This chapter summarises the report’s main findings and recommendations with the aim of supporting the Egyptian agenda in boosting productivity growth in the manufacturing sector. The assessment and recommendations are articulated into five areas: boosting productivity, unleashing trade development, promoting innovation, improving the design and evaluation of productivity-enhancing polices, and strengthening the quality of firm-level data to study productivity and effectively support evidence-based policy making.
Productivity Review of Egypt
Focusing on the Manufacturing Sector
Abstract
Increasing productivity in the Egyptian manufacturing sector can boost Egyptian growth and living standards. The Egyptian government targeted manufacturing – along with agriculture and information and communication technology (ICT) – as key, priority sectors to further develop through its National Structural Reform Programme introduced in 2021. More recently, Egypt’s Narrative for Economic Development sets out plans to strategically shift the economy toward high-value, tradable and export-oriented activities. In line with this agenda, the Ministry of Industry (MoIND) developed the Industrial Development Strategy 2026-2030 to position Egypt as a regional hub for sustainable and flexible manufacturing and international trade. As part of the strategy, MoIND identified 28 priority sectors to deepen domestic manufacturing and meet local demand.
This report aims to support these ongoing initiatives with new, cutting-edge productivity analysis, supporting policy recommendations to increase productivity in the manufacturing sector. It draws heavily on analysis from the OECD Multifactor Productivity (MultiProd) project, a cross-country comparable database of detailed productivity indicators using a distributed code approach. Egypt has been included in the project via its Economic Census 2022/2023.1
In a challenging fiscal environment, the government must carefully assess all spending decisions, with a view to retaining budget neutrality and identifying crucial investment areas to foster targeted manufacturing industries. The following sub-sections provide a summary of recommendations on the prioritisation of expenditures in key areas for the further development of the Egyptian manufacturing sector.
The analysis focuses on several key aspects of the manufacturing sector, including firm-level productivity performance (Chapter 2), industry and trade (Chapter 3), innovation (Chapter 4), co‑ordinating productivity monitoring and evaluation (Chapter 5) and data infrastructure (Chapter 6). The rest of this chapter details the five main findings and actionable policy recommendations drawn from the individual chapters of this report.
Fact 1: Labour productivity in the Egyptian manufacturing sector shows scope for improvement
Labour productivity in the manufacturing sector (measured as value added per worker) has been trending downwards since 2014 (Figure 1.1 Panel A). This contrasts with the experience of other peer economies (such as Indonesia, South Africa and Türkiye) who have instead recorded upward trends over the period.
The level of labour productivity in manufacturing is also low and the gap compared to OECD countries has widened over time. Manufacturing sector productivity was 66% of the OECD average in 2023, compared to 90% in 2010 (Figure 1.1 Panel B).2
The low performance of Egypt’s manufacturing sector does not seem to be due to a weaker allocative efficiency compared to OECD countries.3 Allocative efficiency – the extent to which resources (labour) is allocated to the most productive firms and measured using the (static) allocative efficiency (Olley and Pakes, 1996[1]) – represents 27% of aggregate manufacturing productivity in Egypt. This share is similar to the OECD benchmark for 2022/23 (see Figure 2.6).4,5
Additionally, firms may have difficulty obtaining efficiency improvements as they become older. On the one hand, larger firms are found to be more productive than smaller ones, consistent with OECD countries (see Figure 2.7). On the other hand, older firms (more than six years old) in Egypt’s manufacturing sector are more productive than younger ones, but less so than in OECD countries (see Figure 2.8). This is mostly explained by firms aged above 30 years, for which productivity is not statistically higher than firms aged 0‑5 on average (see Figure 2.8, Panel B). This contrasts with the Egyptian non-financial market services sector, where productivity generally increases with a firm’s age, similar to the OECD average. This suggests that manufacturing firms may struggle in obtaining efficiency improvements as they become older.
Note: Panel A plots the trend in labour productivity (value added over employment) growth in the Egyptian manufacturing and total economy (index, 2010 =100) in Brazil, Egypt, Indonesia, South Africa and Türkiye. Panel B plots the percentage of Egypt labour productivity compared to the OECD average level. Labour productivity is expressed in constant 2015 prices. Panel B excludes Ireland and Luxembourg due to data limitation along the series. Manufacturing includes all industries in Section C of International Standard Industrial Classification of All Economic Activities (ISIC) Rev.4 classification, including coke and refining industries.
Source: OECD calculations based on CAPMAS (n.d.[2]), Annual statistical of Employment, wages and working hours (database), https://censusinfo.capmas.gov.eg/metadata-en-v4.2/index.php/catalog/720/study-description; MPED (n.d.[3]), National Accounts Data (database), https://mped.gov.eg/Analytics?id=61&lang=en&National-Accounts-Data; OECD (n.d.[4]), National accounts (database), https://data-explorer.oecd.org/?fs[0]=Topic%2C1%7CEconomy%23ECO%23%7CNational%20accounts%23ECO_NAD%23&pg=0&fc=Topic&bp=true&snb=158; and OECD (n.d.[5]), Trade in employment (TiM) 2023 Edition (database), https://www.oecd.org/en/data/datasets/trade-in-employment.html.
While manufacturing labour productivity is generally lower than the OECD average, this report uses MultiProd data to identify important differences between the most and least productive industries in manufacturing, based on their average firm-level productivity (see Chapter 2, Figure 2.9).6 Egyptian top-half productive industries accounted for a small share of firms (2%), employment (14%) and value added (27%) within manufacturing (Figure 2.10). These values are much lower than their OECD counterparts, for which the top-half productive industries respectively sum to 14% of firms, 30% of employment and 41% of value added. Among the top-half productive industries, the largest shares are in Chemical (ISIC Rev.4 Division 20), Pharmaceutical (21) and Electrical Equipment (27) that represent around 3-4% of workers and 3-10% of value added in manufacturing (see Figure 2.11 for more details on other industries).7
Additionally, top-half productive industries in manufacturing exhibit high dispersion in labour productivity, even larger than in OECD countries (Figure 2.12).8 One possible explanation for this high dispersion may be related to problems in technology and knowledge diffusion from more to less productive firms (Berlingieri et al., 2020[6]). These industries also have a higher capital intensity than other Egyptian industries in the bottom-half of the sectoral productivity distribution (Figure 2.13).9
Bottom-half productive industries, in contrast, account for large share of employment and value added in manufacturing, and firms are much smaller than their OECD counterparts. Those industries are also largely dominated by informal businesses (defined as not registered or not holding the necessary licences). MultiProd data shows that, on average, firms in the bottom-half productive industries have 7 workers in Egypt compared to 23 workers in the OECD benchmark (Figure 2.14). Moreover, with the sole exception of the Food products, beverages and tobacco (ISIC Rev.4 Division 10‑12) industry, the other bottom-half productive industries have, on average, a large share of informal firms – usually over 50% (Figure 2.16).
Figure 1.2 shows that the strong productivity of the top-half productive manufacturing industries in Egypt was largely driven by Egyptian leaders (above the 90th percentile of the log labour productivity distribution), which were closer to the productivity of OECD leaders in the same industry. On the other hand, in bottom‑half productive manufacturing industries, the whole productivity distribution, including the leaders, trails the OECD average (Figure 1.2).
Productivity ratio with respect to the OECD average in each labour productivity quantile, manufacturing industries, 2022/23
Note: The graph plots the ratio between the labour productivity in Egypt and the average labour productivity in OECD countries for each quantile of the log labour productivity distribution (e.g. p5=p5_EGY/p5_OECD). Labour productivity is defined as value added per worker. A value lower than 1 indicates that the labour productivity level in the x quantile of the distribution is lower in Egypt than in the OECD. Firms with one worker are excluded in Egypt, both formal and informal firms are included. Top-half productive industries include electrical equipment, pharmaceutical products, chemicals products, transportation and equipment, machinery and equipment and computers; bottom-half productive industries include rubber and plastic products, food products, textile, basic metals, wood and papers and furniture and other manufacturing. When excluding informal firms, the ranking of industries in terms of productivity remains qualitatively consistent. OECD countries include Belgium, Canada, Croatia, Estonia, Finland, France, Hungary, Italy, Lithuania, Portugal, Slovenia and Spain. The reference year for OECD countries is 2022, except for Croatia and Italy (2019) and Estonia (2021) (see Annex A). For Egypt, the data come from the Egyptian Economic Census 2022/2023.
Source: OECD (n.d.[7]), MultiProd V2 (database), https://www.oecd.org/en/about/projects/multifactor-productivity.html.
Moreover, evidence from the Economic Census 2022/2023 shows that leaders are concentrated in the Greater Cairo region and are more likely to be older (see Figure 2.19). Moreover, especially in top-half productive industries, leader firms employ a larger share of managers and educated workers, on average (see Figure 2.21).
Informality is tightly linked with low productivity in Egypt. First, informal businesses were concentrated in micro firms (fewer than ten workers) and were on average less productive than formal firms (within the same size class) in 2022/23 (see Annex Table C.1). Second, manufacturing industries with the highest productivity also had higher shares of formal establishments (this is particularly true for Pharmaceutical (ISIC Rev.4 Division 21) and Computer (26) where all establishments were formal in 2022/23, Figure 2.16).10 Third, leaders were more likely to be formal enterprises, especially in top-half productive industries (Figure 2.20).
Addressing informality is crucial, as it is not only linked to firm growth and competition but also to living standards. In 2023, the average monthly wage of Egyptian informal workers was around only 63% of the wage of formal workers in the manufacturing sector (see Figure 2.23).
Apart from informality, other main challenges faced by Egyptian manufacturing firms include, among others, difficulties in accessing finance and tax rates (Figure 2.24). According to the 2020 World Bank Enterprise Surveys – the latest available wave for Egypt – access to finance was a challenge particularly for Egyptian manufacturing firms (12%) compared to those in services (6%), consistent with evidence for Middle East and North Africa (MENA) countries. Additionally, around 24% of manufacturing establishments reported tax rates as a major constraint for their operations, as opposed to 8% in the MENA region on average.
Recommendations to address existing productivity bottlenecks in the Egyptian manufacturing sector
This section is articulated around two recommendations (Table 1.1):
Recommendation 1: Promote knowledge diffusion and innovation in high-productive industries to foster productivity growth among laggards.
Recommendation 2: Increase productivity in low-productive industries by addressing informality, favouring the emergence of leading firms and leveraging knowledge spillovers from foreign firms.
Recommendation 1: Promote knowledge diffusion and innovation in high-productive industries to foster productivity growth among laggards
In top-half productive industries, leaders are highly productive and closer to OECD levels. Meanwhile, laggards are far away from the OECD benchmark. Thus, ensuring diffusion of knowledge, innovation and technology from leaders to the rest of the firms is key to helping laggards catch up with national leaders and their OECD counterparts. This is especially true for industries in which productivity dispersion is more pronounced and higher than in OECD (e.g. electrical equipment).
Policies carefully designed to ensure an adequate supply of skills (e.g. through training) and providing more favourable conditions for SME financing are key elements to foster diffusion of productivity (Berlingieri et al., 2020[6]). The Egyptian government can thus promote knowledge diffusion by considering action points elaborated below.
Action 1.1 (short- to medium-term): Evaluate the vocational education and training (VET) system to ensure an adequate supply of skills
Policies that encourage training can be effective in equipping workers with relevant skills that are sought by firms (Berlingieri et al., 2020[6]) and Egypt can leverage the Technical and Vocational Education and Training Reform Programme (TVET Egypt) and the Productivity and Vocational Training Department (PVTD) to provide effective training to workers. In fact, OECD experience suggests that VET speeds up school-to-work transitions (OECD, 2023[8]; 2024[9]). This is important as most manufactured goods exported in Egypt are intensive in middle-skill tasks rather than high-skill tasks. Since new methods of production will require specific skills for middle-skill workers, shortcomings in education and skills can significantly affect the growth potential of the manufacturing sector (Aboushady and Zaki, 2021[10]). Stronger VET systems also increase firms’ absorption capacity by ensuring a steady pipeline of workers with the right skills, which helps firms adapt to technological change, adopt new processes and expand production.
As a first step, Egypt can evaluate and review existing initiatives that provide specialised skills, namely, TVET Egypt and the PVTD.11 The recently established Egyptian National Authority for Quality Assurance and Accreditation in Technical and Vocational Education and Training (ETQAAN) can lead in identifying educational gaps and ensuring training aligns with industry demands (e.g. sought-after skills).12 This could involve integrating tools like the OECD Skills for Jobs database to assess skill shortages and establishing a robust review system with inputs from stakeholders such as MoIND, the Ministries of Education (MoE), of Communications and Information Technology (MCIT), of Labour (MOL), and the Micro, Small and Medium Enterprises Development Agency (MSMEDA).13,14
After identifying gaps, Egypt can strengthen its TVET system. First, Egypt can improve the quality and practical relevance of existing programmes to better align with industry needs. Second, it can further foster international collaborations by establishing partnerships with schools in OECD countries for double degree programmes and providing internships with firms in developed countries.15 These initiatives can help the workforce acquire valuable knowledge and learn best practices from participating entities.
Additionally, Egypt could enhance the reputation of TVET systems to increase uptake and meet skill demand. This can be achieved by promoting programme quality, collaborating with OECD countries in offering in-demand training and regularly monitoring and updating TVET Egypt offerings to ensure relevance and effectiveness.
Action 1.2 (short-to medium-term): Review the definition of SMEs to better target financial initiatives
Favourable financing for SMEs is also a tool to increase diffusion, particularly for firms that have the potential to grow but are constrained by financial barriers (Berlingieri et al., 2020[6]). The Central Bank of Egypt (CBE) has implemented several initiatives to increase access to finance among SMEs.16 However, the definition of SMEs for policy targeting was based only on the firm’s revenue, rather than both revenue and employment.17 This implies that the CBE definition of SMEs also captures some large (and low‑productive) firms when defining SMEs by employment in the Economic Census 2022/2023 (see OECD Business Dynamics Review of Egypt (2026[11])).
To better target existing policies, Egypt could review the current definition of SMEs to align with international best practices. Egypt may consider accounting both revenue and employment in the definition of SMEs, following international practices.18 While the Micro, Small and Medium Enterprises (MSMEs) Development Law No. 152 of 2020 established a unified definition for MSMEs in Egypt and harmonised different definitions used by public institutions, such definition only uses revenue and capital, but not employment (see OECD Business Dynamics Review of Egypt (2026[11]) for more details). 19,20
Apart from redefining the definition of SMEs, in the shorter term, the Egyptian government could raise awareness of currently available incentives for firms and evaluate their effectiveness. In fact, Egypt already has numerous ongoing initiatives to improve financing conditions for SMEs.21 Increasing knowledge among firms of available governmental and non-governmental initiatives may improve the number of beneficiaries (see Recommendation 12).22 Egypt should also regularly evaluate these policies (see Recommendation 11) and ensure that resources are being effectively directed toward smaller and more financially constrained businesses.
Recommendation 2: Increase productivity in low‑productive industries by addressing informality, favouring the emergence of leading firms and leveraging knowledge spillovers from foreign firms
Bottom-half productive manufacturing industries are characterised by a higher share of informal, smaller and low-productivity firms across the productivity distribution. The concerned industries, however, contribute to the most employment (86%) and value added (73%) in Egypt’s manufacturing sector and are key to sustaining job creation. In such industries, SMEs (10-249 workers) are lower in their contribution to employment, which is instead concentrated in micro (fewer than 10) and large (250 or more) firms, more than in OECD countries (see OECD Business Dynamics Review of Egypt (2026[11])).
To support the emergence of productive firms in low‑productive industries, Egypt may focus on addressing the high share of informality in those industries, which may limit firms’ scaling up and realising efficiency improvements.
At the same time, in these low-productivity industries, Egypt can favour the emergence of leading firms. Some of these industries can even better leverage connections with foreign firms and benefit from knowledge spillovers.
Action 2.1 (short- to medium-term): Reduce informality by raising awareness of current formalisation incentives and by developing sectoral and regional policies
Egypt has implemented and designed several policies to incentivise formalisation and it should continue and further strengthen current efforts. The 2020 MSMEs Development Law provides temporary five-year licences to informal enterprises that are applying for formalisation, which in turn grant them a range of benefits, including exemptions from the payment of, among other things, stamp duties, notarisation fees and any fees required for the registration of the land for informal firms applying to formalise their situation. During the licence period, lawsuits and penalties against informal enterprises are also placed on hold. Additionally, a more recent law (19/2023) grants the Industrial Development Authority the possibility of delivering temporary three-year operating permits to unlicenced industrial firms if they commit to adhering to environmental requirements, civil procedures and related inspections (OECD, 2024[9]). These two measures aim at reducing firms’ cost of becoming formal and remaining formal. Finally, the CBE Financial Inclusion Strategy (2022-2025) facilitates MSMEs and young firms’ access to financial services, which can enhance the benefit of formalisation and encourage integration into the formal sector.23
Egypt should continue its current efforts to reduce informality, fully implement all new measures and raise awareness among firms on current available incentives (provided by the MSMEDA, the Ministry of Finance and other agencies). This could go hand in hand with raising awareness campaign on the benefit of formalisation (such as having access to finance, incentives, etc.), to help businesses and workers understand the benefit of complying with registrations and labour and tax obligations (see, for example, Argentina’s 2013 strategy within the Integrated Plan to Reduce Non-registered Employment (ILO, 2014[12])).24
Furthermore, Egypt could devote resources to address regional disparities by specifically targeting governorates with high informality and low productivity to ensure inclusive growth. Policies could be devoted to attracting firms in these regions and investing in both physical (infrastructure) and human capital (labour skills) inputs.
The MSMEDA, in co‑operation with the International Labour Organization (ILO) is currently preparing a national strategy for the formalisation of the informal sector in Egypt. Project 5.5 of the OECD Egypt Country Programme will provide recommendations to support the National Strategy for Formalisation in Egypt.
Action 2.2 (short-to medium-term): Support the emergence of leading firms in low‑productive industries and leverage large anchor firms to create spillovers on local enterprises
Low‑productive industries need leader firms that are close to OECD leaders (Figure 1.2). Moreover, these industries are characterised by a large presence of micro firms: in fact, average employment is significantly lower than in OECD countries (Figure 2.14). This evidence suggests that firms do not scale up in those industries.
Egypt can further improve firm-level productivity. To support greater technology adoption, Egypt should continuously invest in improving the quality of digital infrastructure and digital skills (see Recommendation 7 and Chapter 4). Egypt should also ensure to build managerial skills as firms grow bigger. Indeed, only a few managers are employed by bottom-half productive industries as opposed to top‑half productive industries (see Chapter 2). Furthermore, Egypt should attract and retain skilled workers, by counting on return migration (e.g. Balik Scientist Program of the Philippines) for instance. Once these firms gain domestic competitiveness over time, Egypt could facilitate access to international markets (see Action 4.3). Ideally, Egypt should be able to identify firms with high growth potential, then scale them up.
In addition, Egypt can leverage the role of multinational enterprises to deepen the link between domestic and multinational firms. Evidence from other countries have shown that foreign direct investment (FDI) can enable the transfer of knowledge through interactions with international customers, suppliers and competitors (Crespi, Criscuolo and Haskel, 2008[13]) and can lead to an increase in the size and productivity of domestic firms (Alfaro-Ureña, Manelici and Vasquez, 2022[14]; OECD, 2019[15]). In Egypt, Food products and beverage (10-12), Metals (24-25) and Textiles and apparel (13-15) account for a non-negligible share of FDI within manufacturing (see the OECD FDI Qualities Review of Egypt (2025[16])).25 FDI in these sectors can thus be better leveraged to provide positive spillovers to local firms. This strategy could also be relevant for high-productive industries in Egypt.
A key Egyptian initiative in this direction is the National Suppliers Development Programme (NSDP), which links multinational companies (e.g. Nestlé Egypt) with local suppliers. Developed by the Industrial Modernisation Centre (IMC) in Egypt, the initiative assesses import needs, conducts gap analyses and provides support such as consultancy and certification to meet investor standards (OECD, 2025[16]). As suggested by the 2025 OECD FDI Qualities Review of Egypt, the IMC could expand this project and assist local producers in other key sectors. This could be particularly relevant for certain manufacturing industries, such as textiles, apparel and metals, which record high shares of FDI within the sector. Ultimately, this could lead to an increase in business productivity and size. Costa Rica’s Encadenados programme is a key example in this direction, serving as a strategic platform that facilitates connections and exchange of knowledge among local firms and multinationals.26
International trade is a key driver of productivity growth for its link with economies of scale and specialisation, as well as its impact on competition. Trade also exposes firms to new or better input varieties (Amiti and Konings, 2007[17]; Topalova and Khandelwal, 2011[18]; Halpern, Koren and Szeidl, 2015[19]), which positively contributes to productivity.27 Trade openness fosters productivity growth by encouraging competition in product markets. Fostering Egyptian manufacturing export growth is thus key to enhance productivity. Additionally, trade liberalisation has the potential to reduce informality by inducing a re‑allocation of resources towards more productive formal firms (Dix-Carneiro et al., 2024[20]).28
Fact 2: Egypt’s non-petroleum manufacturing sector has potential to further strengthen its export performance
The manufacturing sector – excluding coke and refined petroleum products – is a key contributor to Egypt’s total exports and the relevance of the sector has been steadily increasing over time. Non-petroleum manufacturing exports represented 27.5% of total Egyptian exports in 2010, increasing to 30.2% in 2022.29
Egypt’s share of world non-petroleum manufacturing exports (0.14% in 2022) is higher than that of Jordan (0.05%) and Tunisia (0.10%), but lags behind Morocco (0.23%) and United Arab Emirates (0.48%) (Figure 1.3, Panel A). Compared to Morocco, Egypt has not consistently gained market share over time. The share of Egyptian non-petroleum manufacturing exports declined between 2010 and 2015, then recovered, returning to its 2010 levels by 2018. Since then, Egypt’s share has remained relatively stagnant until 2022. In contrast, Morocco steadily increased its share of global manufacturing exports, rising from 0.15% in 2010 to 0.23% in 2022.
The growth of Egyptian manufacturing exports has also been moderate compared to selected MENA economies. Between 2010 and 2014, Egyptian manufacturing exports experienced a steady decline mainly attributable to the devaluation of the Egyptian pound (EGP) against the United States dollar (USD) and a challenging investment climate. High reliance on imports can explain why exports did not grow enough in Egypt after the devaluation of EGP against USD, as importer firms had to deal with higher prices (Zaki, Abdallah and Sami, 2019[21]). Gross exports started to increase again in 2017, reaching USD 15.7 billion in 2019, then decreased to USD 13.6 billion in 2020, reflecting unfavourable effects of the COVID-19 pandemic. By 2022, gross exports rose to USD 17.8 billion, reaching a growth of 37.3% with respect to 2010. Contrastingly, selected MENA economies experienced, on average, greater increases in manufacturing exports during the period (2010-22) compared to Egypt.
In more recent years, Egypt has shown progress. According to the latest estimates from CBE, non-oil merchandise exports grew from USD 20.7 billion in 2021/22 to USD 24.9 billion in 2024/25 (provisional estimates), marking a 20% increase (Figure 3.4, Panel A). Conversely, total merchandise exports fell from USD 38.7 billion in 2021/22 to USD 30.5 billion in 2024/25, a 21.1% decline. This drop reflects the contraction in oil exports – containing crude oil; oil products; bunker and jet fuel; and natural gas – which decreased from USD 18.0 billion to USD 5.6 billion over the same period.
Nevertheless, Egypt shows an untapped manufacturing export potential, as exports represent a lower share of manufacturing gross output compared to other MENA economies, peer countries and OECD countries (dark blue bars in Figure 1.3. Panel B).30 The ratio between exports and gross output for the non-petroleum manufacturing sector in Egypt was 14.8% in 2022. Other peer countries registered a higher ratio in 2022: the Philippines (22.2%), Jordan (32.5%), Türkiye (36.2%), South Africa (37.9%), Morocco (39.2%), Viet Nam (45.7%), Thailand (54.9%) and Tunisia (66.8%), with an average for OECD countries of 45.1%.
Note: Panel A shows the share of manufacturing exports to world manufacturing exports in Egypt, Jordan, Morocco, Tunisia and United Arab Emirates from 2010 to 2022. Panel B plots the share of exports and imports in the manufacturing sector over its gross output at basic prices across countries in 2022 by country. Manufacturing is the sum of all industries except Coke and refined petroleum products (19). The TiVA dataset is expressed in current USD. OECD is the unweighted average of all 38 OECD countries.
Source: Calculations based on OECD (n.d.[22]), Trade in value-added (TiVA) 2025 Edition (database), https://www.oecd.org/en/topics/sub-issues/trade-in-value-added.html.
Egyptian manufacturing sector exports have been highly reliant on Coke and refined petroleum products (19), but its relevance has reduced over time. Coke and refined petroleum products (19) fell from 21.1% of Egypt’s manufacturing exports in 2010 to 15.0% in 2022. In efforts to diversify manufacturing exports, MoIND launched its Industry and Trade Development Strategy 2016-2020. The strategy targeted an increase in Egyptian non-petroleum exports by identifying some key industries to further develop, namely engineering, chemical, textile and clothing, and building materials industries. Subsequently, MoIND is planning to implement its new Industrial Development Strategy 2026-2030 to position Egypt as a regional hub for sustainable and flexible manufacturing and international trade. The strategy aligns with the strategic shift in the growth model outlined in Egypt’s Narrative for Economic Development, which prioritises high-value, tradable and export-oriented activities (MPED, 2025[23]). As part of this vision, MoIND has identified 28 priority sectors to deepen domestic manufacturing, meet local demand and reduce reliance on imports. These targeted sectors span advanced manufacturing and green technologies (SIS, 2025[24]).31
Egyptian (non-petroleum) manufacturing exports are concentrated in four industries. In 2022, these industries together accounted for nearly 60% of total manufacturing exports: Chemical and chemical products (USD 5.42 billion, accounting for 25.9% in 2022), Textiles, apparel, leather and related products (USD 2.63 billion, 12.6%), Food products, beverages and tobacco products (USD 2.38 billion, 11.4%) and Basic metals (USD 2.02 billion, 9.7%).32 This contrasts with the composition in OECD countries, where Food products, beverages and tobacco products (accounting for 13.9% of manufacturing exports in 2022), Transport equipment (12.7%) and Basic metals (9.8%) account for a substantial share of manufacturing exports. Whereas the top industries in selected MENA economies were similar to that of Egypt’s, Chemicals and chemical products (15.8%), Textiles, wearing apparel, leather and related products (14.7%) and Food products, beverages and tobacco products (12.8%) take up a large share of manufacturing exports (see Figure 3.9).
Egypt’s top four industries in terms of exports – together with Other non-metallic mineral products (23) – already have established export strength and competitiveness in international markets, showing a revealed comparative advantage (RCA). The RCA indicates how strong a country is in exporting products in a particular industry compared to the rest of the world, which helps reveal where the strengths of an economy lie.33 Over the 2010-22 period, the five industries maintained their comparative advantage in the global market, indicating high persistency in Egypt’s export strength (see Figure 3.10).
Although Other non-metallic mineral products (23) and Basic metals (24) have a competitive edge as indicated by their RCA index, they are highly carbon-intensive industries that produce substantial amounts of carbon emissions. The OECD greenhouse gas (GHG) footprint indicators show that the basic metals industry (29.7% in 2020) is the largest contributors to GHG emissions embodied in Egypt’s manufacturing exports, followed by other non‑metallic mineral products (16.7%). Additionally, their carbon intensity (calculated as tonnes of carbon dioxide emissions per unit of export in USD) is significantly higher than OECD and slightly above the MENA averages (see Figure 3.13). The high carbon intensity of these industries may lead to trade restrictions, particularly with the European Union (EU), due to the Carbon Border Adjustment Mechanism (CBAM) – a recent EU policy to tackle the risk of carbon leakage in emissions-intensive trade-exposed sectors. Some products of basic metals and non-metallic mineral products – such as iron and steel products, cement, fertilisers, aluminium, electricity and hydrogen – will be affected by this policy (see Box 3.3). In response, Prime Ministerial Decree No. 2731 of 2024 established a Ministerial Committee headed by the Vice Prime Minister and Minister of Industry to steer the decarbonisation of the industrial sector and address CBAM-related matters.
Apart from the abovementioned industries, other manufacturing industries represent new opportunities for growth (top-right quadrant of Figure 1.4). While they have not yet developed a comparative advantage in production compared to the rest of the world – indicated by dark blue bubbles in Figure 1.4 – they have significantly expanded their exports over the 2010-22 period. Additionally, they have also largely increased their value added, which suggests a complementarity between domestic production and export growth. Examples of such industries include Computers, electronic and optical products (26), which posted the highest export growth, as well as Machinery and equipment n.e.c. (28), Pharmaceuticals, medicinal chemical and botanical products (21) and Rubber and plastic products (22). These industries represent promising opportunities in further developing export growth and gaining a competitive edge in the global market, particularly Computers, electronic and optical products (26) and Machinery and equipment n.e.c. (28) where the global demand is relatively high (see Figure 3.17).
Growth of gross exports and value added by (non-petroleum) manufacturing industry in Egypt, 2010-22
Note: The graph plots the log difference of exports (y-axis) and value added (x-axis) between 2010 and 2022. The size of the bubbles corresponds to the industry share of value added in manufacturing in Egypt in 2022. Both export and value added are at basic prices and expressed in nominal USD. The light blue bubbles are industries with RCA above 1, while the dark blue bubbles are industries with RCA below 1. The horizontal line is the median value of changes in exports, while the vertical line is the median value of changes in value added. The figure excludes Coke and refined petroleum products (19). The numbers listed in this figure correspond to: 10-12. Food products, beverages and tobacco; 13-15. Textiles, wearing apparel, leather and selected products; 16. Wood and products of wood and cork, except furniture; articles of straw and plaiting materials; 17-18. Paper and paper products; printing and reproduction of recorded media; 20. Chemicals and chemical products; 21. Basic pharmaceutical products and pharmaceutical preparations; 22. Rubber and plastic products; 23. Other non-metallic mineral products; 24. Basic metals; 25. Fabricated metal products, except machinery and equipment; 26. Computer, electronic and optical products; 27. Electrical equipment; 28. Machinery and equipment n.e.c.; 29-30 Transport equipment; 31-33. Furniture; other manufacturing; repair and installation of machinery and equipment.
Source: Calculations based on OECD (n.d.[22]), Trade in value-added (TiVA) 2025 Edition (database), https://www.oecd.org/en/topics/sub-issues/trade-in-value-added.html.
Finally, the global value chain (GVC) integration of the manufacturing sector is significantly lower than peer countries. In the 2010-22 period, both backward and forward linkages were lower than other MENA economies in most manufacturing industries (see Annex Figure D.5 and Annex Figure D.6). The foreign value added share of gross exports, which reflects “backward participation” in GVCs, hovered around 20% for the non-petroleum manufacturing sector in Egypt during the 2010-22 period. In 2022, this value was 17.7% for Egypt, lower than United Arab Emirates (52.3%), Morocco (40.5%), Tunisia (39.0%), Jordan (38.4%) and Türkiye (32.1%) (see Figure 3.18, Panel A). This indicates that Egypt’s manufacturing export production relies less on global production networks than peer economies.34 At the same time, this may suggest that domestic suppliers play a comparatively larger role in serving exporters, underscoring the importance of strengthening local linkages. Meanwhile, the share of domestic value added embodied in foreign final demand (“forward participation” in GVCs) was 20.4% in 2022. Egypt has a relatively low trade integration in the global supply chain compared to peer economies like Tunisia (71.7%), United Arab Emirates (56.9%), Morocco (52.3%), Türkiye (45.1%) and Jordan (41.2%) (see Figure 3.18, Panel B).35
Recommendations to foster industrial and trade development to unleash manufacturing growth potential
The overall success of Egyptian trade policies will depend not only on effective trade policies, but also on a comprehensive policy mix covering a wide range of enabling factors for firms’ exporting activities. This section is articulated around three main recommendations (Table 1.2):
Recommendation 3: Improve sectoral strategies to boost industrial exports.
Recommendation 4: Reduce tariff and non-tariff barriers to trade, support SME trade activity and help new businesses enter the international market.
Recommendation 5: Co‑ordinate trade and industrial policies.
Recommendation 3: Improve sectoral strategies to boost industrial exports
MoIND has already targeted some specific industries to unleash export growth in non-petroleum manufacturing industries. Future policies could benefit from the following actions, which aim to provide specific areas of intervention for each type of industry category (based on their export performance, RCA and value added growth). Policies may capitalise on new areas with high growth opportunities, while building on Egypt’s existing strengths.
Action 3.1 (short- to medium-term): Promote access to global markets for industries with potential for export growth
Egypt can prioritise export development efforts in emerging industries with potential for export growth. Relevant industries include Pharmaceuticals, medicinal chemical and botanical products (21), Rubber and plastic products (22), Computers, electronic and optical products (26) and Machinery and equipment n.e.c. (28). These industries have demonstrated simultaneous high growth in both value added and exports over the period 2010-22, but have yet to gain a comparative advantage compared to other countries in exporting such products. Particularly, Egypt’s computers industry has shown the highest growth of export, and global demand for products in this industry is high. These should be the top priority industries in the short and medium terms in improving export performance. However, it should be noted that some of these industries – the pharmaceutical industry in particular – are highly capital intensive, thus export growth may not necessarily translate into employment growth.
Action 3.2 (short- to medium-term): Design industrial policies to encourage productivity growth in industries with established competitiveness and increased exports
Food products, beverages and tobacco (10-12), Textiles, wearing apparel and leather (13-15), Chemicals and chemical products (20) and Other non-metallic mineral products (23) represented a sizable share of value added in Egypt’s manufacturing sector and have an established competitive edge in the global market due to their comparative advantage in producing products compared to the rest of the world. Over the 2010-22 period, they exhibited varying export growth (with Chemicals and chemical products (20) recording the highest growth) and relatively modest value added growth. Industries in this category will be important industries in the short term as a source of foreign currency and in increasing Egypt’s exports at the intensive margin (i.e. for firms that have already engaged in exporting activities). Well-designed industrial policies targeting these sectors will also be important to foster value added growth. Moreover, the Textiles, textile products, leather and footwear (13-15) industry is labour intensive. Consequently, its export development may also contribute to foster employment in that industry. The textiles industry also shows higher forward GVC linkages, but remain lower than in peer countries. Given that GVCs have proven to drive export growth in several fast-growing developing countries (IFC, 2020[25]), Egypt may consider continuously increasing forward linkages in industries with a competitive edge.
Action 3.3 (short- to medium-term): Facilitate decarbonisation of production processes in key industries to sustainably enhance export competitiveness
Other non-metallic mineral products (23) and Basic metals (24) have established competitiveness. Moreover, they represent a large share of Egyptian manufacturing exports and value added, but they produce substantial carbon emissions. In the long run, the ability to reduce emission intensity in Egypt will depend on the adoption of new production technologies to improve the production process. Decarbonisation of the aforementioned industries is thus pivotal in enhancing the competitiveness of Egypt’s industrial sector in the upcoming decade amid the global green transition. Some products of basic metals and non-metallic mineral products industries – specifically iron and steel products, aluminium, cement and fertilisers – will be affected by the CBAM. In December 2024, the Egyptian government has endorsed a National Action Plan for Decarbonization. This is an important consideration given that countries in the European Union are key trade partners.
Recommendation 4: Reduce tariff and non-tariff barriers to trade, support SME trade activity and help new businesses enter the international market
Action 4.1 (short-term): Reduce non-tariff barriers to trade by enhancing transparency and streamlining documentation rules and time to obtain import licenses
Non-tariff trade barriers remain high in Egypt compared to peer economies (see Chapter 3 and OECD (2024[9])). Barriers include stringent registration and documentation rules, alongside lengthy processing times to obtain an import licence. Specific product requirements also serve as a bottleneck, which largely hampers access to better inputs, and therefore hinders Egyptian firms’ export performance. The latter calls for interventions in reducing non-tariff barriers, including administrative and technical barriers.
Egypt could improve the transparency of non-tariff measures, and actively inform SMEs about compliance requirements. Egypt may also consider addressing administrative barriers to trade, by streamlining registration and documentation rules, as well as requirements to obtain an import licence. Recent development within the National Structural Reform Program mentions that Egypt’s Ministry of Trade is streamlining import licensing and prior-approval procedures for imports to enhance transparency and investor predictability (MPED, 2024[26]).
To advance this agenda, Egypt can build on recent initiatives. The Egyptian Customs Authority launched the Nafeza (window in Arabic) system as the national single window for foreign trade facilitation (ILO, 2022[27]). This window works as a one-stop shop for foreign trade, as it assigns a single point for the submission of all of the documents needed for import, export and transit of goods. Egypt should ensure that Nafeza is working effectively in automating customs administration, simplifying procedures and reducing clearance time.
Action 4.2 (short- to medium-term): Reduce tariffs on imports needed to export and adjust tariffs to align with environmental goals
Tariffs imposed on manufacturing products remain significantly high in Egypt compared to peer economies, despite a reduction over time (see Chapter 3). Tariffs should be lowered, particularly on imports needed to export, which can have positive effects on productivity (Martínez Zarzoso, Said and Zaki, 2021[28]). Otherwise, there are risks that the current tariff structure incentivises firms to import final goods rather than assembling them in Egypt.
The current tariff structure also presents challenges to the manufacturing sector to domestically produce green equipment that are crucial for the green transition. For example, the tariff imposed on raw materials required to produce solar water heaters in Egypt is higher than tariffs imposed on final goods (UNIDO, 2020[29]).36 Consequently, the difference in tariffs incentivises firms to import the final good, rather than build the domestic capacity to produce equipment that would help in the green transition (e.g. solar heating).
Another distortion in the current tariff schedule contributing towards plastic pollution, as tariffs for traditional plastic are lower than its greener alternatives. Tariffs for plastic materials and products are concentrated below 10%, while product substitutes range between 5% to 25% (UNCTAD, 2023[30]). This dissuades manufacturers from adopting more sustainable alternatives as inputs. On this front, the Ministry of Environment is preparing a new decree, to be issued by the Prime Minister in the first quarter of 2026. This could provide an important opportunity to adjust tariff incentives and better align them with Egypt’s environmental objectives.
Action 4.3 (short- to medium-term): Strengthen efforts to boost SME exports and facilitate the entry of new businesses into the export market
While initiatives to increase exports in Egypt exist, they have mostly favoured larger and already established firms. That is the case of the Export Rebate Program (ERP) that offers a cash transfer to exporting firms based on the volume of their sales (see Chapter 3 for more details), which implicitly favours larger exporting businesses (Alhelewa, 2020[31]).37 Similar to the ERP, other existing efforts in Egypt focus on boosting exports at the intensive margin (increasing exports for firms that are already engaged in exporting activities) rather than the extensive-margin (increasing the number of firms engaging in exporting activities). In this context, the MSMEDA has recently established a new export department within its structure with the aim to support SME competitiveness and exporting activities, which can help SMEs to boost their exports.38 On this front, Egypt can build momentum by expanding and better targeting the efforts undertaken by the relevant agencies.
Egypt could combine volume-based and SME-specific support policies. Other countries have been implementing export policies specifically aimed at small businesses (e.g. SME export promotion grants in Türkiye (OECD, 2016[32]) and the PROGER programme in Brazil (OECD, 2020[33])). Moreover, ensuring good export promotion policies may be effective in helping smaller (and new) firms alleviate their information-related impediments and deal with complexities in finding partners and exporting (Srhoj, Vitezić and Wagner, 2023[34]; Martincus and Carballo, 2010[35]). Export vouchers can also support SME export growth. For example, Korea introduced an export voucher programme to provide financial assistance to export-oriented SMEs.39 Enabling policies, such as lowering tariff and non-tariff barriers (see Actions 4.1 and 4.2), are also instrumental in encouraging SMEs to expand their exports and facilitating the entry of new exporting businesses.
Recommendation 5: Co‑ordinate trade and industrial policies
Action 5.1 (short- term): Strengthen institutional co‑ordination between trade and industrial policy
Trade policies can be an effective tool to boost industrial development, as long as trade and industrial policies are co‑ordinated (Zaki, 2021[36]). Improving co‑ordination is crucial to ensure both sets of policies are aligned and mutually reinforcing. Additionally, building a clear vision for Egyptian industrial policy along with the elimination of institutional deficiencies will help attract investments to the targeted sectors (Zaki, 2021[36]). With the recent ministerial changes and restructuring of the MTI, trade policies now fall under the Ministry of Investment and Foreign Trade, while industrial policies are under MoIND. It is therefore critical to ensure close co‑ordination between the two bodies and their respective policies. In this regard, it is beneficial to build on the momentum acquired by the weekly meetings held by the Ministerial Group for Industrial Development, headed by the Vice Prime Minister and comprising nearly twelve ministers alongside private-sector representatives, as an institutionalised platform for such coordination. One way to institutionalise such co‑ordination is by developing a whole-of-government industrial – and potentially export – strategy, which can align objectives, streamline interventions and ensure consistency across policy areas.
Innovation is a key driver of productivity growth. The effects of innovation on productivity are widely documented in both economic theory and empirics. In the long run, growth relies mainly on innovation (Romer, 1990[37]). Evidence for Egypt has shown that research and development (R&D) has a positive impact on innovation, and innovation in turn has a positive effect on productivity (El-Shala and Moustafa, 2014[38]). Additionally, R&D is a key factor that influences firms’ absorptive capacity, i.e. the ability of firms to recognise the value of new information and technologies, assimilate and exploit them commercially (Cohen and Levinthal, 1990[39]).
Fact 3: Egypt has increased R&D expenditures, and there are opportunities to expand inventive activities linked to intellectual property right (patents, trademarks, designs)
Egypt’s gross R&D expenditures – a measure of inventive input – is significantly lower than OECD countries but has increased over time, outperforming some peer economies. Egypt spent 0.5% of gross domestic product (GDP) on R&D in 2011 and reached 1.0% in 2023 (World Bank, 2025[40]). However, it still trails OECD R&D spending of 3.0% in 2022, the United Arab Emirates (1.5%), Türkiye (1.3%) and Thailand (1.2%), but it is higher than other peer economies (such as Tunisia 0.7%, South Africa 0.6% and Viet Nam 0.4%). Additional evidence from the OECD Review of Innovation Policies: Egypt (OECD, 2026[41]) shows that businesses expenditure on R&D is also significantly lower in Egypt (0.2% of GDP in 2022) than in some emerging economies and OECD countries (2% on average). Fostering firms’ R&D expenditure is key in boosting productivity. Evidence for Egypt shows that firms’ R&D has a positive impact on innovation, and innovation in turn has a positive effect on productivity (El-Shala and Moustafa, 2014[38]).
Other indicators of inventive activities linked to intellectual property rights (IPR) – namely rates of patenting, trademarks and designs – are lower compared to peer economies.40 Over the period 2012-22, Egypt registered a significantly lower number of patents compared to its peers (Figure 1.5, Panel A).41 The number of patents for Egypt as the applicant country has decreased in the more recent years, while countries like Morocco, Thailand, Tunisia and Türkiye have seen growth. Moreover, over the 2016-21 period, Egypt’s number of registered trademarks and designs was only respectively 8.7% and 12.4% of the MENA average.42 In the previous period (2010-15), the share of trademarks was 1.6 percentage points higher, suggesting that Egypt lost market share in the innovation landscape (in terms of trademarks) within the MENA region over time. Meanwhile, the share of designs was 5.8% higher during the 2016-20 period compared to 2010-15, reflecting improvements in Egypt’s performance in terms of designs within the MENA region. Among the selected peer economies, Jordan and Türkiye are currently leading in the number of trademarks, while South Africa and Türkiye are leading in designs (Figure 1.5, Panels B and C).
Number of total patents, trademarks and designs by applicant country per 100 000 inhabitants
Note: Panel A shows the total number of patents for periods 2012-16 and 2017-22 in IP5 patent families (i.e. patents protected in at least two IP offices worldwide, one of which within the five IP offices (IP5), namely the European Patent Office [EPO], Japan Patent Office [JPO], United States Patent and Trademark Office [USPTO], Korean Intellectual Property Office [KIPO] and China National Intellectual Property Administration [CNIPA]), priority date, by applicant country. Panel B shows the total number of registered trademarks for periods 2010-15 and 2016-21 in at least one of the three covered offices (EUIPO, JPO or USPTO), by date of filing and applicant location, using fractional counts. Panel C shows the total number of registered designs for periods 2010-15 and 2016-21 in at least one of the three covered offices (EUIPO, JPO or USPTO), by date of filing and applicant location, using fractional counts. The number of patents, trademarks and designs are per 100 000 inhabitants. For USPTO, data refer to design patents.
Source: Calculations based on OECD (n.d.[42]), Patents in OECD Selected Technologies (dataset), https://data-explorer.oecd.org/vis?tm=patent&pg=0&hc[Measure]=&snb=36&vw=tb&df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_PATENTS%40DF_PATENTS_OECDSPECIFIC&df[ag]=OECD.STI.PIE&df[vs]=1.0&dq=9P50_3.A...PRIORITY...INVENTOR%2BAPPLICANT..._T&pd=2010%2C&to[TIME_PERIOD]=false&lb=nm&ly[rw]=TIME_PERIOD%2CAGENT_ROLE%2CREF_AREA; OECD (n.d.[43]), Intellectual Property Statistics (database), http://oe.cd/ipstats; World Bank (n.d.[44]), Population, Total - World (dataset), https://data.worldbank.org/indicator/SP.POP.TOTL?locations=1W.
An intellectual property (IP) framework is important as it shapes how innovation is protected, commercialised and incentivised.43 A report from INVESTMED (2023[45]) identifies several areas where Egypt’s IPR framework offers opportunities for further strengthening (see Chapter 4 and Table 4.1). First, the Egyptian IPR framework is complex and multi-layered, and could benefit from greater policy coherence across various IPR-related policies and initiatives. Second, the presence of scattered and separate IPR offices in Egypt creates scope to enhance coordination and integration. Third, many entrepreneurs would benefit from additional guidance and awareness-raising activities on IPR protection, which could further support their ability to access and use the available IP services. In this regard, a new Supreme Council for IPR was established in late-2025 to synchronise IPR laws and regulations, improve coherence across IPR-related policies and initiatives, and oversee the previously fragmented IPR offices. The Council is expected to enhance the effectiveness of IPR administration and support better outreach and guidance to entrepreneurs, thereby improving their understanding of and access to IP protection.
Finally, the number of young firms can also be indicative of a country’s innovation landscape. In both developed and emerging economies, they can bring innovation to the market, contribute to job creation and increase productivity. In the Egyptian manufacturing sector, young firms (aged 0-2) represent a higher share of firms and employment compared to OECD countries.44 However, the economic census reveals that around 70% of Egyptian young firms in the manufacturing sector in 2022/23 originated from the informal sector, which may limit their ability to innovate and adopt more advanced technologies.45 Given the nature of young informal firms, they face structural and operational challenges due to limited access to finance and public incentives, which are supposed to help them innovate and scale up.
Recommendations to promote innovation and stimulate productivity growth in the manufacturing sector
This section is articulated around three recommendations (Table 1.3):
Recommendation 6: Increase firms’ R&D expenditures.
Recommendation 7: Create an enabling environment for innovation.
Recommendation 8: Support firm entry and young innovative firms (start-ups) in manufacturing industries.
The recommendations in this section provide general policy advice tailored to the manufacturing sector (see the OECD Review of Innovation Policies: Egypt for more details of effective innovation policy (OECD, 2026[41])).
Recommendation 6: Increase firms’ R&D expenditures
Action 6.1 (short- to medium-term): Provide support to businesses to invest in R&D, incentivise collaborative R&D projects and increase the supply of researchers
While R&D is an important driver of innovation and economic growth, the existence of knowledge spillovers and financing difficulties may induce firms to invest less in R&D than what would be optimal (OECD, 2020[46]). For this reason, several OECD countries and partner economies governments are making use of direct and indirect support measures in the form of subsidies and tax credits respectively. These two incentives have found to positively stimulate firms’ R&D expenditures – and more generally innovative activity – across OECD countries (OECD, 2020[46]) and middle-income economies (Zuniga, 2023[47]) (see Chapter 4 for more details).46 Moreover, the effectiveness of R&D support policies in encouraging additional business R&D investments has proven to be larger for SMEs than for large firms in both OECD and middle-income economies.
While some initiatives already exist, targeting increase in R&D expenditure, Egypt can devote more attention to it, especially in fostering firms’ R&D activity. To this aim, Egypt can benefit from following other countries’ practices and fostering the use of tax credits and/or direct R&D subsidies, as well as further incentivising collaborative R&D projects with industry, academia and research institutions (see Chapter 4 for more details).47
Importantly, increasing R&D expenditures also requires expanding the supply of human capital needed to carry out research (Bloom, Van Reenen and Williams, 2019[48]). In the short run, such policies could take the form of tax incentives to hire research personnel or social contribution reduction. In the longer run, improving educational institutions will be essential. Policies aimed at increasing the supply of science, technology, engineering and mathematics (STEM) graduates are thus key complementary R&D and innovation policy.
Recommendation 7: Create an enabling environment for innovation
Action 7.1 (short-term): Improve policy coordination to support IPR protection
Egypt may consider providing co‑ordinated and consistent policies in supporting IPR protection and registration. This includes addressing institutional fragmentation of IPR offices within the country, improving data integration, enhancing co‑ordination among IPR offices and simplifying access to centralised information. While the National Intellectual Property Strategy (2022-27) helps address some of the existing gaps in the current IPR system, the government can further improve the strategy by developing clearer and more transparent guidelines for firms to follow in navigating and accessing IPR processes. 48 Additionally, it is important to evaluate the required number of staff in the IPR offices to effectively implement the IP strategy (see Chapter 4 for further discussions).
Furthermore, Egypt can make the IP framework more inclusive by specifying policies targeted towards SMEs and young firms. For example, policies can provide financial assistance to qualified SMEs and young firms to obtain IP protection. In this regard, the MSMEs Development Law No. 152 of 2020 stipulates that innovative projects are exempt from IP fees as part of non-tax incentives. Such policies are likely to ease the burden of smaller firms, given the high costs a firm may incur when registering inventions. Alternatively, Egypt can also provide non-financial assistance, for instance by providing guidance to MSMEs in understanding the IP framework. The MSMEDA can have a leading role in this.
Action 7.2 (short- to medium-term): Improve enabling infrastructure for innovation by enhancing the quality of digital infrastructure and improving energy efficiency
Innovation relies heavily on the availability of high-quality digital infrastructure and efficient electricity production, which enable firms to adopt advanced technologies.
Digital infrastructure has recently improved in Egypt – thanks to the ongoing digital initiatives of the Egyptian government – but Internet speeds can be further improved, particularly in mobile connection.49 In 2025, the median Internet speed of fixed broadband (91.6 megabits per second, or Mbps) was faster than the MENA average (Jordan, Morocco, Tunisia and Türkiye) of 85.0 Mbps, but still much lower than the OECD average (189.1 Mbps). The speed of mobile connection (46.2 Mbps), instead, is substantially lower than its peer economies, and it is roughly 2.5 times slower than the OECD average (see Figure 4.6).50
To increase the quality of digital infrastructure, Egypt could aim to reach the MENA average for median mobile connection speed (75.8 Mbps) in the shorter term and narrow the gap with the OECD average for fixed broadband (189.1 Mbps) in the medium term. Moreover, Egypt should focus on narrowing the gap in digital connectivity between urban and rural areas.51
Additionally, Egypt has scope to further improve energy efficiency amid increasing temperatures resulting from climate change and increasing consumption rates (IEA, 2022[49]; 2023[50]). While technology advancements can lead to higher energy efficiency (Shabalov et al., 2021[51]; Villanthenkodath and Pal, 2024[52]; Zaghdoud, 2024[53]), it can also increase energy consumption in the short run (Jin, Duan and Tang, 2018[54]). Consequently, enhancing energy efficiency is at the core of pursuing sustainable development, particularly in developing countries where economic growth is strongly correlated to higher energy consumption (Zaghdoud, 2024[53]). At the same time, improving energy efficiency goes hand in hand with diversifying the energy mix towards cleaner sources. In this front, the Egyptian government is actively implementing the Integrated Sustainable Energy Strategy 2035, which aims to increase the share of renewable energy to 42% of the country’s electricity production by 2035, while also enhancing energy sector efficiency (Egypt Energy, 2022[55]).
Recommendation 8: Support firm entry and young innovative firms (start-ups) in manufacturing industries
Action 8.1 (short- to medium-term): Support innovative young firms and assess the presence of barriers to entry in manufacturing industries
Having a business environment that supports young firms is critical for Egypt’s economic growth and international competitiveness. The national government can strongly consider policies that would position Egypt as an attractive hub for young firms with a friendly investment climate, particularly in light of the increasing competition from other countries in the region vying to attract start-ups.52
Apart from providing policies to support all young firms, Egypt can also specifically target the most innovative ones that are more likely to grow (start-ups). In this regard, the MSMEDA has already introduced some measures specifically for innovative enterprises which have been operating for fewer than seven years. Additional criteria to target support – following other country practices (Audretsch et al., 2020[56]) – could be based on innovation indicators (e.g. share of investments in R&D, registration of patents, worker’s high level of education) or upon verification of self-declarations (e.g. possession of IPR certificates).53 Relevant policies could entail simplification of laws and regulations, reduction of the cost of incorporation, and tax incentives.
A recent Egyptian Prime Ministerial Decree (No. 2878 of 2024) established the Ministerial Group for Entrepreneurship in September 2024 – chaired by the MPED – as an effort to support the startup ecosystem across multiple fronts. These include enhancing the regulatory environment, easing access to markets, coordinating government efforts, improving access to finance, retaining talent, reducing brain drain and expanding into global markets (OECD, 2026[11]; MPED, 2024[26]). More generally, MPED has made significant strides in fostering a robust innovation and entrepreneurship ecosystem in Egypt, such as the establishment of the Orange Corners Egypt programme, the Egypt Entrepreneurship and Innovation Center (EEIC) and Egypt Ventures (see MPED (2024[26]) and Chapter 4 for more information).
Fact 4: Egypt has an untapped potential to adopt a more co‑ordinated approach to productivity research and to further develop the monitoring and evaluation of policies
In recent years, several pro-productivity policies have been implemented or planned in Egypt, especially targeting the manufacturing sector. The 2021 National Structural Reform Programme contains a large set of initiatives aimed at influencing both external (such as improving the business environment and competition) and internal (such as developing human capital) factors to the firms, which can positively influence productivity. MoIND has had a key role in defining industrial and trade policies, aiming to diversify the productivity structure of the economy (in terms of exports, value added and labour) by leveraging high‑potential export and value added growth manufacturing industries. Several other agencies are also involved in defining pro-productivity polices, including the CBE, the MCIT, the Ministry of Foreign Trade and Investment, and the MSMEDA. This policy landscape has been further strengthened by the launch of Egypt’s National Economic Development Narrative in September 2025, which sets out a comprehensive economic model centred on macroeconomic stability, structural transformation and a strategic shift toward high-productivity tradable sectors.
However, more policies could be properly evaluated to produce evidence that can support policy making. While some initiatives already exist, such as the Information and Decision Support Center (IDSC) and Ministry of Planning and Economic Development (MPED) Egypt Impact Lab in 2022, more efforts need to be put into strengthening evaluation of policies. Currently, Egypt needs a co‑ordinating institution to conduct or steer productivity analysis, and able to advise policy makers in pursuing productivity growth. In this context, Egypt can leverage the recent inclusion of the Minister of Higher Education and Scientific Research in the High-Level Ministerial Group for Industrial Development – which meets on a weekly basis – to foster stronger synergies between applied research and industrial initiatives, thereby supporting more co-ordinated productivity-enhancing policymaking.
Recommendations to improve the design and evaluation of pro-productivity policies
Pro-productivity policies in Egypt can benefit from following a more comprehensive approach, stronger co‑ordination among institutions, enhanced policy clarity, monitoring, evaluation and transparency. The section outlines four recommendations (Table 1.4) to help Egypt achieve these objectives:
Recommendation 9: Co‑ordinate pro-productivity research in a dedicated institution.
Recommendation 10: Improve the design of productivity-enhancing strategies.
Recommendation 11: Strengthen the monitoring and evaluation of policies.
Recommendation 12: Raise awareness of available incentives.
Recommendation 9: Co‑ordinate pro-productivity research in a dedicated institution
A dedicated institution can monitor productivity trends and examine productivity drivers, providing evidence-based policy advice to policy makers. Across OECD countries, such institutions are usually in the form of expert councils within the president’s or prime minister’s office, or as stand-alone commissions with evaluation responsibilities (see Cavassini et al. (2022[57]) and Chapter 5). The general role of pro‑productivity institutions in OECD countries is to monitor trends, evaluate policies and promote improvements related to productivity and competitiveness and disseminate the results to the public (in the form of annual reports, policy bulletins and dashboard). Following a recommendation of the European Council in September 2016, a growing number of EU countries have started to establish such institutions (Pilat, 2023[58]).54
Action 9.1 (short-term): Assess existing initiatives to identify a suitable institution to co‑ordinate pro-productivity research
MoIND could review existing institutions and discuss with relevant stakeholders where to co‑ordinate productivity efforts. Egypt could first assess existing initiatives that could be suitable for such purpose and determine whether there would be a need to create a new one. Similar to OECD countries, such an institution could regularly examine productivity trends, productivity drivers and bottlenecks to productivity growth, with the goal of formulating effective policies. The aim would be to track total economy trends, in addition to manufacturing industry, sectoral and regional breakdowns. Such co‑ordination efforts would require close collaboration with key stakeholders to access relevant macrodata and microdata, such as the Central Agency for Public Mobilization and Statistics (CAPMAS), the CBE, the General Organization for Export and Import Control (GOEIC), the Productivity and Vocational Training Department (PVTD) and the MSMEDA. Additionally, the designated pro-productivity institution can also collaborate with academics and economic experts to conduct analytical work. Importantly, the effectiveness of the institution requires high-level government commitment. Ultimately, these synchronised efforts would be coupled with MoIND, Industrial Development Authority (IDA) and Egypt’s Industrial Digital Platform, in line with directive issued by H.E. the Prime Minister for Industrial Development in early-2026.
Recommendation 10: Improve the design of productivity-enhancing strategies
Action 10.1 (short-term): Adopt a framework to help design productivity-enhancing strategies
Based on the work of Criscuolo et al. (2022[59]), the OECD recommends adopting a productivity-enhancing policy framework that can help the Egyptian government design productivity-enhancing strategies. The framework, as discussed in Chapter 5, provides a clear discussion of the factors affecting productivity growth and the policy instruments available to policy makers to influence those factors.
Aggregate productivity growth results from a combination of three factors: i) firms increasing their productivity (within-firm enhancement); ii) the speed of diffusion of innovation from the top-half productive firms to the rest of the economy; and iii) the re-allocation of resources from the least to the most productive firms (between-firms enhancement). Both internal factors to the firms (e.g. human capital, innovation, digitalisation, informality) and external ones (e.g. competition, quality of institutions, trade openness) influence these enhancements. Policy makers can use various instruments – either broad (horizontal) or targeted – to directly affect firm performance (within instruments) or affect industry dynamics (between instruments).
A combination of articulated and consistent policy instruments to reach a specific goal serve to define a strategy, which can be directed to targeting firms in specific sectors (sectoral strategies), addressing well‑defined societal challenges (mission-oriented), promoting innovation, diffusion and productivity (technology-focused) or addressing regional disparities of economic activity (place-based).
Finally, effective governance is a key element for successful policy interventions. Co‑ordination of stakeholders in the business sector, public sector and research institutions is crucial to fostering an environment that supports research and evaluation in the context of pro-productivity policies. Good governance and transparency promote the success and inclusiveness of policies through effective design, implementation and evaluation processes (Criscuolo et al., 2022[59]; OECD, 2025[60]).
Action 10.2 (short-term): Use clear and measurable indicators when designing productivity-enhancing strategies
For effective monitoring and implementation of productivity-enhancing strategies, specific goals need to be set. This can be achieved by setting quantifiable objectives that are specific, measurable, ambitious, realistic and time-bound (SMART) (see OECD (2025[60])). Even though the strategy itself can have a broad scope, objectives should be specific, and main indicators and sub‑indicators should be measurable. Ambitious objectives could promote the government’s work and inspire stakeholders to co‑operate to achieve them. However, objectives should also be realistic. If the objectives are overly ambitious, they could be discouraging. Finally, while the strategy may be aiming for a long-term vision, it can be useful to include short-term objectives (time-bound). Quantitative objectives should be detailed in public documents of government strategies to enhance transparency. Having quantitative indicators in a strategy can also be key to initiate a data and evaluation culture, which can be used throughout the policy cycle (see Recommendation 11).
MoIND could better define and use a set of clear indicators to identify and monitor its strategy’s objectives. Moreover, the ministry may consider reducing the number of objectives to prioritise the more pressing ones that could be more realistically achieved within the timeframe of its strategy. Indicators may include, among others, productivity indicators (i.e. labour productivity growth), exports/import growth, GVC participation, job creation, RCA, innovation activities (e.g. R&D, patents, trademarks, design) and green indicators (e.g. GHG emissions). Tracking these indicators over time, and potentially in comparison with peer and more advanced economies, could allow MoIND to identify priority areas (strategy preparation). This may entail, for example, identifying the industries and governorates that the ministry would like to mostly focus on. Moreover, having set quantitative indicators also help better track performance and achievements of selected objectives over time (strategy monitoring and evaluation, see Recommendation 11).
Recommendation 11: Strengthen the monitoring and evaluation of policies
Egypt can strengthen its monitoring and evaluation of policies. A crucial pre-condition for effective policy evaluations is investment in improvements in data capacity, particularly in the quality of firm-level data (see Recommendations 12-16 on enhancing Egyptian data capacity), IT infrastructure, and skills (e.g. ICT, statistics, economics, econometrics). Egypt could also leverage technical skills from external resources by collaborating with academia, research centres and think tanks to achieve high-quality analysis and impartial evaluations that can support evidence-based policy making.
Action 11.1 (short-term): Regularly track the progress of strategy indicators
MoIND and other stakeholders could regularly publish key performance indicators that track progress of productivity-enhancing strategies to monitor achievements of defined goals (see Action 10.2). This could take the form of regular reports or other syntheses of key indicators such as dashboards. Progress tracking could also take the form of client response satisfaction to the programmes to support continuous improvement in the programmes.
Action 11.2 (short- to medium-term): Ensure the evaluation of existing business incentives
Egypt could strengthen the evaluation of available business incentives. This could be done by leveraging existing initiatives, for example the Egypt Impact Lab, and/or by developing internal capacity to evaluate policies. For trade-specific policies, Egypt can leverage the United Nations Industrial Development Organization (UNIDO) Policy Support Unit.55
Among others, Egypt may want to focus its evaluation efforts specifically on incentives that facilitate business formalisation, improve access to finance, support export promotion and alleviate firms’ tax burden through tax and non-tax measures. Institutions that should make greater use of policy evaluation could include the CBE, MCIT, Ministry of Finance, MoIND and MSMEDA.
Recommendation 12: Raise awareness of available incentives and related technical services
Action 12.1 (Short-term): Improve awareness of available incentives through workshops, webinars or online tools
While several pro-productivity incentives exist in Egypt, firms are often unaware of available incentives. This may be due to the existence of multiple actors, as well as the high number of policies.
Awareness promotion campaigns can thus help firms navigate the wide array of incentives. Several countries have strengthened their awareness promotions, via workshops or webinars. For example, government agencies provided online tools to help firms identify available programmes (see Chapter 5 for examples: Innovation, Science and Economic Development Canada and the Italian government platform for incentives).56
MoIND, and other Egyptian institutions can invest in raising awareness of current available incentives and related technical assistance services to firms via webinars, workshops or in the form of online tools. For example, the new Egypt’s Digital Industrial Platform recently developed by the MoIND could incorporate information on the list of available incentives to industrial firms.57 In addition, the Industrial Modernisation Centre (IMC), through its “Productivity Enhancement Program” can continuously offer specialised technical services that help industrial enterprises increase their productivity and comply with international requirements and quality standards.58
Fact 5: Egypt has many business data sources, and there are opportunities to strengthen them to better support productivity analysis
Egypt has rich firm-level data to study productivity. Building on this strong foundation, Egypt can further enhance its analytical potential by improving key elements for productivity analysis. The main takeaways are presented in this section (see Chapter 6 for a detailed discussion of strengths and limitations of available microdata in Egypt). First, having a full panel dimension in the Egyptian Economic Census can address one of the main limitations for productivity analysis, enabling within-firm productivity growth examination. Second, administrative data (i.e. business and tax records and social security data), which in other countries are used to provide timely productivity indicators, could be further exploited in Egypt for statistical and analytical purposes. Finally, greater integration across different data sources supported by the development of a unique unit-identifier across datasets and the development of a statistical business register (SBR) would further enhance the analytical potential of Egypt. The government is aware of current data limitations and is committed to enhance data quality for a more effective evidence-based policy making. Ongoing efforts are outlined below and discussed further in Chapter 6.
Recommendations to improve Egyptian data quality to better monitor productivity and support evidence-based policy making
Recommendations to strengthen Egypt’s data capacity are organised into five key areas (Table 1.5):
Recommendation 13: Enhance the quality and use of administrative data.
Recommendation 14: Create an SBR at CAPMAS.
Recommendation 15: Integrate different data sources to enhance productivity analysis.
Recommendation 16: Upgrade the quality of the Egyptian Economic Census.
Recommendation 17: Improve access to microdata to leverage technical skills from external experts.
While Recommendations 13, 15, 16 and 17 can be implemented in parallel, the success of Recommendation 14 depends on the effective implementation of Recommendation 13.
To implement the following recommendations, Egypt could also leverage expertise from developed and peer economies that have already achieved a comprehensive data infrastructure. Egypt could also benefit from international guidelines on constructing an SBR (UN, 2024[61]; UNECE, 2018[62]; Eurostat, 2021[63]) and reaching a unique business identifier (World Bank, 2016[64]).
Alongside microdata improvements, Egypt could pursue improvements in aggregate data (mainly national accounts) to measure output, labour and capital to calculate productivity at the total economy and sectoral levels. Discussions about these improvements are outside the scope of this report. Nonetheless, data enhancements are key to ensure Egypt aligns with the methodologies used in the OECD productivity database, which is used to compile the OECD productivity compendium (OECD, 2024[65]).59
Recommendation 13: Enhance the quality and use of administrative data
Improving the quality of administrative data sources is not only key in producing an SBR, but also enhancing the compilation of national accounts and the collection of the Egyptian Economic Census. Several countries are using value added tax and income tax records to improve the timeliness, coverage and quality of national accounts data (IMF, 2018[66]). Moreover, some countries are also switching to a registry-based approach for the compilation of their censuses (UN, 2024[61]). This approach partially reduces the costs of data collection and can potentially increase data frequency. Tax data are also key to obtain firm-level information on balance sheet and income statements, which are key for productivity analysis.
Action 13.1 (short- to medium-term): Develop a consistent business identification system to enhance data linkages
Different administrative data use different business identifiers for both companies and their branches, limiting data integration. While the tax number is chosen as the national identifier for companies, not all public institutions are using it. Moreover, there is not a defined unique number for branches in Egypt. Regarding the latter, the Commercial Registry has recently completed the creation of an identification number for firms’ branches, and its quality and adoption by other institutions should be assessed.
To address this challenge, the Egyptian government has recently decided to define a unique business identifier (UBI), to be used across all administrations. Because the tax number does not cover the universe of businesses, the UBI will be created ex-novo to ensure full applicability among all businesses (as in the case of Morocco presented in Box 6.1). Egypt should develop this national business identification system covering both companies (legal units) and their branches (local units) and ensure that these numbers are used by all public Egyptian institutions (see also OECD Business Dynamics Review of Egypt (2026[11]) for further recommendations on this and for peer country examples).
Action 13.2 (short- to medium-term): Prioritise efforts to achieve common classifications and standards in administrative data
Egypt could ensure that all administrative data sources adhere to a consistent classification for industries and governorates. Ideally, the industry classification should align to the most updated international classification (currently ISIC Rev.4) to facilitate cross-country comparisons. For governorates, Egypt could define a unified classification for governorates to be followed by all public administrations. This harmonisation concerns all public entities collecting data on businesses, including administrative and statistical data (see OECD Business Dynamics Review of Egypt (2026[11]) for further development on this aspect).
Action 13.3 (short- to medium-term): Facilitate the sharing of administrative data with CAPMAS for statistical purposes
To construct an SBR, CAPMAS should access several administrative data from a multitude of public entities. Relevant data include firms’ registration (from the Financial Regulatory Authority, the General Authority for Investment and Free Zones, the Suez Canal Economic Zone and the Commercial Registry), tax records (from the Egyptian Tax Authority), export and import registers (from GOEIC), businesses’ licences (from the Industrial Development Authority and others) and employment (from the National Authority for Social Insurance). While CAPMAS is already accessing some of these data for the construction of the Economic Census business frame, some remain inaccessible. Moreover, for the SBR, CAPMAS should regularly engage in data sharing with administrative data holders.
Egypt should define rights and rules for administrative data sharing. First, Egypt could modify or pass new legislation that would allow CAPMAS to access administrative data for statistical purposes while respecting data confidentiality rules. In fact, several countries changed their statistical laws for this purpose (UN, 2024[61]). Developing a clear legal framework and good confidentiality rules for data sharing and its purposes are key elements in achieving a smooth process and building trust with data providers. In addition, to facilitate smoother administrative data sharing across public institutions, Egypt can further expand and reinforce the recently implemented Government-to-Government (G2G) initiative to allow the sharing of entire datasets. While the G2G has been developed to facilitate inter-administrative exchange of information on businesses, it does not allow access to the entire dataset. Instead, it is based on a single-firm search functionality (see OECD Business Dynamics Review of Egypt (2026[11]) for further recommendations on how to enhance this).
Recommendation 14: Create an SBR at CAPMAS.
In the medium term, Egypt could develop an SBR by merging administrative data and surveys. Further guidelines and recommendations on the development of such registry are elaborated in the OECD Business Dynamics Review of Egypt (2026[11]). The main action points are summarised below.
A recent reform, backed by Presidential directives, empowers the Ministry of Investment and Foreign Trade and General Authority for Investments and Free Zones (GAFI) to lead the construction of an Economic Entities Platform to collects information on business establishment, licensing, operation, expansion and exit procedures under a single integrated system (following the “only-once” principle for data collection).60 Once created, this platform can be the backbone of the SBR.
Action 14.1 (short-term): Entrust CAPMAS with a mandate to construct an SBR
Egypt could establish a dedicated law legitimising CAPMAS to create an SBR and regularly access administrative data from several stakeholders (including, among others, the Egyptian Tax Authority, the Commercial Registry and the National Authority for Social Insurance) for statistical purposes. This has been done in several developed and peer countries. In Tunisia, for example, Decree No. 94-780 of 4 April 1994 entrusted the National Institute of Statistics of Tunisia with the creation of the SBR. The decree also stipulates the role of institute in the update, management and utilisation, as well as the dissemination of statistics (UN, 2024[61]).
Action 14.2 (medium- to long-term): Develop an SBR and attribute a unique identifier at different levels of aggregation (establishment, enterprise, business group)
Once CAPMAS has accessed several administrative sources (Action 13.3), it should create an SBR by merging several data to store detailed information about every registered unit in the country.
The SBR should assign a unique identifier (which could be different from administrative/legal identifiers) to each unit. A specific identifier should be assigned for each level of statistical business unit aggregation: local unit (establishment identifier), enterprise level (firm identifier) and business group (group identifier):
Each establishment should have a unique identifier.
Establishments belonging to the same enterprise should have the same firm identifier.
Firms belonging to the same business group should have the same group identifier.
Having information at various levels of aggregation may help examine different determinants of productivity growth, which can then better support evidence-based policy making. Data at the establishment-level may enable, for example, observing workers’ skills and the management structure of units while studying local and regional differences (including the role of education and infrastructure). Data at the enterprise level may help explain economies of scale and allow the examination of trade and the role of exporting on productivity. Finally, business group information allows to further analyse the role of ownership, firms position in GVCs and network integration.
Action 14.3 (medium- to long- term): Harmonise business data collection around the business registry
Once an SBR is created, all entities engaging in business data collection should use it as the sampling frame for their surveys. Such an objective requires the commitment of all Egyptian entities involved in business data collection (including but not limited to CAPMAS) to ensure that data are harmonised and integrable around the same registry and identification of units.
Recommendation 15: Integrate different data sources to enhance productivity analysis
Action 15.1 (medium-term): Create a comprehensive data infrastructure to be used for productivity analysis in the longer term
Egypt could aim at integrating several data sources – including surveys form CAPMAS, data on trade registers from GOEIC, data on workers from the national social security – with the aim of enhancing productivity analysis. The integrated infrastructure would allow the merging of data at the firm level (e.g. census, ICT survey), at the individual firm level (e.g. ownership structure) and at the product firm level (e.g. GOEIC) to obtain a complete picture on the characteristics and activities of Egyptian firms. Integrating different data sources is crucial in building a comprehensive data infrastructure that can be used to study productivity growth and support evidence-based policy making. A unique business identifier can help in ensuring that units are easily matched across datasets, allowing for a smoother process of data integration. In the shorter term, Egypt could also exploit the use of available techniques to integrate data (like string matching) in the absence of unique identifiers. In the longer term, data integration system should be built around the SBR.
Recommendation 16: Improve the capability of tracking firms across time in the Egyptian Economic Census
Action 16.1 (short- to medium-term): Provide a unique longitudinal identifier across survey waves to make panel analysis possible
CAPMAS should provide a unique longitudinal identifier for establishments and businesses in the Egyptian Economic Census to make a full panel analysis possible. To meet international best practices, production surveys for productivity analysis should be longitudinal and should contain a panel dimension. This means that units need to be identified by a unique longitudinal identifier that is constant over time. Although the census contains an establishment identifier, this identifier is wave-specific. Hence, units cannot be matched across the different waves of the survey, preventing analysts from studying productivity growth within establishments. Each establishment should also provide information on the enterprise (firm identifier) and the business group (group identifier) they belong to. CAPMAS is already in the process of collecting tax and commercial identifier for future waves of the census for certain (i.e. mostly larger) establishments.
Recommendation 17: Improve access to microdata to leverage technical skills from external experts
Expanding access to various databases allows outside experts to conduct a greater depth and breadth of analyses than could be completed with existing staff. By allowing outside experts to access high-quality government data, the Egyptian government can leverage insights from external experts to complement its technical expertise and support future growth. Broader use of data by technical experts would also enhance data credibility and quality. Consequently, this can contribute to a substantial improvement of the framework for the dissemination of official business statistics and to the development of better policies within the country.
Action 17.1 (short-term). Expand the number of datasets accessible in the Economic Research Forum (ERF) micro portal and ensure they are up to date
Even though several major data sources are available to external experts upon request via the non0-governamental Open Access Micro Data Initiative (OAMDI-ERF) of the ERF, some data remain inaccessible. For example, the CAPMAS ICT Survey, more recent time series of GOEIC export/import data and other administrative data (e.g. tax records, social security data) are not readily accessible. Egypt should consider opening access to more data (adequately anonymised) through this ERF portal. Furthermore, Egyptian institutions and CAPMAS should ensure that the data provided through the OAMDI-ERF are available up to the most recent time series and are regularly updated as soon as new survey waves or data become available. Providing the data with a unique identifier for businesses, adequately anonymised when necessary, would allow researchers to match different datasets.
Action 17.2 (medium-term): Develop physical and/or remote microdata access facilities at CAPMAS
CAPMAS may consider establishing physical and/or remote access solutions that allow outside experts with technical expertise to access its microdata to conduct productivity analysis. Several developed and developing countries have indeed established physical rooms within their national statistics office with dedicated computers where outside experts can access microdata in a secured space. To enhance security, these rooms are under video surveillance and computers do not have access to Internet. More recently, countries are also setting up remote access solutions to allow outside experts to access the data without the need to travel. Remote access solutions entail, for example, developing virtual private network connections – or other end-to-end access mechanisms – wherein external experts can safely access the data remotely in a secure and closed environment, accessible from their own computer or from a dedicated machine. Experts can only extract from this environment results that have passed a confidentiality review. Alternatively, countries are also allowing remote execution solutions. In this method, experts do not directly see the data, rather they write the statistical routines, which are then executed by the national statistics office or central bank officials (e.g. see the Bank of Italy Research Data Centre discussed in Chapter 6). The experts only receive results that have passed a confidentiality review.
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← 1. Economic Census 2022/2023 is the most recent wave of the survey available for analysis. Due to data limitations, the MultiProd code has been adapted to run on Egyptian cross-sectional data using the Egyptian Economic Census.
← 2. This decline in manufacturing productivity relative to the OECD is attributable to the fact that labour productivity in OECD countries grew at a faster pace, compared to Egypt.
← 3. OECD countries included in the MultiProd analysis are Belgium, Canada, Croatia, Estonia, Finland, France, Hungary, Italy, Lithuania, Portugal, Slovenia and Spain. The reference year is 2022 for most OECD countries. For Croatia and Italy, the latest available year in MultiProd is 2019 and for Estonia, it is 2021 (see Annex A).
← 4. Allocative efficiency is based on the Olley & Pakes (1996[1]) productivity decomposition. It is important to consider allocative efficiency, as a growing body of literature attributes high aggregate productivity to the efficient allocation of resources across firms (Berlingieri et al., 2017[79]). This implies that a flow of inputs from low- to high-productivity firms is productivity-enhancing, while inefficient allocation of factors adversely affects aggregate productivity.
← 5. The entire MultiProd analysis excludes the coke and refined petroleum industry (ISIC Rev.4 Division 19) from the manufacturing sector and firms with only one worker.
← 6. Manufacturing industries are divided into top-half and bottom-half productive industries, based on their average firm-level log labour productivity. The industry is classified as top-half (bottom-half) if above (below) the median level of average firm-level productivity across Egyptian manufacturing industries. The industries included in the top and bottom half are also consistent with the most and least productive industries across the OECD benchmark. Top-half productive industries include chemicals and chemical products (20), basic pharmaceutical products (21), computer, electronic and optical products (26), electrical equipment (27), machinery and equipment (28), and transport equipment (29-30). Bottom-half productive industries include Food products, beverages and tobacco (10-12), textiles, wearing apparel, leather and related products (13-15), wood, paper products, and printing (16-18), rubber, plastics, non‑metallic mineral products (22-23), basic and fabricated metal products (24-25), and furniture, other manufacturing, repair and installation of machinery and equipment (31-33).
← 7. Across OECD countries, a larger share of manufacturing value added and employment is accounted for by computer and electronic (26), machinery and equipment (28), and transport equipment (29-30).
← 8. Productivity dispersion is measured as the (log) ratio between top-10 and bottom-10 percentiles of the log labour productivity distribution.
← 9. A full comparison with OECD countries is difficult as the capital variable is calculated following different methodologies for Egypt and the OECD. OECD countries rely on the perpetual inventory methods, while Egypt uses total fixed assets (due to the absence of panel data).
← 10. As previously mentioned, Food, beverage and tobacco products (10-12) is a notable exception, being a low-productivity industry but having high formality intensity.
← 11. Currently, under the PVTD, there are 83 vocational training centres (38 fixed centres, 35 mobile training units, 10 fixed training units) affiliated with the Egyptian Ministry of Labour. The ministry is also involved in the accreditation of curricula and trainers.
← 12. In October 2022, President Abdel Fattah El-Sisi signed Law No. 160 of 2022 to establish the Egyptian National Authority for Quality Assurance and Accreditation (ETQAAN) for technical and vocational education and training (SIS, 2022[75]). The German development agencies GIZ and KfW, as well as the United States Agency for International Development and the European Union are supporting the establishment of ETQAAN. The authority aims to evaluate whether VET programmes are established in response to labour market needs and the private sector participates in the identification of competencies and assessment of students (OECD, 2024[9]).
← 13. The OECD Skills for Jobs database is a detailed performance indicators by occupation and a taxonomy of skill requirements by occupation (OECD, 2019[68]) (see Chapter 2 for more information). As a first step, the degree of “labour market pressure” for each occupation in each country is assessed by five performance measures, namely, wages, working time, employment, underemployment and under‑qualification with the country average, where the five relative performance measures are standardised, then aggregated into a single index of occupational imbalance for each occupation (OECD, 2019[68]). As a second step, the occupational imbalance index is mapped to the underlying skills requirements associated with each occupation based on a widely used taxonomy (O*NET) and aggregated to the country level (OECD, 2019[68]). A well-established review system, which entails collecting quantifiable measures, may be beneficial and useful in the long run (see Recommendation 11).
← 14. In this regard, inputs from MSMEDA may particularly be valuable in supporting smaller firms to thrive in the market. Meanwhile, the role of the MCIT may be prominent in meeting demands in digital skills.
← 15. Institutions like Cairo University provide numerous academic programmes with international universities (e.g. France, Germany, Spain, the United Kingdom). Moreover, the Egypt University of Informatics (EUI), established by the MCIT, aims to develop world-class education and scientific research for human capabilities in modern ICT-related fields. EUI provides dual degree agreements, where successful candidates spend their final year at partner universities abroad (e.g. Canada, United States). Such partnerships and programmes can be extended to upskilling and reskilling technical workers. For more information on EUI, see https://eui.edu.eg/.
← 16. CBE initiatives include mandating national banks to allocate at least 20% of their total loan portfolio to SME financing, and capped rates for SME lending to 5% and 12% for small and medium-sized firms respectively.
← 17. Firms with low revenue and high employment are also low-productive. Indeed, the average log labour productivity of medium-sized revenue firms and large employment firms is substantially lower (9.88) than other medium-sized revenue firms (11.58) or other large employment firms (10.58).
← 18. See the European Commission definition of firm size, which account for both employment (head count) and turnover or balance sheet total: https://single-market-economy.ec.europa.eu/smes/sme-fundamentals/sme-definition_en. In peer countries, for example, Türkiye uses both employees (only with an employment contract) and annual net sales or financial balance sheets.
← 19. The Egyptian Parliament enacted Law No. 6 of 2025, effective March 2025, as part of a comprehensive package. The law introduced tax incentives for small enterprises with annual turnover not exceeding EGP 20 million. These include exemptions (e.g. from state development fees and stamp tax), reduced tax rates (from 0.4% to 1.5%) and simplified tax procedures (EY, 2025[82]). The law replaced earlier incentives set by MSMEDA under the MSMEs Law No. 152 of 2020, which applied to firms with turnover below EGP 10 million.
← 20. MSMEs are defined based on their revenue, or capital if revenue is missing. Micro enterprises: annual turnover of less than EGP 1 million, or any newly incorporated enterprise with capital of less than EGP 50 000; Small enterprises: annual turnover between EGP 1 million and EGP 50 million, any newly incorporated industrial enterprise with capital between EGP 50 000 and EGP 5 million, or any newly incorporated non-industrial enterprise with capital between EGP 50 000 and EGP 3 million; Medium enterprises: annual turnover of EGP 50 million or more, not exceeding EGP 200 million, any newly incorporated industrial enterprise with capital between EGP 5 million and EGP 15 million, or any newly incorporated non-industrial enterprise with capital between EGP 3 million and EGP 5 million.
← 21. In addition to the CBE initiatives, MSMEDA also provides financial and non-financial services to SMEs. For instance, MSMEDA provides different packages to finance SMEs (e.g. leasing, factoring, Islamic venture capital). The agency also launched a portal that provides MSMEs with all information and services available on the ecosystem that supports new businesses and develops existing ones. Furthermore, the MSMEs Development Law No. 152 of 2020 includes provisions aimed at protecting funding institutions, which incentivise these institutions to provide funds to MSMEs. Under the law, funding institutions are offered guarantees, allowing them to recover their funds in the event MSMEs fail to comply with the terms of the agreements signed for the purpose of funding their activities. Moreover, MoIND, in co‑ordination with the CBE, has also developed a financing policy with a concessional return rate of 15% to finance the purchase of production lines, equipment and raw materials for some targeted manufacturing industries.
← 22. Innovation, Science and Economic Development Canada uses an online tool, the Innovation Canada digital platform, to help businesses find programmes and services to help them grow. For more details, see https://innovation.ised-isde.canada.ca/innovation/s/?language=en_CA.
← 23. The financial incentives are now under the Ministry of Finance.
← 24. In 2013, an Integrated Plan to Reduce Non-registered Employment, led by the Ministry of Labour, Employment and Social Security, was launched in Argentina. This plan fits in the broader strategy to tackle informality, which has been rampant since 2003. It defines new policies and instruments to make further progress on the subject of employment formalisation. Within this plan, conducting social awareness campaigns through massive media on informality issues, the advantages of complying with labour and tax obligations and the resulting social protection were part of the strategy. Through the Corporate Social Responsibility Plan, leading businesses raised their client and supplier awareness of the need and obligation to comply with labour regulations.
← 25. Note that the larger share of FDI in the manufacturing sector are linked to the Chemicals and chemical products (20) industry (OECD FDI Qualities Review of Egypt (2025[16])). However, this industry is not discussed in this section, as it is identified as a high-productive industry in this report.
← 26. See https://procomer.com/encadenados/ for more information.
← 27. This mechanism can also be used to link liberalisation in services markets to productivity. Service trade reforms can have substantial spillover effects on the productivity of manufacturing industries that use services as intermediate inputs (Benz et al., 2023[78]).
← 28. Evidence from Egypt goes in this direction, showing a positive link between trade policies and reduction of informality. Such results are likely the effects of trade reforms, which push the least productive informal firms to exit the industry and enable the most productive (formal) firms to export to international markets. Consequently, this leads to an increase in the demand for formal workers who are usually more skilled, and to a likely decline in informal (and irregular) employment (Ben Salem and Zaki, 2017[77]).
← 29. This uptrend in the Egyptian non-petroleum manufacturing sector contrasts with the experience of OECD countries, where the share of non-petroleum manufacturing in total exports has decreased (from 47.6% in 2010 to 46.3% in 2022).
← 30. The manufacturing sector in Egypt is highly reliant on imports from around the world, with a share of imports from manufacturing industries over gross output in manufacturing of 30% (light red bars in Figure 1.3, Panel B), thus, contributing to an overall negative trade balance.
← 31. Targeted sectors include including solar and wind energy components, electric vehicles and parts, industrial software, desalination systems, pharmaceuticals, aluminium, electrical transformers, seamless pipes, water pumps, motors, cosmetics, polyester, soda ash, electric generators, inks, smart electrical components, recyclable materials, HVAC systems, elevators, surveillance systems, robotics, green hydrogen, petrochemicals, textiles, health-focused food products, leather goods, and iron and steel derivatives.
← 32. In this iteration, the Coke and refined petroleum (19) industry was included in the total of manufacturing.
← 33. The revealed comparative advantage (RCA) index provides an indication of the relative specialisation of a given country in selected industries. Country is said to have an RCA in industry when its ratio of exports of industry to its total exports exceeds the same ratio for the entire world. This can be expressed as: where represents exports of economy in industry , represents exports of the world in industry , represents the total exports in country , and represents world total exports. A higher value of RCA indicates a higher export strength. Indeed, a high level of RCA (equal to or greater than 1) in an industry indicates a competitive edge in the global market due to their comparative advantage in producing products compared to the rest of the world. Meanwhile, a low level of RCA (less than 1) suggests that the country does not have a comparative advantage in the product, which may be brought by insufficient resources, skills or infrastructure to produce the product competitively within the country.
← 34. A high backward GVC linkage implies that a country heavily relies on imported components for its exports, while a low backward GVC linkage suggests that the country depends less on foreign inputs and has a more self-sufficient production network.
← 35. A high forward GVC linkage indicates that a country is a key supplier of intermediate inputs to other countries’ exports, while a low forward GVC linkage suggests limited trade integration in the global supply chain.
← 36. Local solar water heater (SWH) factories buy their raw materials and input components at relatively high costs including custom duties, as these inputs cannot be easily identified as SWH or renewable energy manufacturing inputs to benefit from any customs benefit or release. This makes importing the whole SWH system more attractive and easier than importing certain components and locally manufacturing others (UNIDO, 2020[29]).
← 37. The ERP has been offered since 2002 and had been modified several times to expand the sectors covered. In addition to the ERP, other initiatives that favour SME exports exist, such as MSMEs Development Law No. 152 of 2020, which has established a 2% custom tax rate for all MSMEs (FAO, 2020[71]).
← 38. The new department within the MSMEDA should continuously co‑ordinate with the Ministry of Investment and Foreign Trade to ensure that SMEs are receiving effective incentives in engaging in trade. As part of the co‑ordination, relevant stakeholders (e.g. Ministry of Investment and Foreign Trade, MSMEDA, UNIDO) can regularly monitor progress and conduct impact evaluation using quantitative measures to keep track of what works and what does not (see Recommendation 11).
← 39. See https://www.mss.go.kr/site/eng/03/20301120000002019110758.jsp for more information.
← 40. IPR is the exclusive legal rights associated with creative work, commercial symbols or inventions. There are four main types of intellectual property: patents, trademarks, designs and copyrights (OECD, 2009[67]).
← 41. Patent indicators used throughout the report mainly rely on IP5 patent families that identify the most valuable patents protected on the largest markets (Amoroso et al., 2021[76]; Dernis et al., 2015[80]). The value of patents is often associated with the number of patent jurisdictions in which the invention is protected: patentees will only take on the additional costs and delays of extending protection to other countries if they deem it worthwhile in terms of economic returns (OECD, 2009[67]). IP5 patent families are defined as sets of patent applications protecting the same invention filed in at least two IP offices – with at least one application filed in one of the five largest IP offices worldwide (IP5): the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), the National Intellectual Property Administration of the People’s Republic of China (CNIPA) or the United States Patent and Trademark Office (USPTO).
← 42. MENA is the unweighted average of Jordan, Morocco, Tunisia and Türkiye.
← 43. An effective IP framework is particularly relevant and important for SMEs and emerging innovators.
← 44. Young firms are defined based on their age (0-2 years). The data do not allow to distinguish between innovative firms (i.e. start-ups) and other firms. Moreover, within the manufacturing sector, there is a high variation across industries. There are more than 20% of young firms in textiles, wearing apparel, leather and related products (13-15), but only 2-3% in basic pharmaceutical products and pharmaceutical preparations (21), computers (26) and transport equipment (29-30) industries (which are lagging compared to OECD countries in terms of the number of young firms and their contribution to employment).
← 45. Textiles, wearing apparel, leather and related products (13-15) and rubber and plastic products (22-23) have the highest share of informal firms.
← 46. With regards to tax credits, most of the recent studies for OECD countries found that each unit of tax credit translates into at least one additional unit of R&D (OECD, 2020[46]).
← 47. Some initiatives exist in this regard. For example, the Information Technology Industry Development Agency (ITIDA) provides some services and funds for private investments in R&D centres, including tax exemptions and training programmes. Moreover, The Information Technology Academic Collaboration programme managed by ITIDA offers funds to collaborative R&D projects between businesses and academic institutions.
← 48. The National Intellectual Property Strategy, launched in September 2022, is a 5-year plan (2022-27) intended to serve as a solid basis for the establishment of the IP system in the country (SIS, 2022[72]). Its strategic goals include: i) governing the institutional structure of IP; ii) configuring the legislative environment for IP; iii) optimising the economic return of IP in achieving the SDGs; and iv) raising awareness of Egyptian society on the importance of IP (for further discussions on strategy, see Chapter 4). Furthermore, in July 2023, the parliament approved a draft law establishing the Egyptian Authority for Intellectual Property as a national body for the protection and welfare of IPRs. The goal of the association is to unify the administrative bodies responsible for the management of IP in Egypt.
← 49. Recently, Egypt has developed numerous relevant government initiatives to increase digital adoption in the country, such as the ICT 2030 Strategy, Digital Egypt 2030 and Digital Decent Life.
← 50. In this aspect, the rural-urban divide for Internet access and speed in Egypt is not negligible, reflecting opportunities to further strengthen infrastructure in rural areas. This dispersion underscores the heterogeneity in network availability, based on the area of residence.
← 51. The ongoing Digital Decent Life initiative can be key in narrowing the gap in accessing quality Internet between urban and rural areas in Egypt.
← 52. In this regard, some policies exist already but could be strengthened. For example, the MCIT promotes R&D, innovation and entrepreneurship in the field of ICT to support sustainable national development and to position Egypt as a regional innovation hub (OECD, 2023[69]). To provide further support to spur innovations among start-ups, the administration opened eight CREATIVA Innovation Hubs across the country to create an enabling environment for technology, innovation and entrepreneurship. Moreover, the MSMEDA initiated a pioneering Fund of Funds programme, whose objective is to increase the supply of seed, early stage, and venture capital, which go to innovative start-ups and young SMEs with high potential for growth and job creation (MSMEDA, 2021[70]). The pilot phase kicked off in 2015, followed by a full-fledged programme in 2021, in partnership with the World Bank.
← 53. Single criteria may not be sufficient and a combination of them may be needed. See for example the case of Italy, which has introduced a comprehensive package of incentives called the Italian Startup Act, which has been effective in sustaining innovative start-ups (Menon et al., 2018[81]). Innovative start‑ups must meet at least one of the following criteria: i) an R&D expenditure ratio of at least 15%; ii) one-third of employees are doctoral students, graduates or researchers and/or two-third hold a master’s degree; and iii) hold, deposit or license a patent or own registered software.
← 54. For more information on European countries establishing a productivity board, see https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-productivity-boards_en.
← 55. The UNIDO Trade, Industry, Growth, and Rapid Market Access (TIGARA) project is funded by the European Union and is currently in the process of establishing a policy support unit. The project is carried out in co‑operation with the MPED and the Ministry of Industry and Transport (UNIDO, 2024[73]). For more information on the TIGARA project, see https://open.unido.org/projects/EG/projects/210122.
← 56. For more details on Canada’s case, see https://innovation.ised-isde.canada.ca/innovation/s/?language=en_CA. For Italy, see https://www.incentivi.gov.it/it.
← 57. For more information on the new Industrial Platform, see https://www.sis.gov.eg/Story/194679/FIE-Egypt%27s-digital-industrial-platform-contributes-to-upping-exports?lang=en-us.
← 59. The OECD Productivity Statistics database contains a consistent set of productivity measures at the total economy and industry levels for OECD member countries and Group of 20 (G20) economies. While the database and this publication present value added-based productivity indicators by relating value added to the labour and capital inputs used, productivity measures can be computed for different representations of the production process. A typical approach is to relate a volume measure of gross output to primary and intermediate inputs, as used in the KLEMS methodology, which measures the contributions of capital (K), labour (L), energy (E), material inputs (M) and services (S) to output growth (OECD, 2018[74]).
← 60. The platform is expected to be completed by the end of 2026, with technical co-leadership from the MCIT.