Beyond corruption, what really holds back Egypt’s economy
In previous writing, I examined the complex relationship between corruption and development through the lens of China’s recent history. Drawing on a book about the country’s “gilded age,” I explored how, over the past four decades, rampant corruption in China did not prevent it from achieving rapid economic growth, attracting both domestic and international investment, and establishing itself as a formidable player in global markets.
That analysis provides useful context as we shift our focus to Egypt. The question here is: To what extent can financial and administrative corruption be considered a real obstacle to growth and development in Egypt? Is it, as many claim, the core issue that must be resolved before any other progress can be made?
Corruption in Egypt: No debate there
The World Bank defines corruption as the misuse of public authority for private gain—a broad category that includes embezzlement and bribery. Egypt falls squarely within countries known to suffer from high levels of corruption.
It’s worth noting that the World Bank’s corruption indicator does not reflect the Bank’s own internal assessment, but rather compiles survey data from various stakeholders interacting with Egypt’s institutional landscape. The score, ranging from 0 to 100, measures perceived control over corruption, with higher scores indicating stronger control.
According to the most recent indicators (2011–2017), Egypt’s average score stood at 33.9 out of 100. This suggests that much more needs to be done to control corrupt practices. In response, the Egyptian government launched the National Anti-Corruption Strategy under the Administrative Control Authority.
So, the widespread nature of corruption in Egypt is not under dispute. What is contentious, however, is the degree to which this corruption, as is so often assumed, actually impedes development and growth.
Why Vietnam succeeded where Egypt did not
To answer that, we need a comparative lens. While comparisons to China may not always be appropriate due to significant structural differences, Vietnam offers a more relevant parallel.
Vietnam has a similar population (98 million) and comparable per capita GDP. Its corruption levels, according to World Bank data from the same period (2011–2017), are also close, with Vietnam scoring an average of 35.3 out of 100.
Despite these similarities, Vietnam has been one of the fastest-growing economies in the Global South over the past two decades, averaging over 6.4% annual growth between 2000 and 2024. Moreover, Vietnam has consistently achieved high investment rates, averaging 30% of GDP over the past 10 years—more than double Egypt’s 14% over the same period.
Vietnam’s success in combining economic growth with persistent corruption lies in its institutional performance. The country has managed to create an environment of stability in which private investors can anticipate what the state will require of them, and where economic policy is consistent over the medium and long term.
For investors, predictability is more critical than whether the official they deal with is honest or corrupt.
Corruption is a problem—but not always an obstacle
This institutional stability is also reflected in other World Bank indicators. Between 2011 and 2017, Vietnam outperformed Egypt in metrics like rule of law and government effectiveness.
The rule of law indicator measures the enforcement of contracts and protection of property rights. Vietnam scored an average of 43.1 out of 100, compared to Egypt’s 33.3.
Government effectiveness, defined by the quality of public services, policy implementation, and the state’s credibility in the eyes of private investors, shows an even larger gap. Vietnam averaged 50.2 out of 100, while Egypt scored just 31.5.
Can corruption be managed?
These data points raise a crucial question: how has Vietnam managed to contain corruption in a way that still allows for solid institutional performance in key sectors? While the details of Vietnam’s success merit further research, the initial takeaway is that effective institutions can still function in a corrupt environment, provided corruption is kept from deeply undermining those institutions.
The promising lesson here is that Egypt does not need a sweeping, state-wide reform revolution to succeed economically. It only needs to improve the performance and oversight of institutions directly involved with investors, such as licensing authorities, tax offices, and economic regulators.
Vietnam’s case also proves that a country doesn’t need to match the governance levels of North America or Europe to attract investment or sustain growth. Its institutional capacity remains modest by global standards, yet it has still created a workable environment for private capital, albeit through mechanisms not necessarily captured by World Bank metrics.
This is not a defense of corruption
None of this is to say that corruption is not harmful. It certainly is, both in terms of weakening trust in state institutions and fostering inequality. But corruption does not inevitably block economic growth or private investment.
In Egypt’s case, targeted interventions can make a difference. Stability in the exchange rate, consistent legal frameworks, and predictable regulatory processes are critical for encouraging private investment.
Institutional reform in key sectors, such as tax collection and business licensing, can help improve investor confidence. Even informal political understandings that improve procedural clarity can play a constructive role.
Another critical factor is access to finance. Egypt lags dramatically here. In 2023, private sector credit amounted to just 29% of GDP. By contrast, Vietnam hit 125%, and China stood at 195%. These figures underscore the importance of financial inclusion, particularly when governments crowd out private borrowers by absorbing a large share of credit to finance public debt.
More important than corruption?
The experiences of Vietnam and, to a degree, China suggest that stable institutions, investor predictability, and access to finance matter more than whether corruption is fully eradicated.
In other words, corruption may not be the single greatest barrier to development. And for Egypt, focusing first on stabilizing key institutions and policies may yield better results than aiming for an unachievable ideal of a corruption-free state.