After his visit to India on the occasion of the celebration of the 55th anniversary of its independence, Mr. Salama Ahmad Salama included in his daily column, during the period from February 8th till February 16, 2004 a number of prudent comments about the progress India managed to achieve. Those comments raised question marks about several development issues in general and about the developmental performance in Egypt in particular compared to that of India. I found it necessary to consider the growth of some of the main development aspects in the two countries during the period from 1975 till 2001. I based my study on the information derived from the World Bank database about the global development indicators.
What was the result of comparing the Egyptian development performance to that of India during a time span of 27 years?
What are the lessons derived from this comparison that could represent a guide for the policymakers to mend any malfunctioning?
It would seem as though the Egyptian development performance is better than that of India if we look at some general indicators. The per capita income for instance increased by 138% in Egypt compared to 118% in India. The share of the industrial sector in the GDP in Egypt has reached 33.1% in 2001 compared to 26.5% in India.
Although the share of the industrial sector in the GDP in Egypt in 1975 was higher than that of India, it has become higher than the Indian share by 6.6 points in 2001 compared to 4.5 points in 1975. The same applies to the transformational industries; Egypt managed to increase its share at a higher pace than India. Egypt managed to increase the life expectancy in 2001 to 68.3 years compared to 63 years in India. It seems that the distribution of income in Egypt is better than that in India.
As per the previous indicators, it might be strange that the Indian development performance is admired by several Egyptian and non-Egyptian observers. We would know, however, that it is not strange if we remember a number of things that make the Indian performance more distinguished than the Egyptian one.
On the industrial and technological level, India managed to make important achievements. It managed to boost industrialization as the share of equipment and means of transportation has reached 22.7% in 1975. India managed to maintain this standard till 2000. In Egypt this percentage receded from 11.4% in 1975 to 5.7% in 2000, which indicated a plummet in its performance. On the other hand, India managed to increase its products exports from 44.8% in 1975 to 76.5% in 2000. On the contrary, the Egypt’s already-small share shrank from 34.1% in 1975 to 32.7% in 2001.
It is more important that India managed to achieve important technological breakthroughs. This enabled it to increase its exports containing hi tech elements such as planes, computers, drugs, equipment, medical appliances, and electric appliances increased to 5.7% of the total exports in 2000 compared to 0.8% in 1999.
The story of the Indian excellence in the field of software and IT services is well known and there is no need to mention it here. Suffice it to say that those exports are estimated at $10 billion and they increase by 25% to 30% annually.
It is well known that India allocated 1.23% of its GDP for research and development activities in 1996 compared to 0.21% in Egypt. Unfortunately, this percentage deteriorated in Egypt to reach 0.19% in 2000 as per the statistics of the World Bank. It is worth noting that India’s interest in the hi-tech projects didn’t divert its attention from developing small-scale industries and traditional crafts.
One of the manifestations of the Indian good performance is the purchasing power of its exports that increased during the comparison period to 7.8 times compared to 2.5 times in Egypt. This was of course one of the signs of India’s self-reliance in the field of consumer products. In addition, India managed to achieve self-sufficiency in the field of grain production. In general, meeting the basic requirements of the Indian citizens through the national production is one of the high priorities in the Indian developmental policy.
But this is not the only sign for India’s dependence on its own capabilities in the field of development; Egypt on the contrary, relies on foreign countries in this field. Also, the local savings rate in India is higher than that in Egypt although the per capita income in India is no more than 40% of that in Egypt. The local savings rate increased in India from 18% in 1975 to 21% in 2001 while it decreased in Egypt from 12.3% to 10.4% during the comparison period. Thus, the Indian savings rate has become double the Egyptian rate in 2001.
The increase of self-reliance in India is reflected on how far it depends on foreign aid. In 1975, the rate of reliance on foreign aid in financing the government expenditure was less than Egypt and it has become far less than that of Egypt at the time being as it decreased from 14% in 1975 to 2% in 2001. This rate, however, is decreasing in Egypt, which is considered a result of the tendency of donor countries towards reducing their official donations to developing countries. The rate of reduction of reliance on foreign aid in Egypt was lesser than that of India; the rate decreased from 30% to 8.6% in 1975.
The same phenomenon applies to the rate of the capital accumulation funding through foreign aid; in spite of the sharp plummet in this rate in Egypt from 57.9% to 8.2% between 1975 and 2001, this plummet in dependence on foreign aids for this purpose was sharper in India as it decreased from 8.7% to 1.6%. We could also notice that there was progress in the field of the reliance of both countries on foreign aid in financing importing commodities and services; this indicator was five times its counterpart in India in 2001.
It is worth mentioning that the ratio of foreign debt to the GDP decreased in Egypt while it increased in India during the comparison period. Yet, this ratio is still higher in Egypt than in India; it amounts to 30% in Egypt while it is 20% in India in 2001 compared to 42% in Egypt and 14% in India in 1975. This means that Egypt is depending more than India on foreign loans.
The abovementioned facts indicate that India has achieved distinguished developmental performance through making technological and industrial leaps that boosted industrialization and enabled it to acquire a competitive edge in the field of software and IT. The important lesson that we should learn from this is that what is important is not the high share of industries in general in the GDP (the Egyptian share is higher than that of India) but what counts is how a certain industry could give an added value to the national economy; industries should not confine themselves to assembling imported components but it should increase the locally manufacturing components in products and have a share in producing capital equipment, and combining between new industries and traditional crafts.
Comparison between the development processes in the two countries revealed that India has a high percentage of self-reliance, which is not the case in Egypt. This makes development more stable and capable of going ahead in India; it gives decision makers more independence and immunity against pressures of major countries and financial institutions working for their benefits. One of the proofs to this is the possession of India of nuclear weapons and missiles that are capable of carrying nuclear warheads without being exposed to pressures or extortions from the European countries or the USA.
In this evaluation, two other things should be mentioned which weigh the balance in favour of India:
- First, the large achievements of India have been achieved in a country with a very large population (1023 million in 2001), which is considered 16 times the number of population of Egypt. The Indian population also contains a large variety of religions, languages, and cultures.
- Second, these achievements have been made in a stable democratic atmosphere in which free elections are conducted. One of the most salient signs of democracy in India is that the post of the Indian president is occupied by a member of the Muslim minority in India; he is a physicist and the progress of Indian space industries is attributed to him; several years ago a member of the untouchables held the same post.
One of the India’s achievements is its interest in the issues of the developing countries and its initiative with Brazil and South Africa to defend the interests of those countries in all the international fora. This front managed to achieve good results in foiling the endeavors of major capitalist countries to impose their agenda related to liberalization of trade, and services, and Intellectual Property on developing countries during the latest ministerial meeting of the WTO held in Mexico. In return, the pioneering role played by Egypt in defending the interests of the developing countries have receded a lot in comparison to the way it was during the fifties.
Therefore, there are precious lessons that could benefit the development policy makers; they should direct their eyesight towards India and other Asian countries that managed to achieve progress during few decades; this is not an invitation to copy the Indian model; there is no doubt that India has its own geographic, strategic and cultural idiosyncrasies and local nature. For instance, if the large population in India has certain disadvantages, it also has its advantages that would give India an edge over Egypt; the Indian model can not be said to be faultless; India has a long way to cover to uplift large sections of its population.
Democracy in India is not complete, like capitalist democracies, due to the big difference in the distribution of wealth and income, the monopoly of the rich of wealth and power; there is no doubt that there are several advantages in the Indian model that we could use to form a framework for a developmental model that suits Egypt.
In the end, we should take into consideration that there are several fields in which Egypt could have jointly worked with India for the mutual benefit of the two countries. This entails the following:
- First, we should stop applying the western ready-made formulas;
- Second we should trust the developing counties as they might have experiences that could be useful to us,
- Third, we should believe in the fact that strengthening economic, scientific, technological and political cooperation should have first priority in the Egyptian foreign policy.
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