Politics, Economics and Tourism Development in Egypt: insights into the sectoral transformations of a neo-patrimonial rentier state

Abstract

This article challenges claims that liberalising state-regulated markets in developing countries may induce lasting economic development. An analysis of the rise of tourism in Egypt during the past three decades suggests that the effects of liberalisation and structural adjustment are constrained by the neo-patrimonial character of the Egyptian political system. Since the decline of oil-rent revenues during the 1980s tourism development has been the optimal strategy to compensate for the resulting fiscal losses. Increasing tourism revenues have helped in coping with macroeconomic imbalances and in avoiding more costly adjustment of traditional economic sectors. Additionally they provided the private elite with opportunities to generate large profits. Therefore sectoral transformations resulting from economic liberalisation in neo-patrimonial rentier states should be described as a process which has led to the diversification of external rent revenues, rather than to a general downsizing of the rentier character of the economy.