The evolving social contract: appraising the Egyptian experience in the context of Malaysia`s "Miracle"


Loubna Olama


The emergence of the Newly Industrializing Economies (NIEs) of East Asia and other South East Asian economies offers an optimistic reality in the face of dismal economic and social conditions prevailing in the rest of the developing world. More importantly, they provide their own model of development which, while best suited to their intrinsic circumstances, might serve as a role model for success that other developing countries, such as Egypt, could emulate. This thesis examines that premise in relation to Malaysia’s social contract with the ethnic Malays in comparison to Egypt’s declared adherence to its own social contract seeking higher levels of equity and welfare for its citizens. Malaysia was chosen as a subject of comparative analysis because among the success stories within South East Asia it was deemed the closest in circumstances to Egypt. These similarities are explored within the thesis and contrasted with the several existing and important differences. The dominant economic literature lacks any serious, in-depth comparative analysis between the two countries discussed here, especially as the economic development of each is reflective of the viability of their social contracts. The purpose of this thesis therefore is to analyze both countries’ social contracts, explore their implementation, determine the relationship between the government and the citizens, examine the benefits from such contracts and establish whether the Egyptian and Malaysian governments were able to adhere to their contractual commitments. Implicitly there is also an analysis of the degree to which the social contracts being discussed are historically determined by geopolitical circumstance. While Egypt was overwhelmed by adverse political and economic circumstances preventing it from the effective pursuit of sustained development and the fulfillment of social contracts, Malaysia relatively advanced ahead and realized relative success on both fronts. Until its financial crisis of 1997, Malaysia was considered to be an economic miracle and envied by many developing countries that regarded it as their vision of a success story. However the crisis exposed the weaknesses within the Malaysian economy and that its increasing rates of growth, while impressive, did not necessarily indicate sustained development. Malaysia is therefore not considered a benchmark for Egypt but rather as a useful experience from which to deduce lessons and learn from its shortcomings vis-à-vis Egypt’s own distinctive circumstances. The fundamental differences in social, political, technological, economic and historical contexts between Egypt and Malaysia imply that Egypt must seek to identify its own path toward development reflected in an appropriate social contract which best fits its needs as well as its resources. While it is appropriate to look elsewhere for inspiration, Egyptian reform must be motivated by a contractual arrangement that is unique and specialized with respect to its needs and history. A reappraisal of Egypt’s outdated social contract is therefore a necessity and should readdress its social commitments with regards to education, health, employment and subsidies to ensure both the empowerment and active contribution of the whole population in the process and not limit it to a free handout system as is currently the case. The need for a long term sustained development strategy is of paramount importance. However the government should endeavor to ensure adherence to such a strategy so it does not end as a mere intellectual exercise. The government should reclaim its crucial developmental role and not succumb it to the private sector forces which only pursues its personal gains with little regard to the social context. It is ironic that, although the prevailing Egyptian social contract has entailed a relinquishing of political rights in exchange for subsistence and despite the government’s softening of its commitments, Egyptians still did not regain these previously relinquished rights within a democratic context. A truly participatory democratic system and a simultaneously stable and predictable institutional environment is therefore an integral prerequisite for Egypt to advance ahead on its belated path towards sustained growth and development.


Economics Department

Degree Name

MA in Economics

Date of Award


Online Submission Date

February 2013

First Advisor

Salevurakis, John

Committee Member 1

Salevurakis, John

Committee Member 2

Selim, Tarek

Document Type



96 p.


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