hospitals and medical centres, automotive. Reforms related to the strategy include streamlining licensing, including a digital platform linking 41 state agencies, and changes to trade policies to boost exports, cut the trade deficit and support local producers.
Moreover, Egypt’s Narrative for Comprehensive Development Reforms for Growth, Jobs and Resilience positions FDI as a central driver of Egypt’s structural transformation, linking investment attraction to technology transfer, export diversification, and higher-productivity job creation. It also underscores the importance of predictable, transparent, and competitive market conditions to unlock the full benefits of investment. By situating FDI within a broader agenda of institutional reform, private-sector development, and skills upgrading, the Narrative provides the strategic framework through which sector priorities, industrial upgrading efforts, and entrepreneurship initiatives are aligned to support long-term, innovation-led growth.
In an encouraging development, the General Authority for Investment and Free Zones (GAFI) announced in May 2025 that startups in the service sector, notably in the ICT sector, are allowed to set up headquarters in designated free zones (State Information Service, 2025[17]).
The SCZone, located on a key global trade route, is central to Egypt’s economic strategy. Focused on logistics, trade, and manufacturing, it aims to attract FDI by leveraging its strategic position. Key industries include petrochemicals, automotive assembly, and textiles, with an emphasis on supply chain efficiency and positioning Egypt as a bridge between Europe, Asia, Africa and the Arab states. Unlike Shenzhen, which centres on high-tech innovation, the SCZone prioritises large-scale manufacturing and trade, as well as ports operations and maritime services.
The zone has begun adopting the Triple Helix Model (industry–academia–government collaboration), though integration efforts are still at an early stage. While current activities remain more focused on logistics and production, the incorporation of universities and R&D institutions is progressing gradually.
Government efforts emphasise infrastructure, tax incentives, and regulatory support to attract investment. In contrast to Shenzhen’s innovation-driven policies, the SCZone’s approach is more logistics-oriented. To boost competitiveness, it could invest in R&D, strengthen academic partnerships, and foster a more innovation-friendly ecosystem.
Source: Suez Canal Zone (2024[18]).
There are signs of structural evolution in the industry mix over the past decades, as the share of the agricultural sector has decreased, while those of the extractive, manufacturing, and service industries have risen.
We observe a trend of strong growth in high- and medium-high-technology exports as a percentage of manufacturing exports, which increased from 23.7% in 2013 to 38.5% in 2022. In terms of value-added content in manufacturing, those exports have progressed from 14% in 2013 to 25.9% in 2022 (Figure 2.3). This is driven mostly by the chemicals sector (in particular fertilisers) and, to a lesser degree, by metal products, electric machinery, and motor vehicles. In terms of value added in these sectors, Egypt ranks in the middle of the benchmark countries.
Note: High-technology industries are defined here according to ISIC rev 4 code as: Manufacture of pharmaceuticals, medicinal chemical and botanical products (21), Manufacture of computer, electronic and optical products (26) and Manufacture of transport equipment (railway locomotives, air & spacecraft, military fighting vehicles, other transport equipment) (302 to 209). Medium-high-technology industries are defined as: Manufacture of chemicals and chemical products (20), Manufacture of fabricated metal products (except machinery and equipment) (25), Manufacture of electrical equipment (27), Manufacture of machinery and equipment (28), Manufacture of motor vehicles, trailers, and semi-trailers (29).
Source: OECD Trade in Value Added database, 2025 edition, (accessed on 5 September 2025).
Meanwhile, focusing specifically on high-technology sectors (a subset of the broader high- and medium-high technology industries discussed above), their share of manufacturing exports has risen slightly from 2.6% in 2013 to 3.45% in 2022 (Figure 2.4), a level below that of most comparable emerging economies. A similar pattern is observed in the value-added share of high-technology sectors in manufacturing, which increased from 1.36% in 2013 to 1.73% in 2022. This remains among the lowest ratios globally, while several emerging economies have much higher ratios, such as Viet Nam (31.3%), Thailand (8.4%), Jordan (8.2%) and India (4.9%).
Note: High-technology industries are defined here according to ISIC rev 4 code as: Manufacture of pharmaceuticals, medicinal chemical and botanical products (21), Manufacture of computer, electronic and optical products (26), and Manufacture of transport equipment (railway locomotives, air and spacecraft, military fighting vehicles, other transport equipment) (302 to 209).
Source: OECD Trade in Value Added database, 2025 edition, (accessed on 5 September 2025).
Nevertheless, there remains room for improvement for Egypt to diversify. According to the Observatory of Economic Complexity, Egypt ranked 66/132 in Economic Complexity Index (Trade, 2023), 62/89 in ECI (Technology, 2021), and 64/123 in ECI (Research, 2023), with rankings remaining relatively stable over the past two decades. Many emerging economies are ranked higher than Egypt, such as Malaysia (24th), Thailand (29th) and India (39th) (Figure 2.5). Top exports are refined petroleum, petroleum gas, nitrogenous fertilizers, and crude petroleum. The rank has been progressing slowly over the past two decades.
While the ECI provides a backward-looking view, national industrial strategies indicate that Egypt has some potential to move into higher value-added activities, though realising this will require substantial improvements in competitiveness, skills, and the overall investment climate. Egypt’s Narrative for Comprehensive Development Reforms for Growth, Jobs and Resilience emphasizes structural transformation, economic diversification, and the transition toward a knowledge- and innovation-driven economy. It also underscores the country’s strategic focus on enhancing industrial capabilities, deepening local value chains, and fostering sectors with greater technological intensity, positioning Egypt to achieve more sustainable and resilient long-term growth.
Note: The Economic Complexity Index (ECI), developed at MIT, measures a country’s productive knowledge based on the diversity and sophistication of the products it exports. Egypt was ranked 66 out of 132 countries on a trade complexity index calculated in 2023. This Economic Complexity country ranking classifies countries based on estimates of economic complexity derived from trade data.
Source: Global Trade Data (2024[19]) (accessed on 8 September 2025), based on (James, Simoes and Hidalgo, 2011[20]).
The government aims to develop the ICT sector. The ICT 2030 Strategy focuses on capacity building, electronics design and manufacturing, and the emergence of technology parks (MCIT, n.d.[21]). Despite growth, ICT services accounted for only ~5% of total services exports between 2015 and 2021, far below regional competitors such as India, where ICT services comprise 46.4% of total services exports (Figure 2.6). Recent efforts to strengthen the broader ICT ecosystem include expanding innovation hubs, increasing domestic data-centre capacity, and rolling out 4G and early 5G services, alongside improvements in the UN E-Government and E-Participation indices and rising mobile connectivity. Initiatives under the national AI agenda, including targeted skills programmes and emerging AI innovation facilities, are beginning to build human capital, though their impact on competitiveness remains at an early stage.
The Egypt Makes Electronics initiative was launched in 2015, with the aim of transforming Egypt into a regional and global hub for electronics design and manufacturing for Arab, African and European markets. A notable success was achieved in 2022 when Vivo, Nokia, and Samsung invested EGP 2 billion (Egyptian pounds) (~USD 106 million) in an industrial capacity for 20 million smartphones and tablets annually. Industrial capacity was also built to produce fibre optics, and two innovation hubs were established: Creativa and Electronics Innovation Centre (MCIT, 2023[22]).
President Abdel Fattah al-Sissi inaugurated a new government cloud computing data centre in April 2024 in an effort to localize data storage, which used to be stored abroad, and capitalise on its strategic location at the crossroads between Europe, Africa and Asia (Butler, 2024[23]).
Within the ICT services sector, there has been a shift towards higher value added as software and mobile application development and technical support services rose from 30% in 2014 to 40% in 2019, while the share call centre services reduced accordingly. Further growth in higher value-added is fostered through new cloud and data centres within smart city initiatives (Oxford Business Group, 2022[24]).
The government is similarly seeking to boost the pharmaceutical sector, leveraging Egypt’s position as the largest pharmaceutical market in the MENA region with an estimated market size of USD 56.6 billion (African Development Bank, 2024[25]) and being one of only four countries in Africa with a licence for vaccine export (African Development Bank, 2022[26]). In 2021, the government established Gypto Pharma, the ‘City of medicine’ as a new State-owned enterprise to bolster pharmaceutical exports which are foreseen to grow by an annual 30% (State Information Service, 2023[27]). Pharmaceutical products and medical devices have seen considerable growth from USD 700 million in 2021 to almost USD 1 billion in 2023, largely driven by the exports of generics.
As a percentage of total services exports
Note: ICT service exports include computer and communications services (telecommunications, postal, and courier services) and information services (computer data and news-related service transactions). The MENA (Middle East and North Africa) includes Algeria, Djibouti, Egypt, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Syrian Arab Republic, Tunisia, West Bank and Gaza Strip, and Yemen. The reporting period for Egypt and South Africa data is the fiscal year.
Source: World Bank, World Development Indicators, https://databank.worldbank.org/source/world-development-indicators (accessed 19 September 2025).
Going forward, “Egypt’s Narrative for Comprehensive Development Reforms for Growth, Jobs and Resilience”, launched in September 2025, aims to reinforce the more productive and export-oriented sectors. including tourism, ICT, manufacturing, agriculture, and energy (see Box 7.2 in Chapter 7).
Following the 2022 United Nations Climate Change Conference (COP27), hosted in Egypt, the government undertook significant steps to increase the share of renewable energy in Egypt’s energy mix.
In 2023, the vast majority of energy supply came from natural gas (55.1%) and oil (36.8%) (Figure 2.7). Egypt ranks seventh in Africa on CO2 emissions per capita, largely due to its large manufacturing sector (OECD (2024[28]).
Note: Total energy supply is made up of production + imports - exports - international marine bunkers - international aviation bunkers ± stock changes. Note that exports, bunkers and stock changes incorporate the algebraic sign directly in the number.
Source: IEA, World Energy Statistics and Balances, https://www.iea.org/data-and-statistics/data-product/world-energy-balances (accessed 11 March 2026).
The government introduced in 2022 the National Climate Change Strategy 2050 to set out a roadmap for the expansion of renewable energy sources, the reduction of emissions from fossil fuels, increasing energy efficiency, and promoting sustainable consumption practices (Egypt State Information Service, 2024[29]).
The strategy aims to increase the share of renewable energy in Egypt’s energy mix to 42% by 2035, up from 6% in 2022. In 2021, most of the energy supply came from natural gas (55.1%) and oil (36.8%) (Figure 2.7). Several initiatives have been implemented to date, including the rollout of fast charging infrastructure for Electric vehicles and setting up of new “private to private” rules for provision of green energy. Still to be implemented are incentives for biofuels in the transport sector and the replacement of gas by solar thermal for industrial use, enforcement of green building codes, industrial efficiency audit and retrofit, the mandate locally manufactured solar-PV modules and solar-thermal mirrors, a specific incubator for smart energy solutions.
The share of renewable and low-carbon energy sources, including wind, solar, hydro, and nuclear, in Egypt’s total energy mix has been steadily increasing, reaching 11.5% in 2023/24 and an estimated 13.8% in 2024/25. Looking ahead, the 2030 targets vary depending on the scenario: 25% under the Baseline Scenario, 42% under the Reform Scenario, and 20% under the Conservative Scenario. By 2050, Egypt aims to achieve a 55% share of renewable and low-carbon energy, based on projections from the MFMOD-GJ Macro-econometric Forecasting Model used by the World Bank. This trajectory reflects Egypt’s commitment to decarbonization and the expansion of sustainable energy sources within its energy mix.
Across sectors, several ambitious national megaprojects are being implemented to boost economic development and to address key societal challenges. Examples are the domestic production of electric vehicles, the development of green hydrogen, and various initiatives to raise productivity in agriculture (State Information Service, 2025[30]).
There is a shortage of relevant skills for the Egyptian economy. Adult literacy has significantly risen, from 66% in 2006 to 79% in 2022, according to World Bank data. Nevertheless, it remains below emerging countries such as Brazil (94%) and Malaysia (96%) (World Bank, 2026[31]).
While recent results of UNDP’s Trends in International Mathematics and Science Study (TIMSS) aren’t available, in 2019 Egyptian Grade 8 students ranked in the lower third of participating countries performing around the Arab average—above Morocco, Saudi Arabia, Kuwait, and Oman, but behind Jordan, Lebanon, Qatar, UAE, and Bahrain. Science performance was particularly weak, ranking second to last among Arab peers (Mullis, 2020[32]).
The results of Progress in International Reading Literacy Study (PIRLS) shows that the performance of Egyptian students was ranked 55th out of 57 countries in 2021, with only 6% achieving the High or advanced benchmarks, compared to 46% in the U.A.E., 34% in Türkiye, 15% in Brazil (Mullis et al., 2023[33]).
A 2023 study on literacy and numeracy assessment by the International Association for the Evaluation of Educational Achievement (IEA) at grade 6 level places Egypt ahead of Burkina Faso, Pakistan, Senegal and Nigeria, but behind the Palestinian National Authority in both mathematics and reading ability, with a significant gender gap, girls showing a significantly better performance (Davier et al., 2023[34]).
Large class sizes contribute to these outcomes: in 2019/20, primary and lower secondary classes averaged 49 and 53 students, respectively, compared to 24–37 in countries such as Argentina, Brazil, India, Indonesia, and China (MPED and UNDP, 2021[35]). Meanwhile, the Ministry of Education is taking steps to address class congestion through the addition of 98,000 classrooms in the 2024/25 academic year, a presidential directive to hire 30,000 teachers annually, striving to reduce class sizes below 50 (Ahram Online, 2025[36]).
Skills gaps are also evident in digital and language competencies, with university graduates facing unemployment at double the national rate (15.7% versus 7.4% in 2022) (Trading Economics, 2022[37]). Many lack English proficiency, proper Arabic writing, communication, and digital skills, with only 15% able to apply arithmetic formulas in spreadsheets compared to 23% in Morocco, 14% in Brazil, and 54% in Malaysia (ITU, 2025[38]). Initiatives under the Digital Egypt Strategy, including “Future Work is Digital,” aim to address these gaps, while new technological universities provide practical ICT training in partnership with the private sector, enhancing firms’ absorptive capacity for innovation.
Egypt has been expanding and diversifying its higher education provision, and within a couple of years the number of universities doubled to approximately 100 (OECD, forthcoming[39]). Universities in Egypt have increased their presence in global rankings. For example, the Times Higher Education ranking 2024 features 28 Egyptian universities among the 1 906 listed, up from 3 in 2016 (Times Higher Education, 2024[40]). In the QS World University ranking, which includes 1 500 institutions globally, Egypt ranks highest within the group of African universities with a total of 15 listed universities, followed by South Africa with 11. Also in the MENA group, Egypt has one of the highest numbers of ranked institutions (QS Top Universities, 2025[41]) (Figure 2.8).
Note: The QS World University ranking is published annually by Quacquarelli Symonds (QS) company. This ranking evaluates universities across several indicators, including academic reputation; employer reputation; faculty-to-student ratio; citations per faculty; international faculty; international students; international research network; and employment outcomes.
Source: QS Top Universities, QS World University Rankings 2025: Top global universities, https://www.topuniversities.com/qs-world-university-rankings (accessed 6 December 2025).
Relative to population size, other countries in the Middle East have more universities ranked, notably Lebanon and the UAE with 12 higher education institutes per 10 million inhabitants, Jordan 9, Saudi Arabia 6, compared to just 1.3 for Egypt.
Several initiatives promote close collaboration between education and industry in skills development. For example, in advanced digital skills development, and vocational education and training. Technological universities have recently been introduced as a new type of higher education provider that offers programmes and training courses closely aligned with industry skills needs.
Migration has become a double-edged sword for Egypt. Remittances are one of the significant sources of national income (International Monetary Fund, 2024[2]), while brain drain poses a significant threat to the country’s economic competitiveness, as a growing number of young talent graduates from Egyptian universities seek employment opportunities abroad (Figure 2.9), particularly in the Gulf States, Europe, and the United States.
Recent data show that Egypt suffers one of the highest levels of talent loss in artificial intelligence, with a negative migration balance of 500 professionals per 10 000 LinkedIn members in 2021. In stark contrast, the Gulf countries, such as the United Arab Emirates, experience a strong positive influx of talent, with an increase of 1 100 professionals per 10 000 LinkedIn members (OECD, 2024[42]).
The medical sector illustrates the problem starkly: of 212 835 licensed doctors, only around 82 000 (38%) are actively working in the country’s healthcare system, with over 7 000 leaving in a single year (Gazette Staff, 2025[43]). According to media reports, of roughly 220 000 doctors registered in the syndicate, about 120 000 are estimated to be practising abroad, suggesting that more than half of the registered stock may be working outside Egypt (Dalloul, 2022[44]). Skilled professionals in AI, IT, and research similarly leave, weakening domestic capacity.
Figure 2.9 highlights that, although only around 10% of Egypt’s working age population has emigrated, a disproportionately high share – approximately 30% – of its highly educated tertiary graduates leave the country. This suggests that brain drain is particularly pronounced among skilled professionals, which poses a risk to Egypt’s knowledge-based development and innovation capacity.
Note: Working age population is 15-64 according to World Bank definition.
Source: Author’s elaboration, based on migration data from World Bank Global Migration Database 2000-2020, percentages of skilled emigrants from World Bank World Development Report 2023 and population data from https://databank.worldbank.org/source/world-development-indicators#.
The Egyptian government is aware of the detrimental effects of brain drain on the country’s long-term competitiveness and seeks to promote circular migration schemes, particularly to attract the return of highly skilled individuals to boost Egypt’s transition towards a knowledge-based economy.
To mitigate brain drain, institutions such as Nile University and Zewail University focus on producing highly skilled graduates in science, technology, and innovation. Through partnerships with international research centres and private-sector collaborations, these universities aim to provide opportunities for high-quality research and career advancement, retain talent, and strengthen Egypt’s position in the global knowledge economy.
Efforts to mitigate the brain-drain and capitalize on the expertise of Egyptian expatriates is the implementation of programs by the Academy of Scientific Research and Technology (ASRT) such as the "Development Bridges - Egyptian Scientists and Experts Abroad" initiative. This initiative builds upon earlier efforts like the Tokten Program ("Transferring Knowledge through Expatriates"), offering a structured platform for Egyptian research institutions to collaborate with expatriate scientists. These partnerships focus on solving local development challenges, ensuring that Egyptian researchers abroad can contribute meaningfully to the country’s progress.
"Egyptians Abroad Initiative" and "Return and Connect" have been launched to strengthen ties with Egyptian professionals living overseas. These programs provide attractive career opportunities, research grants, and financial incentives to encourage the return of skilled professionals, thereby reversing the effects of brain drain.
Gross expenditure on research and development (GERD) spending as a percentage of GDP has seen a remarkable quadruplication from 0.24% of GDP in 2005 to 1.02% in 2022, according to official statistics. While it is significantly below the OECD average of 2.7%, expenditure in Egypt is higher than that of India (0.65%), Indonesia (0.28%), and some OECD countries, namely Colombia (0.29%, as of 2020) (Figure 2.10).
As a percentage of GDP
Note: Figures for Egypt may not be fully internationally comparable. For further information, see OECD (forthcoming[45]), “OECD support towards STI statistical capability development in Egypt: Assessment and main recommendations”.
Source: OECD calculations based on custom data provided by the Egyptian Science, Technology and Innovation Observatory and OECD Main Science and Technology Indicators (database), www.oecd.org/sti/msti.htm (accessed June 2025).
Despite these gains, the OECD Review team notes that R&D funding has yet to fully permeate Egypt’s research system. Low salaries at both research institutes and universities lead many researchers to pursue additional revenue-generating activities which potentially has adverse effects on their research. During the interviews a head of a research centre reported a salary of less than USD 300 per month, pointing out that lower ranked employees earn significantly less. A social support fiscal package of EGP 15 billion (~USD 310 million) was announced by government in February 2024 to increase wages of academic staff in universities and Research Centres, in addition to doctors and nurses (Arab Republic of Egypt Presidency, 2024[46]).
Innovation outputs, measured here by patent applications and scientific publications, have grown fivefold between 2009 and 2023, surpassing South Africa in absolute terms. Over the same period, Egypt’s population grew by roughly 31%, meaning that innovation output per capita rose by nearly 280%. This reflects substantial progress in innovation performance, although per capita output still remains below that of leading emerging economies.
The proportion of Egypt’s scientific publications published in journals ranked within the world’s top 10% by citation impact increased from 6.6% in 2014 to 11.8% in 2023, outperforming not only emerging economies such as Brazil, Colombia, Malaysia, Thailand and South Africa, but also the OECD average (Figure 2.11). Targeted incentives, such as extra salary payments for top publications, have likely contributed to this success.
Fractional counts
Source: OECD calculations based on Scopus Custom Data, Elsevier, Version 1.2025, April 2025; and Scimago Journal Rankings (accessed on 16 September 2025).
Egypt’s innovation landscape reflects a dynamic interplay of resilience, reform, and emerging potential. The country has demonstrated notable economic adaptability, particularly through its response to recent global shocks and its commitment to macroeconomic reform. Investments in R&D and scientific output have surged, positioning Egypt as a rising contributor to global research. Strategic sectors such as ICT and pharmaceuticals are gaining traction, supported by targeted policies and improved infrastructure, including USD 2 billion invested in internet upgrades and expanded fibre-optic capacity, alongside Egypt’s role as a major hub for submarine data cables linking Europe and Asia.
However, structural challenges persist. The economy remains reliant on low value-added exports, and foreign investment continues to be constrained by regulatory and institutional barriers, even as recent reforms such as streamlined licensing, investment facilitation measures and the implementation of the State Ownership Policy aim to improve the business environment. Although progress has been made in higher education and gender equity, skills mismatches and brain drain still limit innovation capacity, and the government is working to address these gaps through initiatives in technical education, digital skills development and vocational partnerships. The sustainability agenda is similarly ambitious, while notable measures under the green transition, including the expansion of EV-charging infrastructure, improvements in energy efficiency planning and advances in renewable-energy frameworks, represent important progress. Nevertheless, implementation gaps remain and will need to be addressed for Egypt to fully realise its green-transition objectives.
To unlock its full innovation potential, Egypt must continue to deepen sectoral diversification, strengthen talent retention, and foster a more inclusive and transparent investment climate leveraging its demographic dividend and strategic location to become a regional innovation hub. The main achievements and challenges in innovation performance discussed in this chapter are listed in Table 2.2.
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← 1. According to the World Bank, “high-income countries” in the MENA region generally refer to the Gulf Cooperation Council states and other MENA economies with a Gross National Income per capita above the World Bank high-income threshold. The remaining countries are often referred to as “lower- or middle-income MENA countries,” comparable to Egypt (World Bank, 2024[47]).