[Once Upon a Time] The Outcome of Egypt’s Forced Industrialization

After Muhammad Ali, a general of the Ottoman Empire, effectively established his own dynasty in Egypt through a military coup in 1805, he removed the existing landowners and aristocrats and attempted industrialization. However, unlike Britain’s industrialization, the industrialization he pursued in Egypt was imposed from above, and in the end it failed after wasting large sums of money.

The funds Muhammad Ali used for industrialization came mainly from cotton export revenues. Egyptian Jumel cotton was of the highest quality and price because its fibers were long and strong. Ali planted Jumel cotton on the fertile lands confiscated from the nobility and exported it to the industrially advanced countries of the time, including Britain, thereby raising large amounts of money. He also reaped enormous profits by forcibly purchasing cotton grown on other farmland at prices far below export prices. The same was true of other grains.

With this money, he built modern manufacturing factories and imported 500 power looms from Britain. He intended to defeat Britain’s cotton textile industry with them. But the result was a disastrous defeat. The problem was that he brought in the facilities alone, without people and without incentives.

Ali spent large sums to recruit managers from Europe, but he asked them only for management advice, leaving actual management to Egyptians and Turks. Since the factories were owned by the king, all factory workers were in effect civil servants. These senior executives, called nazir, routinely siphoned off company assets through bribery, embezzlement, and the like.

Meanwhile, the workers were procured through forced conscription and were not even paid wages. As a result, people sometimes deliberately injured themselves to avoid being drafted as factory workers. And because the workers had no reason to make good products, the finished goods were so poor in quality that they were difficult to export, even though they used superior domestic Jumel cotton as raw material. Worse still, because the workers neglected maintenance of the machinery, sand got into the machines, and they eventually ended up as heaps of scrap metal.

In the end, Muhammad Ali’s coerced industrialization came to an end, and the revenues from cotton exports were squandered. If the Egyptian people had been guaranteed the freedom to engage in economic activity and the results had been protected as private property, Egypt might have achieved industrialization at a time comparable to that of the European countries.

Original title: [옛날옛적에 ] 이집트의 강요된 산업화의 결말

Author: Center for Free Enterprise (CFE)

Date: 2006-06-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=21&idx=10672