FEMISE is proud to launch its latest series of policy briefs, stemming from insightful conference papers presented at the FEMISE annual conference. These briefs are rooted in scientific research and offer actionable political recommendations to address critical challenges in the Euro-Mediterranean region.

The objective if this new series of Policy Briefs is to provide policy makers, international organisers, researchers and stakeholders in the EU-Med region with research-based policy recommendations that: advocate a better EU-Med integration;  promote mobilization of investments towards green transition and sustainable economies; empower young people through innovation and entrepreneurship advocacy; and facilitate a better and more equal integration of youth and women, aiming to create pathways for decent employment.

These Policy Briefs aspire to drive impactful dialogue and action across the EU-Med region.

Context

Regional economic inequality has become an increasingly pressing challenge in Egypt, marked by stark disparities in development and living standards across provinces. While official household survey data suggest relatively low and stable levels of income inequality—a phenomenon often referred to as the “Arab inequality puzzle”—these measures fail to capture significant territorial disparities in economic outcomes. In reality, prosperity and poverty are highly geographically concentrated, with substantial gaps in output per capita, infrastructure, and access to services between Egypt’s richest and poorest regions.

Over the past three decades, Egypt has undergone major economic transformations, including structural adjustment reforms launched in 2016 and external shocks such as the COVID-19 pandemic. These developments have reshaped regional economic dynamics, yet their implications for regional convergence remain poorly understood. Addressing regional inequality requires policy tools that go beyond traditional income redistribution and instead focus on place-based development strategies that promote growth, job creation, and human capital accumulation in lagging regions.

This policy brief situates regional economic inequality at the centre of Egypt’s development debate, highlighting the need for territorially targeted policies to support balanced and inclusive growth.

Summary

This policy brief analyses trends in regional (inter-provincial) economic inequality in Egypt over the period 1992–2022, using provincial-level real output per capita data. By applying population-weighted Gini and Theil indices, the study reveals that regional inequality has remained persistently high and increased significantly from the mid-1990s until the mid-2010s—contrasting sharply with official estimates of individual income inequality.

The analysis shows that the apparent decline in regional inequality observed after the 2016 structural adjustment program was temporary and largely driven by short-term output contractions in wealthier provinces rather than genuine convergence through faster growth in poorer regions. When accounting for the COVID-19 shock, the findings confirm that regional disparities resumed their upward trend, indicating that structural reforms and external shocks did not lead to sustained territorial convergence.

The brief argues that reducing regional economic inequality requires a shift toward comprehensive place-based policy toolkits. Key recommendations include scaling up public investment in infrastructure and human capital in lagging regions, implementing regionally targeted industrial and sectoral policies to attract private investment and job creation, and strengthening local governance and administrative capacity. The study concludes that without coordinated territorial development strategies, regional disparities will continue to undermine inclusive growth and social cohesion in Egypt.

Read the full Policy Brief no.14 here.

This Policy Brief is part of the FEMISE Policy Brief Series and is based on the FEMISE Conference Paper no.14. entitled: «Measuring Three Decades of Regional Economic Inequality In Egypt And How It Was Affected By The 2016 Structural Adjustment Program» with the same authors.

The opinions and contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of FEMISE, IEMED, ERF or the AECID