Title: Why don't firms grow? Evidence from Egypt

Authors: Chahir Zaki

Addresses: Faculty of Economics and Political Science, Cairo University and ERF, Egypt

Abstract: Using a comprehensive firm-level dataset for Egypt from the World Bank Enterprise Surveys (2013, 2016, 2020), the paper tries to examine the main constraints faced by Egyptian firms and to analyse how these barriers limit their growth. The contribution of the paper is twofold: first, it considers a large array of constraints (related to infrastructure, macroeconomic policy, stability and security, institutions and factors of production) that hinder firms' expansion; second, it examines the effect of these constraints on various measures of firms' performance (sales, employment, capacity utilisation and exports). The main findings of the paper show that business licenses and practices from the informal sector exert a negative effect on sales, employment and capacity utilisation. At the macroeconomic policy level, access to finance, tax rates and tax administration hinder the expansion of firms. While small and exporting firms are more affected by most of the constraints, firms operating in the manufacturing sector face more impediments compared to their counterparts operating in the service sector.

Keywords: Egypt; firms; constraints.

DOI: 10.1504/IJEPEE.2024.142461

International Journal of Economic Policy in Emerging Economies, 2024 Vol.20 No.3/4, pp.347 - 369

Received: 23 Dec 2019
Accepted: 16 Oct 2020
Published online: 04 Nov 2024 *

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