Capital formation in Egyptian industry & agriculture, 1882-1967

Current interest in the measurement of capital stems from its importance as a symptom and a cause of economic growth. For this purpose capital is understood in the real sense, and we are interested in it as a factor of production and the contribution it makes to output. Lack of quantitative enquiries into the historical pattern of Egypt's economic growth in general, and long-term estimates of capital formation in particular, account for the fact that the role played by real capital in the process of growth is quite uncertain and not very well understood. It is the primary objective of this study, therefore, to draw on available statistics in order to measure gross and net fixed capital formation and capital stock in Egyptian agriculture and industry, at current and constant (1960) prices, covering the period 1882-1967. The estimation procedure involved the application in the first place of the commodity-flow approach, and wherever data were available, the expenditure approach was also followed. The emphasis is almost exclusively on one aspect of capital formation; yearly capital accumulation in terms of additions to fixed capital stock. Consequently, little attention is given here to both the sources of investment funds and the determinants of investment decisions, An attempt is also made in this study to describe the long-term trends in the rate and structure of capital accumulation and to outline the broad economic, institutional and historical factors affecting the rate and pattern of growth of capital formation in agriculture and industry. Moreover, the two sectors are discussed together in order to compare their performance and contrast the types of structural change that took place. Finally, the study concludes by some speculation on the general pattern of growth of the Egyptian economy as a whole.