Productivity, Technnical Change, and the Rold of R&D: The Case of Public Sector Engineering and Textiles Industries in Egypt 1975-1989

Abstract

<p>Egypt suffered from dwindling external sources of finance during the second half of the eighties. There was a strong need for Egypt to rely on its indigenous productive capacity as the driving force for its economic development. Expanding world trade in engineering and textiles industries provided an opportunity for development that was cleverly seized by many developing countries, but not by Egypt.</p> <p>The main objectives of this research are to identify the specific nature of technical change, measure trends in productivity, test for structural change, and examine the contribution of R&D to production in public sector engineering and textiles industries in Egypt during the period 1975-1989.</p> <p>Both quantitative and qualitative approaches are used to examine the above issues. Econometric estimation is complemented by descriptive analysis based on field research involving research institutions under study. A good part of and many of the the research is companies based on unpublished materials and data extracted first hand during the course of the work. Of particular importance are interviews held with some of the pioneers of scientific research in Egypt.</p> <p>The estimation results show that productivity in public sector engineering and textiles firms followed an inverted-U pattern that peaked around 1982-84. While the second half of the seventies witnessed an improvement in performance, in the mid eighties a deterioration started which became particularly evident after 1986. However, R&D played a positive role in the engineering industries in the eighties, suggesting a potential for indigenous R&D.</p> <p>While these performance trends could be attributed to changes in economic policies, it is suggested that they were primarily affected by 'technological inertia'. Efforts in the sixties to establish a strong technological foundation for industry bore fruit in the seventies. However, limited interest in R&D in the seventies eventually brought about the slack performance of the eighties.</p> <p>The research findings suggest that Egypt needs a more creative approach to technological management. In particular, technological development is found to be a priority for engineering and textiles industries, which can provide a strong impetus to the country's overall development.</p>