Middle Eastern Studies,

Vol. 44, No. 4, 571 – 583, July 2008

The Cultural Economy of Development in

Egypt: Economic Nationalism, Hidden
Economy and the Emergence of Mass
Consumer Society during Sadat’s Infitah
RELLI SHECHTER

History was repeating itself during the infitah.1 Once again external forces were
killing Egypt’s industrialization project and the country’s economic and political
independence. From 1838 Muhammad Ali, the ‘founder of modern Egypt’, saw his
project of state-led growth frustrated by a British–French coalition, which forced
open the Egyptian economy after defeating his army and obtaining a free-trade
agreement from the Ottoman sultan in return. Nasser, the undisputed leader of the
post-colonial Egyptian nation-state, experienced the crumbling of his endeavour
after the 1967 War. The equivalent to the Balta-Liman free-trade convention was
Sadat’s infamous Law 43, announced by the Egyptian government but seemingly
driven by external pressure.2 Once more, local industry was weighed down by a great
impediment as external economic penetration and internal ‘commercialization’ came
to replace local production. Or did Egyptian intellectuals get it all wrong?
Economic nationalism – the notion that a nation requires a strong, independent
economy to liberate itself and compete with other nations – was long part of the
Egyptian national agenda.3 At its core lays the assumption that local investment and
industrialization were the way to achieve such a goal. National(istic) rhetoric
asserted that industrialization required energy and fierce commitment, and the
same striving for modernity shared in the struggle for nationhood. Modern
industry was evoked as a stepping stone to a new economy and a symbol of the
broader socio-cultural transformation of the Egyptian nation. It found its main voice
and audience in the growing middle stratum in Egypt – the effendiya – after the First
World War.4
The effendiya developed with the expansion of general education in Egypt, but
also in a period when state bureaucracy and the public sector expanded and became
large employers of white-collar workers in a variety of professions. Yet this stratum
also included people in more traditional occupations and in the private sector, and
was not exclusive to those earning their living by working for the state. Although
effendis supported the national cause in its broadest sense, it is hard to ascribe to the
effendiya a uniform political outlook as effendis initiated and joined a variety of
political parties.5 Neither a strict economic definition, the conventional notion of

ISSN 0026-3206 Print/1743-7881 Online/08/040571-13 ª 2008 Taylor & Francis

DOI: 10.1080/00263200802120632
572 R. Shechter

middle class, nor a political definition, can capture the fluidity of this stratum’s social
boundaries and worldview, or the negotiations of meaning and identity within this
group and those with other groups outside. I suggest an alternative, cultural
conceptualization of this group, which explores the emergence, action, and reaction
of the effendiya to present and future change as rooted in the tension between a
desire to be modern, and maintaining local authenticity and a sense of belonging.
Such a notion can be flexible enough to capture effendi attitudes to changing socio-
economic realities in Egypt, yet concrete enough to perceive the effendiya as a
historical agent in shaping such realities during this period and later, most notably
after the 1952 revolution.6
For the effendiya, local industrialization would be the perfect site for modern but
authentic action because mastery of new technology and scientific production went
well with local achievement, self-reliance and independence from international trade
and foreign domination. Over time a ‘productionist’ paradigm was created in Egypt,
based on this amalgamation of authenticity and modernity, which eventually became
enshrined in local economic and national thinking. Here the Nasserist regime with its
statist (Arab Socialist) Import Substitute Industrialization (ISI) project was the
culmination of earlier development of the effendiya and its worldview rather than a
revolutionary effort to transform Egypt’s economy. Later, an age of economic
reform (the infitah), and new riches garnered from work in oil-exporting countries,
would draw significant criticism, precisely because they meant the partial shattering
of this paradigm.
Local industrialization processes, modernity and its corollary manifestation in the
Egyptian national movement were not a particular effendi invention. Inter-war
Europe constructed several models of a productionist paradigm, on both the left –
the Soviet Union – and the right – Italy and Germany. Emerging nations on the
periphery, Japan, part of Latin America, Turkey and to a lesser extent Iran, shared
similar notions. Industry fascinated because it would lead to empowerment and
independence, but no less because it would create a new kind of citizen. Taylorism –
the scientification and rationalization of human effort in achieving pre-planned
goals – was all the rage across the political spectrum where the metaphor of
industrial activity would serve to promote parallel national action.7
Scholars concur that the successful implementation of economic reform depends
not solely on following a strict economic formula, known as the Washington
Consensus, but on the ability to do so in a given political setting.8 The politics of the
transition are therefore very significant in determining its end results. My aim here is
to add a historical and cultural perspective to the analysis of economic reform, which
may help explain transformations in the Egyptian economy. The argument is that
the cultural economics associated with the reform were as significant as its political
economy in determining its end results.
The infitah was ferociously contested from day one. Apart from official voices
defending government policies, there was little in public discourse supporting it. An
intellectual canon developed that lamented the transition and found it detrimental to
Egypt’s present and future. I discuss this opposition as effendi and argue that for the
critics the threat to the effendi productionist paradigm amounted to the destruction
of society and culture at large because effendism was taken to represent the soul of
the nation. It was often mooted that a new, consumerist paradigm was being created,
 The Cultural Economy of Development in Egypt 573

and that the emergence of a local consumer society was tantamount to the loss of
indigenous values, identity, and national independence.
In reality, the broad structural transitions envisioned by both promoters and
critics of the infitah would never fully materialize, partly because the basic tenets of
economic nationalism remained intact throughout the period. Egypt could not
continue with (or go back to) strict ISI policies, nor could it make a clear break
toward an alternative either. Instead, a huge hidden economy emerged alongside the
official one, which would provide ad hoc solutions to many unresolved economic
matters. Being thus caught betwixt and between has largely shaped Egyptian
economic history in the last three decades.

Economic nationalism was part and parcel of national ideology in Egypt from early
on, and local industrialization was meant to be its most significant project. It started
around the time of the Urabi movement (1881–82) with a proposal to create a
national bank.9 Bank Misr (The Bank of Egypt), an investment bank and holding
company, was later established in a period when Egypt gained partial independence
after 1922.10 Tal0 at Harb, the bank’s founder, came to personify the nation’s self-
advancement through industrialization. As Vitalis showed, there was much self-
serving interest in Harb’s call.11 But Harb would still be enshrined in collective
memory as the promoter of Egyptian economic independence. During the inter-war
era the renowned Mashru‘ al-qirsh (the piaster plan), a typical effendi project, called
for public donations for the establishment of an Egyptian factory to make
tarbushes.12 Local manufacturers further enlisted potential middle strata consumers
to the national cause of ‘buying Egyptian’ with advertisements emphasizing the
contribution of purchasing local commodities and thus also promoting Egyptian
work.13
The realization of state-led ISI policies during the Nasserite era was not simply
born as a revolutionary ideology, an alternative to the liberal economics of the
monarchy.14 ISI emerged gradually after the takeover of power, and it crystallized
fully only with the first five-year plan of 1960–61. Moreover, ISI policies found much
support in already existing market structures and the cumulative experience of state
management, between the wars most large industries were monopolized (or
cartelized) and had close ties with the Egyptian government, which sponsored
industry by concessions, subsidies, tariff barriers, and other largesse.15 Experience in
controlled management under the wartime supervision of the Middle East Supply
Centre (MESC) also familiarized the country with central planning.16 After the
Second World War government interference went even further, attempting to bring
about local management and financial control over companies by decreeing the 1947
Egyptianization law.17 Even the Free Officers’ agrarian reforms, a flagship of the new
regime, had their antecedents in an earlier era.18
From 1956 onward the pace of ISI quickened, partly as a result of the special and
unexpected conditions that the Suez War that year had created in transferring much
foreign economic enterprise into government hands when sequestration and later
nationalization of British, French and Jewish property took place.19 It also revealed
symptoms of impatience at the slow progress of economic development when left to
the ‘national bourgeoisie’, which pushed for radicalization of the Nasserist regime.
574 R. Shechter

Internationally, ISI was part of the Third World movement, which Nasser, together
with Nehru and Tito, came to lead, with the tacit support of the Soviet Union.
In its ISI development Egypt sustained the effendi spirit of an earlier period; it was
its coming of age, its culmination, rather than a radical realization of a new national
destiny made manifest. The rhetoric glorifying the High Dam at Aswan20 or the iron
and steel complex at Hilwan was principally about integrating modernity and
authenticity embodied in the new Egyptian man (and to a lesser extent woman) and
the nation-state. This era further experienced a significant build-up of the public
sector and civil service, which wrought positive changes in the state welfare system
and the economy, while providing the backbone of employment for the rapidly
growing effendiya. Echoing Hirschman, we may mark the early 1960s as the
exuberant phase of ISI,21 but one not to be simply evaluated in strictly economic
terms. Rather this period would be valued for implementing a wider, and more
broadly based effendi worldview and course of action.
As industry became all the rage and so entangled with local effendi-turned-
hegemonic national identity, its salience above any other economic activity can
hardly be overstated. Even more, industrialization straightened a productionist
paradigm, which championed dynamism associated with the creation of things. In
practical terms this paradigm stood for the assumption that to manufacture
commodities efficiently and on a large scale was the main endeavour of the economy
and of working life. Agriculture had peaked, services were less significant (and
‘parasitic’, see below), so industry was seemingly all that mattered. This paradigm
was not simply a recipe for economic rejuvenation, it stood at the core of local
nationalism and identity so that it would have a long-term impact on Egyptian
economic development, even when ISI was on the wane.

From the late 1960s, and more so under Sadat, Egypt sought ways out of the well-
known pitfalls of ISI development, compounded by the crisis of the 1967 War.22 But
this proved to be no easy task. Having been so entrenched in local modernity,
national ideals, and group-turned-national identity, the standstill of ISI, and since
the early 1970s the retreat from state-led industrialization, placed a big question
mark on the notion of ‘Egyptianness’ as well. The debate over the alleged destruction
of local industry under foreign pressure and in cooperation with local compradors
well reflected the bigger implications of contemporary transitions. From a canonic
oppositional view, the infitah was tantamount to the destruction of effendi life.
In fact, the gap between those supporting the infitah and those fiercely resisting it
was not as wide as might have been imagined from the debate. The arguments were
still conducted within the productionist paradigm and under the umbrella of
improving the existing national economy. As thoroughly discussed by Wahba, both
sides also used the same terminology and offered similar remedies in suggesting what
needed to be done.23 ‘National capital’ funds were to be wisely invested in
stimulating local industry; ‘parasitic capital’ invested in the tertiary sector or
promoting consumption was condemned as wasteful and selfish and was to be
curtailed; and imports of consumer goods were fiercely resisted by all. Nor was
criticism of parasitic behaviour and conspicuous consumption limited to economic
debates; it was well reflected in contemporary public discourse in the press, in films
 The Cultural Economy of Development in Egypt 575

and in novels.24 The extensive circulation of such criticism attested to a widely held
effendi response to changes in Egypt’s political economy. Absent from the debate,
however, was a more realistic realization that the economy had already gone through
a significant change under the new government policy, and still more under market-
induced transitions, especially remittances from abroad. The stiff linearity of
economic modernity was yet to be replaced by a more flexible, perhaps also more ad
hoc, approach to the economy ‘on the ground’.
The rapid growth of the hidden economy was the most significant result of this
standpoint, and the myopia accompanying it. By ‘hidden’ (also known as informal) I
mean a variety of occupations and transactions in all sectors of the economy that
went unreported, unregulated, and untaxed. Such projects would not formally
contribute to the national output because they were not measured by the state or
included in the official statistics of national growth and employment.25 But the
hidden economy was no marginal phenomenon; by definition immeasurable,
according to several estimates it still constituted a large chunk of the economic
turnover, perhaps as large as the measured national one, or larger. The hidden
economy became a part of Egyptian daily life on every level in employment, housing,
shopping, or dealing with local and national government, and it impacted on
household politics and intimate family and gender relations as well as society and the
economy at large.26
Many small and medium-sized businesses, and the large informal housing sector,
were counted under such economic activity. Finances, whether of large-scale Islamic
companies, moneychangers, or neighbourhood women’s lending clubs (jam0 iyyat),
also operated with little interaction with the official, mostly state-owned, banking
system. Remittances from labour migrants too were siphoned back into the country
outside the official banking system, and they became the most significant
contributors to such informality in increasing both local spending and investment.27
On the darker side of the hidden economy, shady army dealings, smuggling, and
cronyism allowed well placed individuals to benefit from illicit interaction with the
bureaucracy and public sector officials.
The multilayered presence of the hidden economy made it too significant to go
unnoticed. Nevertheless, it was kept concealed in the debate focusing almost
exclusively on the open-door aspect of the infitah,28 and both government and
opposition grossly missed the revolutionary, long-term impact of the hidden
economy. Although this myopia was largely due to the ideological and identity
strings attached to economic nationalism in Egypt, it may also be attributed to a
greater lacuna in mainstream economic thinking à la Kuznets, which was yet to
develop the tools for dealing with such unmeasurable units of the national
economy.29 Supporters of state-led development, but also those of market-led
growth, would be at a loss regarding a large chunk of the economy whose activity
could not easily be associated with either.
Slow to change, the combination of economic nationalism as an ideology and the
measured national economy as the economist’s practice treated the hidden economy
as a temporary situation. Some of its more notorious aspects such as corruption or
tax dodging were exposed in the press and widely condemned. The squeeze of the
effendiya, especially with the deterioration of government wages, the rise of housing
prices, and inflation, also drew much attention and public lament. But they were seen
576 R. Shechter

as passing ills that required fixing, rather than as a constant; conventional wisdom
held that the hidden economy would be dissolved or be co-opted into the national
one once the right developmentalism was implemented. When discussed in more
favourable terms, often by anthropologists studying less affluent urbanites, the
hidden economy was treated as part of the ‘survival strategies’ of those living close to
subsistence.30 The realization that the hidden economy was there to stay took a long
time to reach public discourse and academic writing.
While the hidden economy did not fit easily into contemporary discourse and
economic orthodoxies, it did become an entrenched part of Egypt’s political
economy. Because the formal economic institutions would not allow a significant
enough transition to take place, they facilitated the alternative spread of informality.
This, however, did not mean a duality between formal and informal economies with
little contact between the two; it meant myriad synergies that served both sides. As
the 1977 food riots vividly demonstrated, political leadership would not or could not
push for the dramatic reform necessary fully to engage the economic downturn.31
The state found it convenient to let informal employment and services cushion
structural change and its own retreat from earlier ‘social contract’ and commitment
to its citizens.32 Public sector employees and the bureaucracy realized that it was
materially rewarding to maintain the boundaries between the formal and informal,
where they could serve as ‘gatekeepers’ and benefit from such buffering. And those in
the hidden economy surely did not want the heavy interfering hand of govern-
ment getting closer to their businesses and pockets. In sum, all those involved with
this informal economy had, for a variety of reasons, a keen interest in keeping it
hidden.

If the hidden economy was an unplanned supply-side response to the defunct ISI,
increase in consumption was a reaction to forced austerity under the previous
dominance of a productionist paradigm. Economic nationalism and the devel-
opmentalism it inspired fostered austerity (sacrifice for the nation) as a desired
national trait, and aspired to curtail consumption to a level the country could provide.
From the 1919 Revolution, boycotts of imperial commodities had become part and
parcel of the arsenal of the national struggle against foreign dominance.33 Over time,
the purchase of indigenous commodities further manifested an effendi ideal-type of
disciplined consumption patterns; so it was in other national independence
movements, expressed, for example, in the Indian notion of swadeshi (home
industry).34 ISI policies, which were about the scale of making things rather than
catering to specific consumer preferences, further extended the subjugation of
consumption to production. Progress was measured by growth in production at the
expense of quality or price. Segmentation of markets and specific tailoring of
manufacturing and selling to local demand were never ISI’s forte.35 Past acts of
voluntarism were now replaced by state legislation and regulation, where, to
paraphrase Henry Ford, Egyptians were allowed to consume whatever they liked as
long as it was Egypt-made.
During the infitah those condemning and condoning the economic reform
continued to resist consumption, especially its more conspicuous part associated
with imported commodities, on several grounds.36 Consumption seemingly ran
 The Cultural Economy of Development in Egypt 577

counter to central planning, production quotas, etc. – the backbone of ISI – in

introducing the unpredictable market as a key player in determining the economy.
Even supporters of free market-oriented policies still criticized consumption as
waste, taking resources away from savings and investment and hence frustrating
economic rejuvenation. All criticized lack of responsibility in spending, suggesting
that unruly consumption fractured national self-reliance, increased the deficit in
balance of trade, worsened the state of national currency in international markets,
and caused inflation.
Nazih Ayubi sums up the prevailing criticism very well:

In short, there was a growing view that the way to surmount any difficulties
that infitah might face in its initial stages would be to ‘open up’ even further
and to create an overall environment of freedom, stability and certainty
that would encourage capital to invest in a completely ‘free’ capitalistic
economy, and it was this concept of the door that was wide ‘open’ and not
merely ‘ajar’ that eventually shifted the emphasis of infitah from being a way to
secure increased capital and improved technology for invigorating the
productive capacity of the economy, towards a general mood of ‘commercial-
ism’ – characterised by an unmistakable consumerist drive – throughout the
society.37

Under the dominant productionist paradigm, demand was to be subservient to

supply, and when it broke loose during the infitah it was mostly considered harmful
to the real economic needs of Egypt.
Consumption was indeed rampant during this period. It was manifested
everywhere, from entry points into the country, where returning migrant workers
brought back imported commodities, to the Free Zones and local markets where
imported goods were sold. Cityscapes were transformed further, with significant
investment in lucrative construction including high-rise buildings that served as
homes for the rich, business-space, and hotels. On the other hand, rapid
urbanization associated with informal settlements, pressures on physical resources,
and public services (already deteriorating as a result of a cut-back in state
expenditures on welfare) demonstrated a growing gap in spending. Traffic
congestion exacerbated hardships for all city dwellers, but especially for those not
enjoying the exponential growth in the numbers of private cars.38 Advances in
tourism supported a luxury hotel culture, and the development of notorious local
entertainment, mostly associated with the nightclubs on Pyramid Road in Cairo,
also attested to lavish spending. The re-emergence of advertising in Egypt
magnified the visibility of a new Egyptian world of goods and unrestrained
consumption.39
‘Trickle down’ and ‘demonstration effect’ in consumption are mostly associated
with the city, where new lifestyles emerge and where the proximity of rich and poor
promote emulation. But the period under review proved this wrong, as the Egyptian
village, most notably in the delta region, was no less radically transformed.40
Remittances turned mud huts to red-brick houses, which also signified a change from
extended family dwellings to semi-detached houses and separate family units, or even
homes for the nuclear family. The content of homes was further transformed with
578 R. Shechter

new electric appliances and furnishings. And the entire village setting often changed
from an agricultural settlement to an urban suburb.
These transitions in local consumption meant a very significant, perhaps
revolutionary, change in Egyptian socio-economic life. Yet they did not spell
disaster for all, or the breakdown of family, society, and culture, as often envisioned
in effendi narratives. The commercialization of society, as Ayubi implied, threatened
effendi identity and social reproduction. And it was in effendi eyes that this
‘unmistakable consumerist drive’ was tantamount to the creation of ‘a new Egyptian
man’ and ‘a new social order’ that would dominate post-infitah culture and society at
the expense of the effendiya.41 Together with the hidden economy the emergence of
local consumption would mark the end of the dominance of effendism as the
prevailing ideology and lifestyle in Egypt.
Earlier, middle classness was often based on education, which led to management,
especially through the hierarchical civil service and public sector, of things and needs
of fellow citizens.42 With the coming economic transition, however, social
stratification became determined more on the ability to consume private
commodities than to produce and allocate public goods.43 In this new context the
effendiya found itself under pressure from ‘below’ and ‘above’, losing its social
standing in the process. The threat from below came from the ‘democratization’ of
consumption in the sense that consumer goods became more available throughout
Egyptian society. In the study of consumption in developed economies such a spread
of commodities is often associated with a qualified joining by the working classes and
lower strata in the relative affluence of the middle class. But in Egypt it was more of a
two-way street, whereby many among the rural and urban poor improved their lot
while a large portion of the effendiya underwent a process of relative impoverishment
and proletarianization. A larger local consumer society further meant, as elsewhere,
a broadening of the middle. But under existing economic conditions such broadening
stood for sharing relative deprivation. The ibn al-balad (son of the country), lionized
as an authentic noble savage during the Nasserite period, but knowing his place, now
stepped out of his ‘natural’ milieu and threatened the effendiya.
The Egyptian upper class, those running the state bureaucracy, the public sector,
and politics, and increasingly private business, further frustrated effendi expectations
and threatened its worldview. The infitah was perceived as a breakaway from the
previous social contract between the state and its citizens that guaranteed modest
employment and welfare in exchange for loyalty and readiness to forgo personal
liberties and comfort for the common good. Consumerism demonstrated daily the
betrayal by those controlling the state in their retreat from past state-led
developmentalism with its commitment to social justice and to reward for self-
improvement through education and hard work. Effendi commentators increasingly
portrayed a sense of alienation from the political and economic elite, which through
its excessive consumption of modern – read Western – commodities made itself
foreign too and lost its authenticity.
One of the most evident venues for representing effendi crisis and criticism was
quality/festival films of the period, in which cinematic narratives similarly explored
the impact of the infitah on gender relations and family values.44 In films, love
crumbled under the difficult economic conditions of the salaried middle strata,
especially the inability of many an effendi male protagonist to buy an apartment, the
 The Cultural Economy of Development in Egypt 579

prerequisite for marriage. Gender relations were further depicted as under great
strain as male breadwinners found it harder to establish a family or keep one under
female consumerist aspirations. Economic hardships exacerbated by consumerism
were also shown to cause the erosion of family ties and the commitment to mutual
help in times of need. Reproduction of the effendi family was seen to be endangered,
especially as the nouveaux riches of the infitah often married into the effendi family.
For film-makers, crumbling gender and family relations both embodied and
symbolized a broader social malaise. The period witnessed the emergence of a
new, private-sector cinema, associated with loss of state support for the arts, but also
with loss of creativity, commercialization, and vulgarization of culture by the
infitah’s ‘new public’.45 Cinema critics implicitly associated the demise of quality film
production with that of effendi way of life.
With such uniform criticism, little attention was paid to the fact that increases in
overall consumption also meant that many living close to subsistence improved their
material quality of life, or that such increases in demand may feed back an
industrialization effort and increase ‘industriousness’ via small manufacturing.46 The
erosion of welfare in Egypt certainly widened economic gaps at the same time that
new consumerist horizons set novel expectations. However, families in the city and
countryside were not passive in responding to such conditions, and they actively
struggled to improve their lot.47 Worsening economic conditions and new
consumerist expectations could also put family and gender relations under extra
tension. But this did not amount to the total breakdown of the Egyptian family, or
to all-out friction along gender lines as implied by effendi narratives. For some, the
crisis was real enough, but it was felt unevenly in Egypt, and it was surely
exacerbated by a worldview that remained unmoved while the reality surrounding it
was changing.

My analysis of the cultural economy of the infitah – the ideological and identity-
related garb in which contemporary debates on economic reform were clothed –
revolved around the long-term impact of an Egyptian middle class worldview on that
of the nation. An effendi perspective had existed before, but it spread rapidly after
Egypt’s partial independence, attaining a hegemonic position in the Nasserite period,
and starting to lose ground since the infitah. To allow such discussion, I have argued
for a cultural rather than socio-economic or political definition of the effendiya, a
flexible and inclusive category of analysis, which assigns to this worldview significant
agency in shaping economic transitions throughout the twentieth century. The
advantages of such an approach, I hope, have become clear in the analysis above, in
which I emphasized resistance to change during the infitah not simply based on
interests, but also on the resilience of an effendi-turned-national identity.
The article considered changes during the infitah as unintended consequences
rather than a pre-planned decision to transform Egypt’s economic and social life.
Economic nationalism was still strong among infitah defenders and critics alike,
and both sides were taken by surprise at the sheer magnitude of the unleashed
events. Indeed, such surprise attested to an across-the-board myopia regarding the
nature of the economic transformations, associated with the rapid development of
the hidden economy and enhanced by the emergence of local consumer society.
580 R. Shechter

Such short-sightedness, I argued, was largely due to the gap between ‘facts on the
ground’ and their interpretation based on the dominant effendi productionist
paradigm.
Effendi intellectuals, whether in arts, literature, or academia, lamented the
emergence of the new man, the new public and the new social order during the
infitah. Indeed, an infitahi class was portrayed as replacing the more respectable
effendiya to the detriment of Egypt. But the critical analysis was not followed by the
creation of a vital alternative, and responses to the crisis came by and large from the
familiar effendi repertoire of falling back on the state and old-style development-
alism. A generation after Sadat’s infitah the effendiya worldview has not disappeared.
Nevertheless, it has been gradually overtaken by another, more dynamic one:
Islamism.

Notes
Research was supported by a grant from the Israeli Foundations Trustees (2004–2005).

1. For the narrative suggested see G. Abdel-Khalek, ‘The Open Door Economic Policy in Egypt: Its
Contribution to Investment and Its Equity Implications’, in M.H. Kerr and E.S. Yassin (eds.), Rich
and Poor States in the Middle East: Egypt and the New Arab Order (Boulder, CO: Westview Press,
1982), p.278; N.N. Ayubi, The State and Public Policies in Egypt Since Sadat (Reading, UK: Ithaca
Press, 1991), p.77; S.S. Imam, Man yamliku Misr? (Cairo: Dar Misr al-Mahrusa, 2002, originally
published 1986), pp.24–5, especially n.13; M. Zaalouk, Power, Class, and Foreign Capital in Egypt:
The Rise of the New Bourgeoisie (London: Zed Books, 1989), pp.1–2. See a chapter-long comparison
of Nasser’s and Muhammad Ali’s economic projects in G.A. Amin, Egypt’s Economic Predicament: A
Study in the Interaction of External Pressure, Political Folly and Social Tension in Egypt, 1960–1990
(Leiden: E.J. Brill, 1995), chapter 7.
2. On the Balta-Liman convention and its impact on the Ottoman Empire see Ö. Bülent, ‘A Reassessment of
1838 Trade Convention’, in K. Çiçek (ed.), The Great Ottoman-Turkish Civilization (Ankara: Yeni
Turkiye, 2000), Vol.2, pp.230–41. On Law 43 see J. Waterbury, The Egypt of Nasser and Sadat: The
Political Economy of Two Regimes (Princeton, NJ: Princeton University Press, 1983), pp.131–2.
3. For a general discussion on the meaning of economic nationalism see D. Levi-Faur, ‘Economic
Nationalism: From Friedrich List to Robert Reich’, Review of International Studies, Vol.23 (1997),
pp.359–70. On economic nationalism in the contemporary age of globalization see A. Pickel,
‘Explaining, and Explaining with, Economic Nationalism’, Nations and Nationalism, Vol.9, No.1
(2003), pp.105–27. For further discussion on economic nationalism in Egypt see A.A. EzzelArab,
European Control and Egypt’s Traditional Elites – Case Study in Elite Economic Nationalism
(Lewinston, NY: Edwin Mellen Press, 2002); R. Owen, ‘The Ideology of Economic Nationalism in its
Egyptian Context 1919–1939’, in M. Buheiry (ed.), Intellectual Life in the Arab East, 1890–1939
(Beirut: Center for Arab and Middle East Studies, American University of Beirut, 1981).
4. The term effendi designated, from the early nineteenth century, a modern/Western educated person
who usually belonged to the Egyptian-Ottoman elite of the period. It became associated with a
growing literate ‘middle group’ only after the First World War, hence the term new effendia,
sometimes used in describing this stratum. The following discussion on the effendia is based on I.
Gershoni and J.P. Jankowski, Redefining the Egyptian Nation, 1930–1945 (Cambridge: Cambridge
University Press, 1995), pp.7–22; L. Ryzova, ‘Egyptianizing Modernity through the ‘‘New Effendiya’’:
Social and Cultural Constructions of the Middle Class in Egypt Under the Monarchy’, in
A. Goldschmidt, A.J. Johnson and B.A. Salmoni (eds.), Re-Envisioning Egypt, 1919–1952 (Cairo:
AUC Press, 2005); R. Shechter, Smoking, Culture and Economy in the Middle East: The Egyptian
Tobacco Market 1850–2000 (London: I.B. Tauris Publishers, 2006), chapters 7 and 8.
5. For different manifestations of effendi political activity see M. Deeb, Party Politics in Egypt, the Wafd
and Its Rivals 1919–1939 (London: Ithaca Press, 1979); J.P. Jankowski, Egypt’s Young Rebels: ‘Young
Egypt’ 1933–1952 (Stanford, CA: Hoover Institution Press, Stanford University, 1975).
 The Cultural Economy of Development in Egypt 581

6. For the notion and the somewhat exceptional use of the term effendiyya in this context see
R. Shechter, ‘From Effendi to Infitahi: Consumerism and Its Malcontents in the Emergence of
Egyptian Market Society’, British Journal of Middle Eastern Studies (forthcoming).
7. For the reception of Taylorism in Europe see C. Maier, ‘Between Taylorism and Technocracy:
European Ideologies and the Vision of Industrial Productivity in the 1920s’, Journal of Contemporary
History, Vol.5, No.2 (1970), pp.27–61.
8. C.M. Henry and R. Springborg, Globalization and the Politics of Economic Development in the Middle
East (Cambridge: Cambridge University Press, 2001), ‘Overview’; R. Hinnebusch, ‘The Politics of
Economic Liberalization: Comparing Egypt and Syria’, in H. Hakimian and Z. Moshaver (eds.), The
State and Global Change: The Political Economy of Transition in the Middle East and North Africa
(Richmond, Surrey: Curzon, 2001); R. Owen and Ş. Pamuk, A History of Middle East Economies in
the Twentieth Century (Cambridge, MA: Harvard University Press, 1999), ‘Epilogue and Conclusion’;
A. Richards and J. Waterbury, A Political Economy of the Middle East (Boulder, CO: Westview Press,
1996), chapter 9.
9. EzzelArab, European Control, chapter 4.
10. On Bank Misr see E. Davis, Challenging Colonialism: Bank Misr and Egyptian Industrialization, 1920–
1941 (Princeton, NJ: Princeton University Press, 1983); R. Vitalis, When Capitalists Collide: Business
Conflict and the End of Empire in Egypt (Berkeley: University of California Press, 1995).
11. Vitalis, When Capitalists Collide. See especially pp.42–4.
12. Jankowski, Egypt’s Young Rebel, pp.11–12. For economic nationalism in the Egyptian cigarette
industry see Shechter, Smoking, Culture and Economy, pp.111–16.
13. M.L. Russell, Creating the New Egyptian Woman: Consumerism, Education, and National Identity,
1863–1922 (New York: Palgrave Macmillan, 2004), pp.73–7.
14. See Mourad Wahba’s discussion on ideology formation during the period preceding the revolution, in
M. Wahba, The Role of the State in the Egyptian Economy, 1945–1981 (Reading, UK: Ithaca Press,
1994), pp.37–43.
15. On monopolistic conditions in contemporary Egypt see A.A.I. El-Gritli, ‘The Structure of Modern
Industry in Egypt’, L’Egypte contemporaine, Vol.38 (1947), pp.368–582; C. Issawi, Egypt at Mid-
Century: An Economic Survey (London: Oxford University Press, 1954), pp.158–61. For business–
state relations see Vitalis, When Capitalists Collide.
16. On MESC see M.S. Ghali, Al-‘alaqat al-iqtisadiyya bayn Misr wa-Baritanya, 1935–1945 (Cairo: Al-
Hay’a al-Misriyya al-‘amma li-l-kitab, 2001), chapter 5. Robert Vitalis and Steven Heydemann make a
clear case for the argument above in their ‘War, Keynesianism, and Colonialism: Explaining State–
Market Relations in the Postwar Middle East’, in S. Heydemann (ed.), War, Institutions and Social
Change in the Middle East (Berkeley: University of California Press, 2000).
17. For a detailed study of the 1947 law see F. Karanasou, ‘Egyptianisation: The 1947 Company Law and
the Foreign Communities in Egypt’ (Ph.D. dissertation, St. Antony’s College, Oxford University,
1992).
18. On past failed attempts to bring such reforms see G. Baer, A History of Landownership in Modern
Egypt, 1800–1950 (London: Oxford University Press, 1962), chapter 6.
19. R.L. Tignor, Capitalism and Nationalism at the End of Empire: State and Business in Decolonizing
Egypt, Nigeria, and Kenya, 1945–1963 (Princeton, NJ: Princeton University Press, 1998), chapters 4
and 5.
20. Y. Meital, ‘The Aswan High Dam and Revolutionary Symbolism in Egypt’, in H. Erlich and
I. Gershoni (ed.), The Nile: Histories, Cultures, Myths (Boulder, CO: Lynne Reinner, 2000).
21. A.O. Hirschman, ‘The Political Economy of Import-Substituting Industrialization in Latin America’,
The Quarterly Journal of Economics, Vol.82, No.1 (1968), pp.1–32.
22. For the political economy of the period see Waterbury, The Egypt of Nasser and Sadat, chapters 5–7.
23. Wahba, Role of the State, pp.181–8. See also S. Soliman, ‘State and Industrial Capitalism in Egypt’,
Cairo Papers in Social Science, Vol.21, No.2 (Summer 1998), p.3.
24. Shechter, ‘From Effendi to Infitahi’.
25. Although the more common term used is ‘informal’, I use ‘hidden’ when discussing such
development to emphasize the fact that it was mostly absent at the time from accounts on
economic transitions. On the informal hidden economy see, N. Choucri, ‘The Hidden Economy: A
New View of Remittances in the Arab World’, World Development, Vol.14, No.6 (1986), pp.977–
85; I.M. Oweiss, ‘Egypt’s Economy: The Pressing Issues’, in Ibrahim M. Oweiss (ed.), The Political
582 R. Shechter

Economy of Contemporary Egypt (Washington, DC: Center for Contemporary Arab Studies,
Georgetown University, 1990), pp.13–18; D. Roy, ‘The Hidden Economy of Egypt’, Middle
Eastern Studies, Vol.28, No.4 (1992), pp.689–711. For informal housing see A.M. Soliman, ‘Tilting
the Sphinxes: Locating Urban Informality in Egyptian Cities’, in A. Roy and N. AlSayyad (eds.),
Urban Informality: Transnational Perspectives from the Middle East, Latin America, and South Asia
(Lanham, MD: Lexington Books, 2004). For women’s participation in the informal economy of
the Middle East see R.A. Lobban Jr. (ed.), Middle Eastern Women and the Invisible Economy
(Gainesville, FL: University Press of Florida, 1998). For a general discussion on informal economy
see A. Portes and W. Heller, ‘The Informal Economy’, in N.J. Smelser and R. Swedberg (eds.),
The Handbook of Economic Sociology (Princeton, NJ: Princeton University Press, 2005).
26. D. Singerman, Avenues of Participation: Family, Politics, and Networks in Urban Quarters of Cairo
(Princeton, NJ: Princeton University Press, 1995); D. Singerman and H. Hoodfar (eds.), Development,
Change, and Gender in Cairo: A View from the Household (Bloomington: Indiana University Press,
1996); U. Wikan, Tomorrow, God Willing: Self-made Destinies in Cairo (Chicago: University of
Chicago Press, 1996).
27. See, in addition to the sources on informality above, G. Filer, ‘Scope and Some Effects of Remittances
of Egyptian Migrant Workers in the Arab Oil-Producing Countries, 1973–1984’, Asian and African
Studies, Vol.21 (1987), pp.305–25; A. Lesch, ‘Egyptian Labor Migration’, in Ibrahim M. Oweiss (ed.),
The Political Economy of Contemporary Egypt (Washington, DC: Center for Contemporary Arab
Studies, Georgetown University, 1990); S.E. Ibrahim, The New Arab Social Order: a Study of the
Social Impact of Oil Wealth (Boulder, CO: Westview, 1982), chapter 4.
28. Both Ikram and Waterbury emphasize that the infitah and Law 43 caught the Egyptian
government quite unprepared for the magnitude of contemporary change. K. Ikram, The Egyptian
Economy, 1952–2000: Performance, Policies, and Issues (London: Routledge, 2006), p.22;
Waterbury, The Egypt of Nasser and Sadat, p.154. The same was true for the opposition and
its critique of the open-door policies, which recommended statist solutions in an economic reality
increasingly beyond state control. See, for example, I. al-‘Issawi, Fi islah ma afsadahu al-infitah
(Cairo: Kitab al-Ahli, 1984); F. Mursi, Hadha al-infitah al-iqtisadi (Cairo: Dar al-Thaqafa al-
Jadida, 1976).
29. S. Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, CT: Yale University
Press, 1966).
30. This is true for virtually all the literature quoted above on the impact of the infitah on daily life.
Moreover, contemporary ethnographies mostly took women and their plight under socio-economic
conditions as their main interest, thus further emphasizing a double marginality of their subjects who
faced both contemporary economic hardships and relative social exclusion from public life. See, in
addition to the above, A.E. Macleod, Accommodating Protest: Working Women, the New Veiling, and
Change in Cairo (New York: Columbia University Press, 1991).
31. For a brief description of the food riots and their outcomes see R.A. Hinnebusch Jr., Egyptian Politics
under Sadat: The Post-Populist Development of an Authoritarian-Modernizing State (Cambridge:
Cambridge University Press, 1985), pp.71–2.
32. On the notion of social contract in the Middle East see J. Waterbury, ‘From Social Contract to
Extraction Contracts: The Political Economy of Authoritarianism and Democracy’, in J.P. Entelis
(ed.), Islam, Democracy, and the State in North Africa (Bloomington, IN: Indiana University Press,
1997), chapter 7.
33. Russell, Creating the New Egyptian Woman, pp.89–92; N.Y. Reynolds, ‘Commodity Communities:
Interweavings of Market Cultures, Consumption Practices, and Social Power in Egypt, 1907–1961’
(Ph.D. dissertation, Stanford University, CA, 2003), pp.291–304.
34. C.A. Bayly, ‘The Origin of Swadeshi (Home Industry): Cloth and Indian Society, 1700–1930’, in
Arjun Appadurai (ed.), The Social Life of Things: Commodities in Cultural Perspective (Cambridge:
Cambridge University Press, 1986).
35. For the evaluation of a contemporary marketing expert see S. Saddik, ‘An Analysis of the Status of
Marketing in Egypt’, European Journal of Marketing, Vol.7, No.2 (1973), pp.77–81. For similar
evaluations a decade into the infitah see A.B. El-Haddad, ‘An Analysis of the Current Status of
Marketing’, in E. Kaynak (ed.), International Business in the Middle East (Berlin: Walter de Gruyter,
1986); G. Rice, ‘Marketing Management in Egypt’, Management Decision, Vol.22, No.4 (1984), pp.3–
14.
 The Cultural Economy of Development in Egypt 583

36. For an overview of contemporary arguments against consumption see F. Ajami, ‘The Open-Door
Economy: Its Roots and Welfare Consequences’, in G. Abdel-Khalek and R. Tignor (eds.), The
Political Economy of Income Distribution in Egypt (New York: Holmes & Meier Publishers, 1982),
pp.501–11; Waterbury, The Egypt of Nasser and Sadat, pp.134–8.
37. Ayubi, The State and Public Policies, p.25.
38. G. Amin, Whatever Happened to the Egyptians? Changes in Egyptian Society from 1950 to the Present
(Cairo: American University in Cairo Press, 2000), pp.105–8.
39. R. Shechter, ‘Glocal Mediators: Marketing in Egypt during the Open-Door Era (infitah)’, Enterprise
and Society (forthcoming).
40. K.H. Bach, ‘The Vision of a Better Life: New Patterns of Consumption and Changed Social
Relations’, in N.S. Hopkins and K. Westergaard (eds.), Directions of Change in Rural Egypt (Cairo:
American University in Cairo Press, 1998); P. Weyland, Inside the Third World Village (London:
Routledge, 1993).
41. The term ‘new Egyptian man’ emerged at a symposium on this topic, ‘Bina’ al-insan al-Misri al-jadid’,
organized by the Ahram Centre for Political and Strategic Studies, in which some of the most
prominent Egyptian intellectuals participated. See a report on the symposium in al-Ahram, 9 Oct.
1976. The term ‘new social order’ was often used in discussing social transformations of the time, and
is best associated with S.E. Ibrahim’s The New Arab Social Order: A Study of the Social Impact of Oil
Wealth (Boulder, CO: Westview, 1982).
42. On higher education as a source of social mobilization see Waterbury, The Egypt of Nasser and Sadat,
pp.234–41.
43. Such consumerism is common in periods of rapid economic transition and sudden enrichment in other
parts of the world. See part two in P.N. Stearn’s Consumerism in World History: The Global
Transformation of Desire (London: Routledge, 2001).
44. The analysis is based on Shechter, ‘From Effendi to Infitahi’.
45. On the notion of the ‘new public’ and the cinema of the infitah see D. Sharaf al-Din, al-Siyasa wa-al-
sinima fi Misr, 1961–1981 (Cairo: Dar al-Shuruq, 1992), pp.169–213.
46. Homa Hoodfar’s ethnography well illustrates the arguments made above. See her Between Marriage
and the Market: Intimate Politics and Survival in Cairo (Cairo: The American University in Cairo
Press, 1999. First published in 1997 by the University of California Press), chapter 7. The notion of
‘industrious’ is borrowed from J. de Vries ‘The Industrial Revolution and the Industrious Revolution’,
The Journal of Economic History, Vol.54, No.2 (June 1994), pp.249–70.
47. For discussions on urban adjustments to the new economic realities and local agency in the process see
Hoodfar, Between Marriage; Singerman, Avenues of Participation; Singerman and Hoodfar (eds.),
Development, Change, and Gender; Wikan, Tomorrow, God Willing. For the same agency among those
living in the countryside see Hopkins and Westergaard (eds.), Directions of Change; Weyland, Inside
the Third.