4. Political risks in Egypt seem to be increasing again, and the country seems to be retreating...

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4. Political risks in Egypt seem to be increasing again, and the country seems to be retreating from democracy, largely due to intervention by the military.

As a manager in an international business, how would the current turmoil and political uncertainty in Egypt influence your investment decisions, and what does this mean for the future of the Egyptian economy?

With 83 million people, Egypt is the most populous Arab state. On the face of it, Egypt made significant economic progress during the 2000s. In 2004, the government of Hosni Mubarak enacted a series of economic reforms that included trade liberalization, cuts in import tariffs, tax cuts, deregulation, and changes in investment regulations that allowed for more foreign direct investment in the Egyptian economy. As a consequence, economic growth, which had been in the 2 to 4 percent range during the early 2000s, accelerated to around 7 percent a year. Exports almost tripled, from $9 billion in 2004 to more than $25 billion by 2010. Foreign direct investment increased from $4 billion in 2004 to $11 billion in 2008, while unemployment fell from 11 percent to 8 percent.

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