The problem with Egypt? Its cities.
The most talked-about book in urban circles this year is Edward Glaeser's The Triumph of the City, from Penguin Press. In 338 lively pages, the Harvard economics professor argues that proximity counts — that when people gather in relatively dense agglomerations, human imagination is unleashed, and economic benefits flow to millions of people who would otherwise have remained poorer.
In the Feb. 16 New York Times, economics columnist David Leonhardt applies Glaeser's central idea to Egypt and finds that it fits like a tailored glove. Leonhardt observes:
When Hosni Mubarak took power in 1981, Egypt was indeed more urban than the rest of the world. About 44 percent of its population lived in cities. In East Asia, by comparison, only 26 percent of people lived in cities.
Since then, the cities of Asia have expanded rapidly, drawing in millions of peasant farmers looking for a better life — and, more often than not, finding it. Almost 50 percent of East Asians now live in cities. And Egypt? It is the only large country to have become less urban in the last 30 years, according to the World Bank. About 43 percent of Egyptians are city dwellers today.
This urban stagnation helps explain Egypt’s broader stagnation. As tough as city life in poor countries can be, it’s also fertile ground for economic growth. Nearly everything can be done more efficiently in a well-run city, be it plumbing, transportation or the generation of new ideas and businesses. “Being around other people,” says Paul Romer, the economist and growth expert, “helps make us smarter.”
Egypt has nothing like China’s Shenzhen, India’s Bangalore, South Korea’s Busan or, to go back further in time, our own Chicago — striving cities that have spawned thousands of new companies.
Those cities become giant incubators for economic growth. They are the places where people learn to collaborate and to compete, where they can take advantage of the skills they already have and learn new ones, too.
The government and economy of Egypt, Leonhardt says, have largely failed at "giving their workers skills and forcing them to compete." In a dynamic, urbanizing country, workers are impelled to learn, team up, exchange, and achieve, the theory goes. In a non-urban setting, it's easier to stagnate.
One piece of evidence supporting his contention about a skills deficit: Among 48 countries that participated in a recent standardized math test for eighth-graders, Egypt was seventh from the bottom. (Below Egypt were Algeria, Oman, Palestine, Kuwait, Saudi Arabia, and Qatar. The United States was ninth from the top.)
In the limited space of a newspaper column, Leonhardt doesn't really prove what's causing what. He suggests, however, that Egypt's authoritarian government largely prevented robust economic competition and innovation from emerging in its cities, and thus Egypt's cities failed to generate the economic rewards that people in other once-lagging nations have begun to enjoy.
Like many dictatorships, Leonhardt says, Egypt has a capital city "where people and businesses come to live off the government." I interpret this to mean that density by itself is not enough to improve economic well-being. Proper economic incentives and a degree of freedom are needed. If this is the case, then urbanization will not automatically deliver the rewards that Glaeser points to in his book.
Leonhardt's column also does not investigate the urban structure of Cairo, Alexandria, or other cities in Egypt. Is there something about the physical organization of those cities that impedes economic progress? We don't know.
Nonetheless, Leonhardt and Glaeser are clearly onto something. City life tends to promote economic progress — unless you do things that negate urbanism's inherent advantages. The Times columnist is surely right in his conclusion: "Whatever the details, you can be sure that a more prosperous Egypt will be a more urban one."