this video is sponsored by invid AI this is Egypt a country probably best known for its ancient landmarks and river system Egypt has existed as a society in one form or another for thousands of years stretching back all the way to the dawn of civilization it was once one of if not the most sophisticated regions in the ancient world but today unfortunately it's a bit of a different story the country is still home to a major economy but since it's also home to the 13th largest population in the world that productivity is spread extremely thin
which makes it one of the poorest Nations on the Mediterranean but in the words of every shady real estate agent ever it has potential massive potential it's easy to overlook but Egypt has all of the right ingredients to be a global top 10 superpower now obviously between that optimistic hypothetical and the current reality there are a lot of challenges both from within and abroad while the country has recently been experiencing some truly encouraging levels of industrial growth there are unfortunately some recent developments that make it look like it's not necessarily going in the right direction
it's dealing with heavy tensions between its neighbors who are threatening to cut it off from its ancient lifeline and equally severe tensions from within that have gone so far as to motivate the government to move its entire Capital City to somewhere they're a little bit further removed from the angry mobs no matter how much potential an economy has it's never going to be able to capitalize on it under these circumstances but there's also a little bit more to this story than yet another hopeful economy undone by corruption and instability no matter which direction Egypt goes
it has the potential to drag entire economic regions along with it and to find find out why we must as always answer a few simple questions so why should Egypt be one of the most powerful economies in the world why isn't it and finally how could its success or failure impact an entire Global hemisphere once we've done all of that we can put Egypt on the economics explained leaderboard if you've ever tried creating a high quality YouTube video you know it takes a lot of effort from scripting and editing to finding the right footage that's
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to the Nubians to the Assyrians to the British involvement in recent centuries there's plenty to talk about in regards to Egypt's history both cultural and economic but even the Modern Nation as it exists today claimed its independence over a century ago now and even in that time it's changed a lot of course no matter what time period we're looking at we can't address the economic functioning of Egypt without addressing its Nile River a 6,650 km long water supply between Lake Victoria and the Mediteranean sea one of the most important elements of the country's current economy
is its enormous potential Workforce Egypt's population has become massive with many of them just now entering the workforce and 94% of its 104 million people live along the massive Nile river that runs through it mostly at the Basin this is really the only reason people can inhabit the country in these numbers as most of Egypt is as Barren as the Persian Gulf countries addressed in a recent video also Beyond just offering life support to a huge and growing population inland waterways are about the cheapest and most efficient form of transportation for trade and commerce and
unlike the open ocean almost anything that floats is seaworthy enough to move materials and labor along their Shores major Empires both ancient and modern have benefited from the Nile even before the recent changes will address later and Egypt doesn't even need to invest anything into making this vital piece of Transport infrastructure since industrialization Freight rail can be competitive on a cost per kilometer basis within land water ways but the size of the goods being transported is more limited Rail lines and supporting infrastructure also need to be created representing a massive upfront investment that isn't necessary
for floating stuff on barges it's a massive expense that Egypt really doesn't have to deal with and when combined with its New Market orientated economy this makes the country attractive for investors seeking low labor costs low transport costs and fewer chances of Transport issues theoretically the consistent benefits garnered from this river is one of the major reasons that Egypt has become a surprisingly competitive Manu facturing power but it's not the only reason while the Nile is vitally important for the country's industry and everyday amenities another Waterway the sez Canal is equally important for Global Industries
most estimates put the global percentage of trade passing through the sez Canal about 12 to 13% handling anywhere from 25 to 35% of global container traffic every single year the role of Egypt in its canal in global trade is so significant that any blockage or interference results in the loss of billions of dollarss in times of conflict businesses can theoretically be crippled in a matter of weeks if the sez is inactive and this arguably more than the legendary Nile is primarily what has made Egypt a global economic Lynch pin in the 21st century in fact
a real life scenario where this globalizing artery was clogged happened just a few years ago although to be honest does feel like it was just a couple of months ago but anyway in 2021 the everg given a massive ship capable of carrying 20,24 shipping containers struggled to stay straight while traveling through the canal in the middle of a sandstorm it ran the side of the canal on route to its destination and when a few egyp tugboats failed to pull the vessel out of the sand of the mud excavators were brought onto the scene to start
clearing a better path the ordal was such an international worry that virtually every news Outlet was covering the excavation process with everything from Dutch and Japanese salvage companies to the president of the United States offering their support to resolve the issue as soon as possible now it's true that the sew Canal has had two separate Lanes to avoid this kind of problem while also allowing for smoother travel as the canal has Ships coming from both directions but the everg given was stuck in a location that blocked off the flow of traffic for everyone wasn't just
a pick up anymore it was a disaster about 370 ships had to drop anchor or float idly holding up the transfer of goods worth approximately 9.6 billion US every day with logistic struggles during the co pandemic this wasn't something that most countries could afford as the rate of trade has already slowed and disordered during the lockdowns and while some chose to make the journey around the cape others stuck around making the bet that the canal would be cleared in time to still remain punctual ultimately it took 150 hours to finally fix the mounting catastrophe and
this was only possible 14 tugboats took advantage of the high spring tides to finally dislodge it for every ship that goes through the Suez Canal Egypt earns an average of $300,000 in fees so even outside of any geopolitical advantages it's a genuinely great source of foreign revenue for the nation but they really suffer if it doesn't work properly and the cost for countries that use it is so great there's always a looming International interest to keep it operational in Good Times Egypt can use the SE Canal to leverage it still relatively lowcost labor force to
produce items incredibly competitively because it can get cheap components from Asia use its cheap labor force in developing manufacturing process to assemble them and then its Cheap shipping setup to get them directly into Europe if it was working at its maximum potential it would be hard to compete with that now reaching that potential is another story Egypt actually has a rather diverse economy compared to its African neighbors making it only second to South Africa in terms of GDP diversity recent findings stemming from the aention changes in 2000 showed a promising distribution in their Industries and
they have an enviable labor position as well with 60% of their population under the age of 30 who can take the Reigns and expand their economy even further a far cry from the current base of manufacturing Powers who are all almost universally dealing with aging populations since the 1970s Egypt has massively increased its manufacturing sector and that growth has remained consistent even in the wake of its domestic struggles recovering its losses from the revolution of 2011 and the protests of 2016 within the decade but again more on that later Beyond manufacturing the country is ranked
as the fifth largest African crude oil producer and the third in natural gas which the highest refiner capacity on the continent the export of fossil fuels accounts for about 15% of their GDP enough to be a significant boost of foreign revenues but not enough to become totally resource dependent with all of this its strategic position growing lowcost labor force easy and cheap Transportation infrastructure provided by nature and frankly more energy that can even use there are reasons to be optimistic that this current wave of growth will continue to increase incomes for everyday citizens in tangible
ways it's roads that have fallen into disrepair and now been handled with an8 $895 million government plan to reduce Road congestion building more than 40 new Bridges and the sez Canal is on its way to being expanded but even with this promise there are some very serious challenges that are going to need to be addressed if the country is going to become a middle-income economy as per usual what is good for the country is not always necessarily what is good for its rulers the country has a long-standing enthusiasm for constructing monuments in the sand projects
that their economy brought on encouraged by those in power to immortalize themselves and this is by no means a practice relegated to history even to today the country is building a new capital city 20 mi east of Cairo at massive public expense to be further away from the potential angry mobs that might want to topple the government this groundup construction is projected to cost the country about 58 billion with a massive Central Park a Cutting Edge business district the world's largest obis and a giant plot for the Octagon meant to house the Egyptian Ministry of
Defense which normally should be at least 60% better than the Pentagon of the US military a lot of analysts fairly point out that this is just an administrative Hideout as very few Egyptians can afford to live here let alone uproot their lives to resettle and that's pretty much the not so secret plan with the government Having learned how vulnerable it is sharing its capital with the people it has to answer to there's also the elephant in the room of Egypt's economy it's debt lots and lots of debt in 2023 Egyptian debt to GDP was 95%
which to be fair is lower than a lot of major economies in the world including the USA but it's still a lot for a relatively poor country not borrowing in its own currency and paying a much higher interest rate on that borrowing to make matters worse this year Egypt's Central Bank increased interest rates by 600 basis points their infrastructure spending is slowing down as it gets harder to borrow and the Egyptian pound has been ranked amongst the worst performing currencies in the entire world there don't appear to be signs of future Improvement at least in
the short term this turbulence has only contributed to higher tensions causing further instability and uncertainty around the country's governance which in turn makes it harder for them to borrow more money or attract foreign business Partnerships the potential of Egypt is massive and something like a European car manufacturer could set up highly competitive plants there but the investment into training and infrastructure would be significant and it could all be at risk with another government shake up this new capital is supposed to curb that threat it's close enough to K to still be able to oversee the
bigger city but far enough away that Elite government workers and the ruling class have a safety buffer from potential angry Riders and a luxurious cocoon and then there is the issue of the Ethiopian Renaissance Dam here's why that's a problem Ethiopia's Highlands Supply more than 85% of the water that flows through the Nile River the major vein that keeps Egypt not only industrially functional but alive Ethiopia argues that the construction of the dam won't dramatically impact the flow of water into the Basin but Egypt is skeptical their historical efforts stemming from the colonial period to
keep construction projects like this out of the Waterway make this a serious issue in the eyes of the Egyptian government adding to the Foreign Relations nightmare Ethiopia has been searching for an infrastructural goal that would help its economy and the dam has received public support a tanm effort with China which has put a plan in motion faster than most expected In fairness this could reduce water flow that is already dwindling in recent decades and put huge pressures on the population that depends on this Lifeline for food Water Irrigation industry and transportation currently although many Upstream
countries don't see the issue it's causing escalating tensions with Egypt even threatening to blow up the dam if it gets bad enough this has obviously caused International push back with countries like the United States suggesting that they might withhold Aid to Ethiopia and China sitting on the opposite side of the aisle given the fact that they're deeply entrenched on the Belton Road Project in reference to the expansion of the SE Canal the media strategy for the country has been to make it look like an upgrade that's far from the case what's actually happening is that
the sez Canal is also been squeezed by conflicts in Yemen targeting ships making the passage this is restricting that major Revenue Center for Egypt all of this combined with the luxurious New Capital City paints a pretty bleak picture oh and look they're planning on making a bid for the 2036 and 240 Olympics Jokes Aside nobody can predict the future least of all economists but Egypt is full of opportunities that will be squandered without a serious system reboot and this is a problem for everyone the sez Canal is a major Global Lifeline that as we saw
earlier with the ever given getting stuck for a week or the Yemen attacks has the potential to massively influence the global economy if the country has pushed to military action to deal with domestic or foreign threats the canal could become even more compromised further hampering Global traffic which is already tossing up going the longer and more expensive route around Africa domestically this will mean that all of the positional advantages the country has in the global economy will be made more or less irrelevant and the strong growth the country has been experiencing ing will become very
hard to maintain of course hopefully for everyone's sake we're wrong okay now it's time to put Egypt on the economics explained leaderboard something that will be particularly important for this economy to give a bit of nominal context to the country's very apparent strengths and weaknesses starting as always with size Egypt has a GDP of $347 billion making it similar in size to Pakistan Romania and only slightly behind South Africa as the largest economy in Africa it's the 42nd largest economy in the world currently and it gets a six out of 10 that is spread out
over the 13th largest population in the world meaning that despite its decent overall output it's still a lowincome country it has a GDP per capita of $3,225 which puts it behind Lebanon Sri Lanka and only barely ahead of India despite being a more concentrated industrial economy even still at less than a third of the global average it gets a two out of 10 stability and confidence is the thorn in the sight of Egypt's potential over just the last decades it's experienced revolutions and violent protests with the government that has shown its willingness to use Extreme
Measures to entrench its own power that has clearly hurt foreign investment and general interest to set up operations or trade relations with the country it gets a 2 out of 10 but only because anything lower represents a country currently engaged in allout Conflict Mass social unrest or an actual Civil War growth as we mentioned has been very strong the country wants to do well and left to its own devices it would probably naturally find a level of a low middle- inome manufacturing base now while that doesn't sound like a lofty ambition it would still be
an improvement from its current reality its nominal growth has been around 60% over the last decade but that is including a recovery from a major dip caused by the protest in 2016 so if things can remain stable it could easily become one of the fastest growing major economies in the world for now though it gets a 7 out of 10 industry currently is not huge or that advanced and a lot of the population are still simple Farmers but its growth in manufacturing basic Services trade accommodation and of course some healthy assistance from natural resources means
it gets a 6 out of 10 altogether that gives Egypt an average score of 4.6 out of 10 which puts it down here on the leader board it also puts it just above Pakistan and another turbulent country that could be competing for the same role in the global economy you should be able to click to that video on your screen now thanks for watching mate bye
