The nighttime lights of Cairo shine from signs, shops, and the heights of international hotels across its skyline. The streets overflow with people and cars. Downtown is abuzz, and the glow of the Cairo Tower presides over it all.

Egypt is full of economic activity: At USD 394.28 billion, Egypt’s GDP placed third in Forbes Middle East’s list of largest economies in the Arab region[1]. In 2016, Egypt overtook South Africa to become Africa’s second largest economy. Egypt has the largest oil refinery capacity in the continent and is the largest non-OPEC producer of oil. The Egyptian IT sector is expanding rapidly, and Egypt’s economy is one of the most diversified in the Arab world. On the United Nations (UN) Human Development Index, Egypt rates as “high,” with a rating of 0.707 that is continuing to improve year-over-year [2].

Which raises the question: Why do so many international organizations still consider Egypt to be a developing country?

Definition problems

Well, to start, “developing country” is not very well defined.

There is no clear agreement on which nations fit the category of “developing.” Widely differing systems for analyzing and comparing countries — from political economy and modernization studies to theories of decolonization and Marxism — include a concept of the “developing nation,” and each uses its own criteria.

The UN, in fact, acknowledges that it has no formal standard for designating “developed” and “developing” countries. A nation’s GDP per capita compared to other nations can be a reference point, but in general, the UN accepts any country’s claim of itself being “developing.” The World Bank has done away with the terms “developed” and “developing” altogether. It now classifies countries as “low income,” “lower middle income,” “upper middle income,” and “high income,” based on Gross National Income per capita.

In many ways, the term “developing country” is determined by history and convention. In common practice, Japan in Asia, Canada and the United States in North America, Australia and New Zealand in Oceania, and Europe are considered developed regions. Israel is also considered a developed country, and in international trade statistics, the Southern African Customs Union is treated as a developed region. By default, most other countries are “developing,” with the exception of countries in the Commonwealth of Independent States (i.e., the former Soviet Union), which are called countries “in transition.”

What makes a developing country?

A developing country — or a “low and middle income” country, a “less economically developed” country, or a “underdeveloped” country — is a country with a lower industrial base and a lower quality of life for its population relative to other countries.

Developing countries tend to share a number of economic and non-economic characteristics:

• Widespread poverty
• Poor education and low literacy levels
• High levels of air and water pollution
• Weak healthcare systems and a high populace with infectious diseases
• Poor nutrition
• Violence against women
• High child and maternal mortality
• High number of traffic injuries and death
• Corruption at many levels of government
• Generally poor infrastructure

As a result, people in developing countries usually have a lower life expectancy than people in developed countries.

When will Egypt stop being a developing country?

Realistically, given its historical use, the term “developing country” is likely to be applied to Egypt until more agencies like the World Bank drop the term and it falls completely out of use. The World Bank is not the only one to see problems with the term. Many point out that it implies an inferiority that is not always fair, and that it assumes the only way for a country to progress is along the Western model.

It is good to remember that “developed” and “developing” were chosen for statistical convenience, and that they don’t always express a judgement about how modern or successful a country is. The list of developing countries includes newly industrialized countries, emerging markets, and frontier markets, and since the 1990s, these countries have shown higher economic growth than the group of developed countries.

Here in Egypt, many reforms undertaken since 2003 have been positive for the country’s economy, for example, reducing customs and tariffs, lowering corporate taxes from 40% to 20%[3], and depegging the Egyptian Pound to let its value trade on international currency exchanges. All of these are encouraging business and investment, and the International Monetary Fund (IMF) rates Egypt as one of the top countries in the world undertaking reforms to modernize its economy.

But despite the size and growth of its economy, many characteristics of a developing country still apply to Egypt. For example, due to poor sanitation over 2,700 Egyptian children die each year because of diarrhea[4]. While life expectancy for Egyptians has been rising steadily for the last 50 years, it still ranks only 149th in the world [5]. Egypt’s GDP ranks quite high, but its GDP per capita is below the world average, and using the World Bank’s categories, Egypt is a “lower middle income” country [6].

Conclusion

So where does all this leave us—is Egypt a developing country or not?

An important element in everything discussed here is inequality. Wealth, health, education, and quality of life in Egypt are not shared equally across the population, especially when Egypt is compared to other nations.

In 2010, the United Nations Development Programme (UNDP) introduced an adjustment to its HDI to recognize the disparity that exists inside countries, and it began publishing an Inequality-adjusted Human Development Index (IHDI) alongside the HDI data. Egypt’s IHDI is 0.492[7]. The large gap between this and Egypt’s HDI of .700 indicates high inequality in the country.

This explains why, despite all the positives about Egypt’s economic performance, many of the characteristics of a developing country—from pollution and traffic injuries to illiteracy and poverty—are sadly visible across the country. These problems don’t automatically disappear with economic growth, and they take more to solve than just government, or even private, spending.

Perhaps what matters in the end is not the label that gets applied to a country, but the country’s ability to keep improving, and the willingness, among its government, businesses, and citizens, to make life better for all.

Footnotes

[1] Omran, H. (2021, July 22). These Are The 5 Largest Arab Economies In 2021, Led By Saudi Arabia. Forbes ME. https://www.forbesmiddleeast.com/industry/economy/saudi-maintains-on-top-of-five-largest-arab-economies-in-2021-ahead-of-uae-and-egypt

[2] “Human Development Report 2020”. United Nations Development Programme. 2020.

[3] “Guide to Doing Business in Egypt: Taxation”. American Chamber of Commerce in Egypt. Retrieved December 2019.

[4] “UNICEF Data: Diarrhoeal disease, October 2019”. UNICEF. 2019.

[5] “Human Development Report 2019: Human Development Index Ranking”. United Nations Development Programme. 10 December 2019.

[6] “World Bank Databank: Egypt, Arab Rep.” World Bank. 2019.

[7] “Human Development Reports: Egypt”. United Nations Development Programme. Retrieved December 2019.