Policy Ret,barch
WORKING PAPERS
,
Education and Employment
Population and Human Resources
Department
The World Bank
February 1992
WPS 862
Higher Education in Egypt
Alan Richards
Education in Egypt must increase people's ability to respond
quickly and effectively to changing technological and market
opportunities. Egypt is therefore stabilizing university enroll-
ment, boosting non-university technical institutes, and promot-
ing interdisciplinary programs that stress problem-solving and
applied work.
The Polcy Rcsearch Working ?apers disseminatethe findings of work in progrcss and encourage the exchangc of ideas among Bank staff
and all oLhers inicrcsicd in dcseloprncnt isses Thescpapers.distnbuiedb  the Research Ads isory Saff. carry the names of thc authors,
rcflct onlythCirvicss and shoudh2heuscd and cited acc. rdingly. ihc findtr gs. incrprteidions and conclisions aretheauthors'o%n. Thev
should not he attributed to the World liank. its Board of Di)rectors, its management. or an! of its memnber countnes.



|    PoHcy Research
Education and Employment
WPS 862
This paper -a product of the Education and Employment Division, Population and Human Resources
Department - is part of a larger effort in the department to build a knowledge base on higher education
issues and reforms. Copies of the paper are available frec from the World Bank, 1818 H Street NW,
Washington, DC 20433. Please contact Jcgajothy Vythilingam, room S6-220, extension 33677 (40 pages).
February 1992.
Egypt's policy on higher education, Richards        ment in the 1970s and 1980s, the quality of
argues, must take account of the realities of       education deteriorated seriously. Classes are too
declining government budgets and employment         big and resources are scarce for anything but
and increasing reliance on the private sector,      professorial salaries (which remain low), so
which must become more competitive intema-         learning amounts to little more than memoriza-
tionally. Education in Egypt must increase          tion and repetition. The system does not foster
Egyptians' ability to cope with economic           the development of synthesizing, problem-
disequilibria: to respond quickly and effectively   solving, or creative thinking abilities. And with
to changing technological and market opportuni-    tertiary institutions overenrolled, academic
ties.                                               success requires the use of tutors, whose fees are
beyond the reach of students of modest means.
The Government of Egypt's strategy for
achieving this goal is to stabilize the number of      The Government is trying to improve
university students and raise the quality of        conditions by stabilizing university enrollments,
instruction. This fundamentally sound strategy,     expanding the role of two- and four-year techni-
pursued since the mid-1980s, has required           cal institutes, increasing the use of pedagogical
considerable courage of policymakers.               materials in university instruction, and promot-
ing several innovative interdisciplinary programs
Policymakers are struggling to correct a        that stress problem-solving and applied work.
longtime, inequitable misallocation of educa-
tional resources -  including an overenrolled           The job guarantee has effectively been
university system combined with a persistently      suspended since the early 1980s, but students
high rate of illiteracy.                            have responded slowly to changing signals from
the labor market, because being a university
The Nasser regime greatly expanded higher       graduate is socially prestigious and presumed to
education and guaranteed jobs to university        increase one's chances of marrying well.
graduates. As a result of rapidly growing enroll-
ThePolicy Research Working PaperSeriesdisseminates thefindingsofwork under way in theBank. Anobjectiveoftlh series
is to get these fimdings out quickly, even if presentations are less than fully polished. The findings, interpretations, and
conclusions in these papers do not necessarily represent official Bank policy.
Produced by the Policy Research Dissemination Center



TABLE OF CONTENTS
Page NQ.
Executive Summary ...............................,                                                          i
.        'The Context:
Egypt's Development Strategy for the 1990s  ...........................  1
IL       History of Higher Education ............                               .................. 6
HI.   Performance and Its Deteiminants
-Quantities .11
-Quality and Internal Efficiency .....................                                                    12
-External Efficiency .15
-Equity ...................................................... 18
-Summary: Determinants of Performance .20
IV.   Concluion: Responses and Reforms
-Thie Government .............................................. 22
-Employers .... . ............................................... 23
-Students ............................................ 23
-Universities ............................................ 24
References ............................................ 25
Statistical Annex
Table  1 : Higher Educational Enrollments ...................... 27
Table  2: Higher Education Graduates  ........................ 28
Table 3: Number of Students Passing the General
Secondary Exam   ...........                   ......................  29
Table  4: Technical School Enrollments ........................ 30
Table  5 : Graduates from  Technical Institutes ................... 31
Table  6: Spending on Higher Education ....................... 32
Table 7: Government Employment .......................... 33
Table  8: Educational Characteristics of the Unemployed  .....                           ..... 34
Table 9: Share of Higher Educational Spending in
Total Educational Spending   ........................ 35
Table 10: Female Enrollment in Universities .................... 36
Box 1: University Exams: The Cases of Economics
and Geology   ............................................   37
Box 2: Some Innovative Responses to the Quality
Problem   ..............................................    39



EXECUTIVE SUMMARY
THE CONTEXT: EGYPrS DEVELOPMENT STRATEGY FOR THE 1990s
1.          The role and development of Egypt's higher education system are placed in the
context of the country's current economic development problems and strategy. Historical background
to the problems and development of the higher education system is provided. The principal
quantitative and qualitative developments of higher education are then presented; internal and
external efficiency and equity of the current system are briefly analyzed. The report concludes with
a review of the principal responses to these p,roblems by government, employers, students, and
aniversities.
2.          The main macro-imbalances and micro-distortions of the Egyptian economy are
briefly outlined, with particular reference to the labor market. Because of the "tvin gaps" (between
domestic savings and investment, and between imports and exports), Egypt has accumulated a very
large foreign debt. Investment has been biased towards non-traded goods, and had a strong capital-
intensity bias. Consequently, the country is ill-equipped to take advantage of its comparative
advantage, and job creation has been seriously retarded. Since the labor force ga-wth rate is now
2.7% per year and is accelerating, this is an especially serious problem. Employment creation and
the production of tradeables are further retarded by high inflation, in turn largely caused by the very
large govemment deficits (typically around 20% of GDP). Egypt in the 1990s faces a period of severe
structural adjustment.
3.          The main consequences for the labor market and for higher education are: 1)
government spending must fall; this increases the urgency of more efficient allocation of resources
within the educational system; 2) government, one of the main sources of job creation between 1973
and 1985, can no longer play this role; 3) the country must embark on a strategy of manufactured
export-led growth to solve the problems of trade and employment which implies: 4) a greater role
for the private secor, and 5) the development of "the ability to deal with disequilibria", or raising
the quality of human capital, specifically, by increasing problem-solving ability.
4.          The fundamental strategy for highei education which can complement the wider
development strategy is to reduce the quantities of university students in order to raise the quality
of instruction: "better fewer, but better". Policy makers have been implementing such a strategy since
the mid-1980s, taking initiatives which have required considerable courage.



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HISTORY OF HIGHER EDUCATION
5.          Many of Egypt's educational problems have deep historical roots. In common with
most 'plantation societies", the ancien regime (c.1840-1952) did little to foster the development of
human c. ital. British indirect rule, budgetary stringency, and demand for obedient civil servants did
little to improve matters. Criticisms voiced over fifty years ago (e.g., of students' tendency simply to
memorize and regurgitate information) have a curiously modern ring. The first universities were
raised on a very narrow social base, and the social demand for education as a path to govermnent
employment had already been well established by mid-century.
6.          The fundamental institutions and problems of the higher education system were
created by the government of Gamal Abd-el-Nasser (1952-1970). The educational system as a whole
expanded rapidly, with growth in secondary and university enrollments being especially rapid. Higher
education was offered free of charge, and in 1964 the govefnment guaranteed a govemnment job to
any university graduate. A very large wedge was thus driven between the private and social returns
to higher education. The explosion of secondary school enrollments in the 1960s set the stage for
extremely rapid increase in university enrollments in the 1970s. The latter increased nearly 3.5 times
between 1971 and 1984, with most of the growth occurring in the 1970s.
7.          The percentage of science students steadily declined even as enrollments soared: the
universities turned out ever-larger number of graduates with poor job prospects. The government
partially concealed this probiem by rapidly inflating the number of persons in the bureaucracy and
(until 1980) in public sector enterprises. By 1982/83 government employment was three times higher
than it was at the height of Nasser's "Arab Socialism", 1966.
8.          The flood of students into the universities in the 1970s and early 1980s led to a
serious deterioration in the quality of instruction. The problem was compounded by large scale
emigration of professors to the capital-surplus oil exporting nations, which offered salaries as much
as fifteen times higher than those in Egypt.
9.          Beginning in the early 1980s, the government of Egypt began to respond to these
problems. It suspended de Xfacto the job guarantee; it began to limit enrollment in universities; it
raised faculty salaries and  .  to foster greater reliance on problem-solving abilities. However,
serious budget constraints l .* hampered achieving objectives.
III. PERFORMANCE AND ITS DETERMINANTS
10.         The quantitative development of the higher education system may be summarized as
follows: 1) university enrollments grew at over 14% per year between 1971 and 1977; 2) growth



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decelerated during 1977-84 to 5.4% per year, 3) after 1984 er-1l1ments declined, falling from a peak
of nearly 650,000 to 567,000 in 1989; 4) most enrollment gro*&.i was in the humanities: the share of
sciences students fell from 55% in 1971 to just over 25% in 1989; 5) the government has attempted
to channel the ever-increasing numbers of successful secondary school leavers into two year technical
schools. Founded in 1973, their enrollments now stand at over 100,000.
11.          Real resources for higher education grew steadily throughout the 1980s. The share
of higher education spending in total educational spending has also risen. Unfortunately, however,
these increases have been entirely absorbed by raising faculty salaries. Although this was necessary,
it has left very little money available for libraries, labs, and other materials, which are necessary if
university education is to break out of its "memorize-and-regurgitate" mode.
12.          This mode is the main quality problem in higher education. The causes of this
problem include the legacy of the kuttab (Quranic schools), the high student/faculty ratios at all
levels of the educational system, the absence of materials, the training system for teachers, and the
fact that few problem-s'ulving skills are required in the government bureaucracy.
13.          Although university administrators are valiantly attempting to remedy this situation,
they face an up-hill struggle in a structural adjustment context. Further, the MOHE has no discretion
over the allocation of spending between faculty salaries and other categories of spending, since it
receives 'line item" budgets from the Ministry of Finance. The competence of the latter Ministry to
make educational decisions is very dubious.
14.          The system suffers from serious external inefficiencies. The government job guarantee
and the anti-employment policy matrix of the last twenty years has seriously impeded the creation
of non-public sector employment. Yet the continued absorption of graduates into the bureaucracy
has become unsustainable; the wage bill constitutes about one-third of all government current
expenditure. The total wage bill has been reduced by cutting public sector wages and by ceasing to
hire new personnel. This has reduced the private return to higher education, further eroded
administrative effectiveness, and forced much of the adjustment onto new labor market entrants,
especially the young and educated. The share of the latter in total, measured unemployment has
increased dramatically over the past several decades.
15.          The responsiveness of prospective university students to these changing market signals
has, however, been reduced by several factors. First, the government remains de jure responsible for
employing graduates, despite the de facto suspension of the job guarantee. This has led to some
dubious employment schemes, such as allocating reclaimed land to (non-agricultural) university
graduates, which continue to signal young people and their families that "the government will
provide". Second, in Egypt as elsewhere, the demand for higher education shifts counter-cyclically:
as job prospects worsen throughout the economy, the opportunity cost of attending university
declines. Third, holding a university degree confers high social status, and is especially important in



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the 'marriage market". This latter force may be changing very slowly among some classes of society,
and it is hoped that the strong demand for skilled labor will further erode the "effendi syndrome",
the desire of all to shun manual labor.
16.          The fundamental equity problem of higher education is that too many resources are
allocated to his sub-sector at the expense of primary education. Since the percentage of secondary
sr iool enrollments is lower among rural youth, such implicit subsidies also have an "urbFa- bias".
Some progress has been made in increasing the proportion of young women in the universities.
17.          The educational system is further biased against the poor through the system of
"tutorials", in which private tutors greatly improve the chances of obtaining a high mark on the
General Secondary Exam, and therefore, of entering the university, particularly its more prestigious
faculties such as medicine. In common with many countries, the higher education system in Egypt
reproduces existing social inequalities.
18.          In light of the above, many have suggested charging "users' fees" or tuition for
universities and/or the creation of private universities (there is one such university in the country at
preset). These proposals have so far been blocked by m-ddle-class interests, and by a fear of
political back-lash. It is also impeded by the unflattering popular perception of governmental
competence: many fear that scholarships, which would be necessary to ensure access to education
for the poor-but-talented, would in fact be allocated to those with "connections'.
19.          In summary, the supply of quality higher education is sharply constrained by large
class sizes, low faculty salaries which encourage absenteeism and moon-lighting, and the inadequacy
of extra-classroom materials. The demand for higher education remains vey strong despite the
declining remuneration of public employees and the very long queues for governme;.L jobs because
of the absence of fees, the continued de jure job guarantee, the depressed state of the labor market,
and the continuing high social prestige of a university degree.
IV CONCLUSION: POLICIES AND RESPONSES
20.          Government responses include: reducing the growth of the universities by raising the
scores required to pass the GSE, increasing budgetary allocations to higher education, and
suspending the job guarantee. De jure suspension of the latter would further reduce the wedge
between the social and the perceived private return to higher education. Policy has done little to
increase the equity of the system; proposals to "target" higher education would, if effective, have this
effect. The fundamental deficiency of government policy toward higher education is the absence of
adequate reform of those macro and miceoeconomic policies which continue to retard job creation
in the private sector, especially the traded goods sectors.



v
21.          Private employers have few formal linkages with the universities. Although the private
university does soonsor "job fairs", the public universities have yet to follow, perhaps because the
Ministry of Labor technically retains a monopoly on all job placements. Informal private sector
employers, of course, rely on word-of-mouth and family networks for recruitment. Although many
university graduates are employed in this sector, this is usually because they lack any viable
alternative.
22.          Studints have responded slowly to the changing labor market signals. There is little
evidence that the d.-mand for higher education has slackened appreciably.
23.          In addition to attempts to raise faculty salaries, universities have created some
innovative interdisciplinary programs which seeks to foster the kind of practical, problem solving
skills which Egypt will need if the economic strategy of manufactured export-led growth is to be
successful during the coming decade.



I.   THE CONTEXT: EGYPT'S DEVELOPMENT STRATEGY FOR THE 1990s'
1.          The role and development of Egypt's higher education system must be placed in the
context of the country's current economic development ;roblems and the strategy which the
government is implementing to confront these difficulties. Accordir. gly, this report begins with a brief
overview of problems and strategies, with a special focus on the la 'or market. The second section
provides historical background to the development and current problems of the higher education
system. The principal quantitative and qualitative developments of higher education are then
presented; internal and external efficiency and equity of the current system are briefly analyzed. The
paper concludes with a review of the principal responses to the problems by government, employers,
students, and universities.
2.          The Egyptian economy is characterized by serious macro-imbalances and micro-
distortions. These have not only generated a large foreign debt, but have also seriously impeded the
rate of growth of the demand for labor. This, in turn, has driven down real wages and increased
unemployment. Both have contributed to a probable increase in poverty since the mid-1980s;
unemployment is increasingly concentrated among young people with education, including university
graduates. The employment problem is particularly severe since the labor force is growing by 2.7%
per year.' Given Egypt's resource endowment, a development strategy which focuses on labor-
intensive manufactured exports has the best chance of remedying this serious situation. One should
ask how the higher education system can the system provide the kind of human capital which such
a strategy will require.
3.          The core of Egypt's macroeconomic problems is the "twin gaps' between investment
and domestic savings, and imports and exports. These difficulties are compounded by a third gap,
that between government spending and revenue. The savings/investment gap grew throughout the
1980s, reaching 12% of GDP in 1986/87. S. ings, in particular, have collapsed: public sector savings
declined and oil revenues dwindled, and public sector companies, enjoined to hire and forbidden
to fire for roughly two decades, accumulated losses, which in the late 1980s were about 8% of GDP.
Recorded private sector savings available to the economy were and are reduced by negative real
interest rates on Egyptian pound deposits.
4.          Desp.te the high investment ratio, most investment went into (admittedly badly
det?riorated) infrastructure, rather than traded goods production which received perhaps 45% of
investment from 1982-87. The relative neglect of investmen: in traded goods, especially
manufacturing (which received less than 20% of all investment) did little to foster exports and to
create jobs. More seriously still, investment had a strong capital-intensity bias: 'COR (incremental
*     I would like to thank Jamil Saimi for his helpful comments on an earlier draft.
' Unless otherwise stated, all numbers In this section ar^ official Central Bank statistics.



capital to output ratio) rose from about 2.5 in FY 1976-81 to 6.5 in FY 1984-88, vwile tbhe capital-to-
labor ratio rose at just under 15% per year from 1975 to 1985 (Handoussa, 1991). A country with
a rapidly growing labor force and increasingly scarce capital increasingly utilized the scarce factor
at the expense of the abundant one. The seriously deleterious employment conseq.dences of such
developments are considered below (paragraphs 1.12-1.13).
5.           The weaknesses in the volume and pattern o' investment contributed t. the second
gap, that of the balance of trade. Impo:ts were roughly 2.5 to 3 1imes larger than commodity experts
throughout the 1980s. The recent decline in the trade gap has been entirely due to the compression
of imports rather than to any significant improvement in export performance. Since roughly two-
thirds of Egyptian imports are intermediate and capital goods, the current ievel of imports is
unsusta;nably low: export performance must improve.
6.           a-port developments during the 1980s were dominated by the decline in the value
of petroleum sales, which fell from $2.9 billion in 1983 to $1.36 billion in 1987. The share of oil in
total exports fell from 70% in 1983 to just under 50% in 1987. Other trade.i goods failed to take up
the slack created by the decline of oil. Although Egypt experienced the usual problems of the Dutch
Disease during the oil boom, the end of the boom brought no relief. .igricultural exports continued
to deteriorate, with cotton export volume in 1990 only about one-third that of the early 1980s. In
1987 the agricultural trade deficit stood at about $2.8 billion, or roughly one-third of the total trade
deficit. Industrial exports fared only slightly better. Textiles and related products account for some
60% of such exports; these and other expanding industrial exports (e.g., aluminum) enjoy substantial
subsidies.
7.          Invisible earnings fared better. Tourism grossed over $2 billion per year on the eve
of the Gulf Crisis, and provided the only really bright area of the Egyptian economy in the late
1980s. Workers' remittances out-performed most predictions in the late 1980s; however, the violent
repatriation of Egyptians from Iraq, the country with the largest number of Egyptians working
abroad, in the fall of 1989 was a harbinger of the future. In December, 1990, the GOE estimated
that some 400,000 Egyptians had returned from the Kuwait and Iraq in the wake of the C(ulf Crisis.
Such returnees increase the already considerabk burden of job creation, and, of course, could no
longer contribute their remittances to domestic savings.
8.          In the final analysis, Egypt plugged its twin gaps by borrowing from abroad. On the
eve of the Gulf Crisis. the total debt was roughly $50 billion; the debt to GDP ratio, if valued at the
free market exchange rate, was 150%, the highest ratio in the world. Despite debt relief inspired by
the Gulf Crisis, if the underlying problems of the twin gaps are not solved, the debt will simply start
to grow again--assuming willing creditors can still be found. A strategy must be found to increase
exports, increase domestic savings, and channel investment into traded goods sectors.



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9.           The twin gaps have been exacerbated by a third gap, the government deficit. Although
the size of the deficit has been reduced, it remained unsustainably high at 16-17% of GDP in
1988/89.2 At least 40% of the deficit is financed by the banking system; the deficit is thvrufore a
major source of inflation, now conservatively estimated at 25% per year. Inflation. of course,
heightens uncertainty, further distorts price signals, engenders negative real interest rates, and
complicates managenient of the foreign exchange rate.
10.          A few details of some aspects of how the GOE has tried to cut the budgetary deficit
are relevant to the situation of the higher education sub-sector. First, because of the inelasticity of
revenues with respect to incomes and their heavy reliance on oil, most adjustment has fallen on
spending. Most of latter, in turn, is composed of subsidies, public sector salaries, interest on the
public debt, and the military. The first two have been protected, forcing most adjustment onto
subsidies and public sector salaries. Rather than reduce the government wage bill through lay-offs,
the GOE has chosen to reduce real spending on ptublic sector salaries by freezing nominal wages and
new hires. (Such policies also reduce employment through attrition and retirement). Real wages in
the public sector fell to 55% of their 1973 level by 1989. Two consequences follow: 1) adjustment
costs are concentrated on new entrants to the job market (including those matriculating from
institutions of higher education) and 2) the decline in government salaries has reduced the relative
economic attractiveness of such employment.
11.          Micro-economic distortions reinforce these macto-imbalances. Egyptian prices bear
little relation to scarcities, and price distortions react synergistically with the regulatory environment
to create a producers' nightmare. For the higher education sub-sector, the most significant example
of this baleful interaction is the increasing capital intensity of production. Partly this phenomenon
has been caused by price distortions: the relative price of labor to capital rose as labor emigration
pushed up wages while accelerating inflation and financial regulations engendered strongly negative
real interest rates. Regulations exacerbate the problem: Individual lay-offs must be reviewed by a
tri-partite (management, labor, government) committee, whose ruling is advisory. However, an
employee has appeal rights, and for group lay-offs, the committee's ruling is binding. (World Bank,
1990b). Legally the government has a monopoly on all job placements outside of agriculture and the
informal sector. It follows that all hiring for the kind of well-paying jobs with a future which most
university graduates seek (e.g., in the private formal sector), must be done through the government.
In practice, private companies can and do hire either through "head-hunting" agencies or through
informal networks of personnel managers. Nevertheless, these cumbersome and inefficient
regulations reduce the flexibility of the labor market by converting labor, the "variable cost" example
of every elementary economics textbook, into overhead. As Hansen has pointed out, such a complex
of forces has created the paradoxical situation of Egyptian producers using too much capital and
labor (Hansen, 1991).
2 In flscal 1989/90, the government claimed that the deficit had fallen to 7% of GDP; however, In 1990/91, it returned
to former levels of some 17%.



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12.          Policies which retard the level and rate of growth of demand for labor have extremely
serious consequences in a countly with significant un- and underemployment and a rapidly growing
labor force. Regardless of fuiure developments with respect to Egypt's external debt, the 1990s are
likely to be dominated by the problem of job creation. Because of a "mini-baby boom" in the
aftermath of the October WUar of 1973, the growth of the labor force in Egypt will actually accelerate
during tne cor .ng decade. Simply providing jobs for rnew labor market entrants will require the
creation of an additional 4.5 million jobs in the 1990s. (ILO, 1991). If current unemployment rates
(perhaps 10-15%) are to be reduced, if wom.en's labor force participation is to rise above its current
low level (12% in 1986), and if (as is now happening), political events force large numbers of
Egyptians working abroad to return, then the number of new jobs needed could be nearly 9 million.
Given that the current labor force is about 14-15 million, this is an almost unbelievably daunt;ng task.
13.          The picture is not brightened when one realizes that as much as 90% of all jobs
created from 1976 to 1986 came from emigration and the expansion of government employment
(Handoussa. 1988). 3 Given budgetary deficits and iegional developmnents, neither of these sources
can continue to expand at anything like the previous rate. For various reasons, the agricultural sector
iF most unlikely to create many new jobs in the coming decade (Richards, 1991). Accordingly, QnlJ
a strategy of nManifactured export-led growth has a chance of solvig the employment problenm in
Ev. Such a strate,,- will require an expanded role for the private sector, simply because of the
latter's greater flexibility in responding to rapidly changing intemational market conditions.
Developments in the higher education sub-sector should be judged on the basis of how well they
contribute to the development of such a strategy.
14.          A strategy of labor-intensive, manufactured exports, with a greater role for the private
sector can both reduce the twin gaps and simultaneously create many jobs. To summarize the
argument of this introduction, such a strategy makes sense both because of Egypt's resource
endowment, and because of the origins of the current problems. The latter are, as sketclied above,
the result of macroimbalances and wicrodistortions. These, in turn, have been generated by the
previous strategy of state-led, import-substituting industrialization. This cannot meet the challenge
of jobs and growth in the 1990s. Egypt must increase savings, reduce consumption, increase, exports,
and raise efficiency, while maintaining a minimal "social safety net" to preserve domestic peace and
stability. The economy must become more dynamic and competitive; such considerations, together
with Egyp's relative paucity of natural resources and abundant labor, strongly suggest a strategy of
private-sectos led manufactured export growth.
3 The predse percentage Is highly sensitive to the (widoiy varying) estimate of migration. For domestic job creation
alone, the public sector generated some 1,235.000jobs or 55.8%. It we assume that net emigration from 1976 wes 1.25
million, then the public-sector-plus-migration share of job creation b.toween the two census years was about 70%--stiii
the large majority of new jobs.



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15.           Implementing such a strategy requires policy reforms, which, in turn, have impiications
for human capital formation in general and for the higher education sub-sector in particular. The
er.sentials of the needed "reform package" are well-known: cut the budget deficit by reducing
govemment employment, targeting consumer subsidies, eliminating energy subsidies and all producer
subsidies. This would lower inflation, thereby raising real interest rates (nominal rates should also
rise) and lessen the difficulties of maintaining a realistic exchange rate. The exchange rate should
be unified, so that all remaining subsidies are explicit. Competition must increase by unifying and
lowering tariff rates and reducing quantity restrictions. Micro-distortions should be eliminated as
quickly as possible, and the regulatory environment must be radically reformed to promote the
growth of private manufacturing. 4
16.           The human capital implications of the new strategy and the reforms needed to
implement it may be sketched here. Above all, the basic health nd education of the mass of the
population need to be extended and strengthened. Egyptian policy makers of the 1980s have
important achievements to their credit in this area. For example, infant mortality rates declined from
120 per 1000 live births in 1980 to 83 in 1989; primary school enrollment rates rose from 89% for
boys and 63% for girls in 1980 to 100% and 79%, respectively, in 1986-88. However, such gains are
threatened by increasingly tight budgets and continued misallocation of educational resources, in
which higher levels of education receive more funds than lower levels, despite the higher social rate
of return to primary education.
17.           Such quantitative improvements, while laudable, conceal a continuing problem of poor
educational quality. An export-led growth strategy requires flexibility, creativity, and an analytical
cast of mind. In the modern, highly competitive international economy, the "ability to deal with
disequilibria" identified by T.W. Schultz (1971) as the main economic contribution of education,
becomes more important than ever. Far too often, such skills and mental attitudes are not being
developed by the Egyptian educational system, most specifically including the universities. In a period
of increasing governmental budgetary austerity, additional resources must be found for basic and
prepatory education; at the same time, truly analytical thinking must be stimulated at all levels of
the educational system: the "ability to deal with disequilibria" must rise if the "export-led growth"
strategy is to succeed.
4 As of this writing (May, 1991) the government has neared agreement with the IMF on a package of reforms which
include some of these measures. Specifically, the exchange rate has been d9valued, steps toward unification of the
exchange rate have been taken, a value-added tax is promised, and energy prices are to rise gradually to world market
levels. These are hopeful, albeit long overdue, changes. Since 'reforms' and *agreements have been announced so
often in the past, it remains to be seen whether the changes are genuine, or rather, as in 1987, were simply a means
to achieve debt relief from the Paris Club.



*6 -
18.          The implications of the new strategy for higher education policy are clear: "fewer, but
better". The country already suffers from an excess supply of ill-trained university degree holders;
at the same, technicians and university graduates who are thoroughly trained in analysis and synthesis
(as opposed to rote-memorization) are very scarce. The direction of higher education policy is clear:
reduce the quantity of university students and graduates, redirecting those denied admission to
technical institutes, and simultaneously to upgrade the quality of education of those who remain in
the universities. This is now explicit government policy, and is entirely sound. Of course, it faces some
difficult constraints, which are discussed in some detail below. Reform in the higher education sub-
sector, as in most areas of the Egyptian economy, has been slow; however, the pace of change in this
sub-sector has arguably been more rapid than in areas such as macroeconomic and industrial policy.
Especially given the daunting nature of the problems, policy makers are to be congratulated on the
skill and courage with which they have been pursuing reforms.
II. HISTORY OF HIGHER EDUCATION
19.          The policy innovations sketched in the preceding paragraphs can best be understood
if they are placed in historical context. Many of Egypt's educational problems have deep historical
roots. The ancien reL -ne (roughly, 1840-1952) did little to foster educational development for two
reasons. First, the highly inegalitarian system of landownership blocked the wide diffusion of literacy.
Economic hisiorical research strong'.y suggests that there is an inverse correlation between basic
education and "plantation societies". Whether in Khedivial Egypt or the post-Reconstruction U.S.
South, those with wealth (here, the large landowners) have little or no incentive to agree to tax
themselves so that the level of education of "their" agricultural workforce can be raised. By contrast,
communities of farm owner-operators are much more likely to tax themselves in order to provide
the necessary public infrastructure for wide-spread education. The Egyptian land-tenure rystem which
arose in the 19th century was a major obstacle to the development of human capital. (Richards,
1982; Cochran, 1986; Wright, 1980).
20.          The British occupation did little to improve matters. Because of their reliance on
methods of indirect rule, the British did nothing to challenge the social dominance of the large
landowners and their indifference to mass education. Further, not only did the British reduce
spending on education and impose fees for primary education, but they also shaped the educational
system to meet their own needs, which were for obedient governmental clerks. Independent,
analytical thinking by local functionaries was discouraged by British colonial authorities, who hardly
wanted Egyptians challenging or modifying British decisions.' Rote-learning and memorization
(which fundamentally involves an acceptance of authority) was the educational means to produce
s 'The less individuality and initiative shown by an Egyptian, the more acceptable he was likely to be to the advisor
whose duty it was to train him for the bureaucracy'. (Cochran, 1986, p. 13).



-7-
such personnel. In addition to retarding the diffusion of literacy (in 1917, after 35 years of British
rule, over 90% of the population was illiterate), such policies had two lasting effects: 1) they created
values which stressed the importance of education as a means to govemment employment, and 2)
they fostered and reinforced a passive, "memorization" approach to learning. Students advanced by
committing large quantities of information to memory, and then repeating it verbatim on
examinations. As we shall see, this remains an acute problem in higher education today, nearly a
century later.
21.          Such stress continued in the early period of Egyptian independence, when, for
example, lack of agreement on the combination of traditional and modern subjects to be included
in the secondary curriculum was resolved by including both. The large number of subjects which
students were expected to master left little choice but to memorize and regurgitate. In 1935, the
Ministry of Education issued a report openly criticizing the role of memorization in education; these
criticisms are repeated today, including in this report, more than a half-century later.
22.          The pace of educational expansion quickened somewhat in the early independence
period: at the end of the nineteenth century, about 3.5% of children of primary school age were
enrolled, while by 1930, the number had risen to 18%. Although primary schools were made free in
1936 (secondary schools followed in 1950) (Waterbury, 1983), by 1937, less than 15% of the
population was literate (less than one-quarter of men and less than 10% of women), with nearly all
progress coming between 1917 and 1927.
23.          It follows that universities were raised on a very narrow social base. The first
University, the Egyptian National University (later Cairo University) was founded in 1908, and
became a public institution in 1925. As a private institution it had a liberal arts focus, offering
courses on economics, philosophy, history, and Arabic literature. Upon its incorporation into the
public sector, it included professional schools, including those of medicine and law. By 1952, there
were only two other institutions of higher education in the country, Alexandria University (founded
in 1942) and the American University in Cairo, a private institution founded originally by Protestant
missionaries. In 1952 Ain Shams university was established; in a pattern often repeated later, this
occurred as an "upgrading" of a higher training institute (in this case, for secondary school teachers,
and for agricultural and commercial specialists.
24.          The fundamental institutions (and problems) of the modern Egyptian educational
system were created by the government of Gamal Abd-el-Nasser. His policy innovations were driven
by two concerns: 1) a strong commitment to equity and to expanding the social base of education
in the country and 2) a desire to bolster Egypt's national independence and regional influence, not
only through diplomatic and military means, but also by creating a modern industrial state. Although
much was achieved, particularly in contrast with the nearly inert polices of the British and the ancient
regime, the goals of neither equity nor growth were fully realized, for two reasons: 1) despite rapid



expansion, the rate of population growth accelerated in Egypt as in all developing countries after
World War II and 2) the two goals were often in conflict.
25.          Primary education expanded very rapidly, from about one million in 1952 to nearly
3.5 million in 1965/66, or an enrollment growth rate of just under 9% per year. However, despite
stated, sincere commitments to universal enrollment, one-third of the eligible age-group was still not
enrolled by the latter date. The expansion of. other educational sectors was still more ropid:
prepatory enrollments increased an as' ni.hing six-fold in 5 years (from 8,000 to 42,000 from lyo6
to 1961) and secondary enrollments more than tripled (from 22,000 to 75,000 during the same years).
Inevitably, educational quality crumbled before the quantitative flood. Quality fell further because
resources were diverted to military activities, and because the government encouraged the expolt of
Egyptian school teachers as a mneans to enlarge Egypt's influence ir. the Arab world.
26.         The explosion of primary and secondary enrollments set the stage for a huge influx
of the "Nasser years cohort" into the higher education system in the late 1960s and 1970s. The rapid
expansion reinforced the "quality problem", since only rote memorization was possible in the face
of soaring enrollments, tight budgets, and scarce and often inadequately trained teachers. The
allocation of resources to education suffered as a result of the heavy demands of military spending
and the rapid growth of state-led import-substituting industrialization. This strategy also contributed
to the misallocation of resources within the educational sector, in which funding for lower levels
lagged behind those of higher education. But such a decision was implicit in the state-led import-
substituting strategy, especially when large numbers of foreign technicians left the country during and
after the Suez Crisis in 1956. The need to replace such technicians and to expand their numbers
fostered a concentration on more advanced levels of higher education at the expense of the primaiy
level.
27.          The expansion of the universities was greatly stimulated by the abolition of fees,
written into law in 1963. (The large number of non-Egyptian Arab and African students who were
encouraged to study in Egypt further increased enrollments). When combined with the "employment
guarantee" (see paragraph 2.11), a very strong demand for higher education was thus created:
university enrollments rose from just over 50,000 in 1952/53 to over 160,000 in 1969/70. At first, these
students were accommodated within the existing universities of Cairo, Alexandria, and Ain Shams
Universities. Then "local branches" of existing universities were created, and finally, the local
branches became autonomous universities. Altl&ough this process began during the Abd-el-Nasser
government with the establishment of Asyut University in 1957, it culminated in a wave of university
founding in the first half of the 1970s (see paragraph 2.13).
28.          The government successfully channelled students into the pure and applied sciences.
Whereas between 1910 and 1951 Egyptian universities produced fewer than 5,000 engineers, between
1952 and 1967 nearly 19,000 graduated. By 1971, some 55% of all university students were enrolled
in scientific fields. Other prestigious fields such as medicine saw their enrollments expand less



rapidly- nevertheless, between 1952 and 11967 11,400 MDs were graduated. Agriculture, veterinary
medicine, and other applied fields also increased their share of total enrollments.
(Waterbury, 1983, p. 237).
29.           Despite such increased stress on the natural sciences, the numbers enrolled ini the
humanities rose sharply. The flood of graduates from these faculties contributed to the creation of
job guarantee, by far the most difficult legacy of the Nasser period for later educational planners.
In 1964 the government promised to employ any university graduzate who could not find another job.
Acquiring a university degree became tantamount to obtaining a highly secure, if modest, life-time
income stream. The private benefits of university education were enormously increased, at the same
time as the abolition of fees dramatically lowered the private costs. The demand for higher
education, already strongly entrenched for social reasons, shot up.
30.           The social benefits, however, were very different. At first, the government placed
graduates in both the bureaucracy and in public sector companies. Both became grossly overmanned.
By the late 1970s, overstaffing in the public sector companies had spawned such a high degree of
inefficiency in production of basic goods that the companies were freed of their requirement to hire
new workers. (see. e.g., Hansen and Radwan, 1982, p. 44).6 In contrast, the government bureaucracy
grew rapidly, throughout the 1970s and early 1980s from the already high base created in the 1960s.7
The job guarantee not only drove a large wedge between private and social returns on higher
education, but also seriously segmented the Egyptian labor market (Hansen and Radwan, 1982),
contributed to budgetary deficits and macroimbalances, and greatly reduced the efficiency of the
public sector. It also hampered the successful upgrading of the quality of higher education.
31.           During the 1970s the numerical expansion of university graduates accelerated as the
"Nasser years' cohorts" poured into the system in the wake of the expansion of secondary schools:
the growth rate of university enrollments rose from 7.6% (1952/53-1965/66), fell to 3.5% (1965/66-
1969/70), and then leaped up to 14% per year (1971-1977). To accommodate these numbers, new
universities were created at Tanta (1972), Mansoura (1972), Zagazig (1974), Helwan (1975), El-
Minya (1976), Minufiyya (1976), and Suez Canal University (1976). However, these universities rarely
were equipped with either the physical or human capital necessary to maintain quality. 8 In many
cases, faculty live in Cairo, adding difficult commutes to already heavy work-loads.
e Despite the relaxation of the formal requirement for public enterprises to hire labor, public enterprise employment
continued to expand: from just under one million In 1976 to 1.2 million In 1986. Public enterprises, like the government
bureaucracy and, Indeed, all formal enterprises, also faced severe restrictions in firing workers throughout the 1980s.
7 Government employment expanded form 1.78 million in 1976 to 2.57 million In 1986.
' There are notable exceptions to this generalization, such as the Agricultural Economics faculty at Zagazig Jniversity,
which, under the leadership of Ahmed Gouell, became nearly as prestigious as that of Cairo or Alexandria University.



- 10-
32.         The labor market into which graduates moved was dominated by two developments:
large scale emigration of Egyptians to work in the major oil-eorting countries, and the continuing
rapid expansion of government employment. The "Dutch Disease" of the period militated against the
creation of jobs in traded goods sectors, while government policy continued passively to encourage
govemment employment. The consequences of emigration for the quality of university instruction
were not good, since the most skilled and active faculty members could and did find jobs abroad
which paid salaries as much as fifteen times those available at home. University administrations were
faced with a difficult challenge of maintaining the continuity of their staff and programs in the face
of high turnover. The wedge between the social and the private rate of return to a university diploma
widened as the marginal social utility of additional public servants declined.
33.         In conclusion, Egyptian higher education policy makers have inherited a difficult
historical legacy. The quantity of university students has long outstripped their quality, the
educational system as a whole has still failed to keep all 6412 year olds in school; one-half of the
adult population is illiterate. Yet, because of the imperatives of structural adjustment, govemment
spending must fall, and funds need to be reallocated with.n the educational sector. Throughout the
1970s, the problems were recognized, but although there were periodic promises to limit enrollments
and to adopt other reforms, nothing of the sort happened. Only in the 1980s have policy makers
finally responded to the increasingly severe crisis in the higher educational system.
34.         The broad policy response has been very sensible: the government has ceased hiring
university graduates, thereby slowly changing the signals to families about the private returns to
higher education. It has reduced the total number of students by raising admissions standards, and
has raised faculty salaries. Total spending per student has increased, and education receives a higher
percentage of the total government budget. There are on-going attempts to raise quality by fostering
interdisciplinary programs and by reforming the examination system.
35.          These are very wise moves, and have required considerable courage from policy
makers. Egyptians had become accustomed to regarding higher education as an 'entitlement". The
decision was parti-ularly difficult, because, of course, the numbers of eligible students continued to
increase, thanks to the on-going expansion of secondary education. In 1971, nearly 79,000 students
passed the thanawiyya amma or General Secondary Exam (GSE), the combined secondary school
completion/college entrance examination. Ten years later, the numbers had increased to 143,000, a
rise of 80%. As one analyst put it in the early 1980s, just before the reforms began to be
implemented, "Any major change in the system now would inevitably catch hundreds of thousands
of families in midstream and could provoke political resentment similar in its intensity to that
following the suspension of some consumer subsidies in January, 1977" (Waterbury, 1983, p. 241).
The government took, and takes, considerable risks in reforming the system.
36.         As we shall see, however, much remains to be done. Despite the increases in overall
spending, the allocation of funds to non-salary spending has fallen, a development which impedes



-11 -
creating the conditions within which a more analytical, problem-solving and creative approach to
learning could be possible. But current policies constitute a courageous reversal of at least twenty-
five years of unbridled, ill-conceived university expansion.
III. PERFORMANCE AND ITS DETERMINANTS
Ouantities
37.          Total university enrollments during the past 15 years are shown in Table 1. Several
basic facts are immediately apparent. 1) University enrollments exploded during the period 1971-
1977, growing at a compound rate of over 14% per year, with the number of students more than
doubling. 2) Growth decelerated during the following seven years, 1977-1984, with enrollments
expanding at about '.4% per year; by 1984 university enrollments were more than three times as
large as they had been only 13 years earlier! By the mid-1980s, the number of students was five times
larger than the designed capacity of the universities' facilities. 3) 1984 was a water-shed year, in
which fundamental policy decisions were taken and began to be implemented: university enrollments
have fallen in every year since then, at a compound rate of about -3% per year, by 1989 the total
number of university students had been reduced by nearly 100,000, a decline of some 14%.
38.          Most of the expansion in university enrollments has been in the humanities: the share
of science students in total enrollments fell from over half (55%) in 1971 to just over one-quarter
(26.3%) in 1984 (Table 1). This decline in the percentage of science students has not been reversed
since the policy reforms of 1984: the decline in enrollments has been roughly equally apportioned
between sciences and humanities. Indeed, the percentage of science students in total enrollments
actually fell slightly from 1984 to 1989, to 25.3%.
39.          Several simple observations may be made on these trends. First, the explosion of
enrollments, encouraged by the absence of charges for university admission and by the govemment
job guarantee, had serious implications for the quality of education. This was especially true during
the 1970s, when large numbers of faculty members sought, often successfully, to obtain employment
in the capital-surplus oil exporting countries. Second, such rapid expansion seriously exacerbated the
difficulties of the labor market: the number of graduates rose nearly four-fold between 1973 and
1986 (see Table 2). The fact that an incr-asing percentage of these graduates were humanities
graduates did not improve their job prospects.
40.          Part of the response to the situation was the attempt to channel secondary school
graduates either into the job market directly, or into two year technical training institutes. These
were first established in 1973; enrollments expanded from an initial 20,805 in 1973 to 105,360 in
1989. Unlike university enrollments, these expanded steadily throughout the two decades (see Table



-12-
4). Such schools complement the "technical secondary schools", whose enrollments are nearly one
million. Graduates from these schools rose steadily, with only a slight dip (1985-86) (see Table 5).
Such monotonically increasing enrollments and graduations stand in marked contrast to the situation
in the universities, and indicate that at least to some extent, policy makers have been able to
"channel" secondary school graduates into these institutes.
41.          However, there arc important constraints on the demand for such technical education.
First, its quality is too often poor, with, as is true throughout the educational system, most resources
being absorbed by salaries. These nevertheless remain inadequate, and severe shortages of technical
school teachers are reported. This is not surprising: technicians are scarce throughout the economy,
and can command good wages, especially in comparison with those offered by the public sector
(which includes all technical institutes). But the dis-proportional allocation of resources to salaries
has left many institutes ill-equipped, and too often, with equipment and buildings which are poorly
maintained. Second, the rapid expansion of the institutes jeopardized quality. Some institutes
operate on a two-shift system. Third, the demand for university education is derived not merely from
the job market, but also from considerations of status. Graduates of technical schools feel that their
education is 'second-class", since it does not lead to a bachelor's degree. Fourth, such status
considerations also strongly affect the faculty, who, in common with experience elsewhere, 9 seek
to upgrade their institution into a university. This has happened twice in Egypt, in which the formerly
technical institutes, designed to produce technicians, at Benha and Helwan were upgraded to
university status.
42.          Real resources available for higher education have continued to expand throughout
the period. Table 6 shows the trends. First, after an expansion of the share of higher educational
expenditure in GDP from 1.1% to 1.6% from 1980/81 to 1985/86, the percentage has since dropped
back to its original share (1.1%) by 1989. However, higher education's share of the government
budget has continued to expand during the decade, from 2.5% in 1980/81 to 5.1% in 1989/90. Third,
real expenditure per student has increased nearly six-fold. Fo !rth, this increase has been entirely
absorbed by increases in faculty salaries; the share of salaries rose from 55.7% of higher educational
expenditure at the beginning of the decade to 69.3% by the close of the decade. Total real non-salary
expenditures fell from LE 80 million in 1980/81 to LE 73.1 million in 1989/90; non-salary expenditure
per student accordingly fell from about LE 158 to LE 129 (in 1980 LE). The consequences of this
development for quality are discussed in the next section.
Quality and Internal Efficiency
43.          The key problem with the quality of university education in Egypt is the same as that
everywhere: students tend to equate "learning" with "memorizing". Consequently, graduates are ill-
See Clark (1990) for a discussion of a similar phenomenon In the California State University system.



- 13.
equipped with the habits and skills of problem-solving and synthesis which are the skills needed for
the modern world. One cannot "respond to disequilibria" in a creative and c'vially useful way by
repeating memorized materials.
44.           Many forces conspire to undermine the quality of higher education and to reduce
learning to a process of memorization. It is sometimes argued that modern Egyptian education more
closely resembles traditional Quranic kuttab (where boys committed the Quran to memory) than is
often appreciated. British policy rei!zforced this trend (paragraphs 2.2 and 2.3). However, such
historical legacies provide only a partial explanation. A more fundamental generator of rote-learning
is the paucity of resources at all levels of the educational system. High pupil-student ratios and the
dearth of supplementary materials almost guarantee the reduction of education to memorization:
how else can a primary school teacher control his or her class of 45 pupils? What can a student be
expected to know except what is in the textbook and what the teacher says if these are the only
materials available? If tests are structured to reflect this situation at the primary and secondary
levels, who could be surprised that students enter the university tratined to mer Z . e and regurgitate?
Since this is how teachers themselves are trained, who would doubt that the, .ould use the same
approach in their own classrooms? If universities themselves have few (and declining) resources
other than faculty members (see paragraph 3.7 above), we should find the continued reliance on
memorization unsurprising.10
45.           These "supply side" forces have been reinforced on the demand side: if university
graduates have long been bound for the government bureaucracy, where, to put it mildly, the scope
for analysis, innovation, and creativity is minimal, why should they learn how to think for themselves?
The job guarantee has not only undermined external efficiency of the universities, but has also
helped to eviscerate the quality of instruction in the universities.
46.           The level of understanding required of many university students to pass exams is low
by international standards. (See Box 1). The usual procedure for a student is to buy the lecture notes
for a course (typically offered for sale by the professor himself as a way to supplement his income), 11
and to attempt to attend the lectures. One says "attempt", because in some faculties, such as
commerce, courses routinely have up to 1,000 students enrolled in a class, and there are usually not
enough seats to go around. Student responses include arriving three hours early and "rotation
systems", in which groups of friends take turns attending class and then share their notes. The
concept of a "syllabus", with readings other than the textbook, is alinost unheard of in the Egyptian
'0 Even students who do have access to alternative materials, and who attend much smaller classes tend to memorize-
and-repeat. For example, professors at the AU.C., with a U.S.-style undergraduate library and class sizes, constantly
complain that, as one put it, 'my students respond to tests by 'printing the screen': I 'enter the data', and they 'print
it out'!l
"' The cost of notes varies with their length; a set of notes for a typical economics class would cost between LE 10 and
20.



* 14-
university system.12 This is understandable: how or where would students obtain access to sszh
readings and information? The deficiencies of libraries, fundamentally caused by grossly inadequate
budgets, prohibit such assignments.
47.          These problems are even worse in the natural sciences and medicine, where adequate
training demands "hands-on" activities in labs, dissection rooms, etc. The usual result is a stress on
theory at the expense of practice: thus computer students study mathematics, but hardly ever get a
chance actually to use a computer, or medical students study anatomy from books, without ever
dissecting a cadaver. It is possible that the scientific fields havu suffered the most from the
deterioration in quality spawned by the decline in non-salary spending per student. This, of course,
weakens the country's ability to increase its competitiveness in international markets.
48.          Policy makers are acutely aware of these difficulties and are attempting to respond.
However, they are constrained in several ways. First, there was little doubt that university salaries
had to rise; university professors were not immune from the deep cuts in public sector real wages. 13
Even today, a full professor at Cairo University makes only LE 300 per month, little more than a
full-time (perhaps illiterate) maid employed by foreigners. If faculty ate inadequately paid, then, of
course, the quality of education will suffer dramatically: professors, like most public sector
employees, 'moon-light' extensively, whether by selling lecture notes or by taking on consulting work.
Such activities generate wide-spread absenteeism; it is not uncommon for faculty members to miss
at least one-third of the regularly scheduled class meetings. Even under the best of circumstances,
the effective academic year rarely exceeds twenty weeks. Although this is technically against the
regulations, few administrators can enforce the rules; after all, faculty members have to make a
living, and certainly have higher than average expectations and consumption standards. The problem
is especially acute for those faculty members who can obtain posts in the Gulf countries. Finally, it
is unrealistic to expect anyone to do a job well if he/she is not adequately remunerated.
49.          Further, university administrators, including the highest level of the Ministry of Higher
Education, have no discretion over the allocation of funds between faculty salaries and other areas
of spending. Their budgetary allocations from the Ministry of Finance are 'line item' budgets, with
funds being non-fungible across categories. Fundamentally, then, the Ministry of Finance is making
decisions which directly impact educational quality. It is highly dubious that this ministry has the
necessary expertise to make the best educational decisions. Experience elsewhere has amply
demonstrated the virtues of greater university autonomy, here, as elsewhere in the economy,
excessive centralization of decision making undermines efficiency goals.
12 This does not apply to the private American University in Cairo, which attempts to provide a university education
conforming to the American model.
13 Refai wages of government employees in the late 1980s were only 55% of those of 1973 (World Bank, 1991).



-15 -
50.          Low salaries and the absence of extra-class materials cani interact in a "vicious circle"
to undermine quality and to promote rote-learning. Poorly paid faculty members neglect teaching
for more remunerative activitie. They have little time or resources for research, and too often
cannot keep up with developments in their field. They may also sell lecture notes. To maximize the
sales of the latter, they structure their tests so that the notes must be memorized. Students respond
by buying and memorizing the notes, thus reproducing poorly qualified graduates. They find difficulty
finding jobs, which, given the continued de jure job guarantee, increases the pressure on the
government to provide for them in some way.
51.          The lack of university autonomy and strong centralization also removes the "status
competition" which is such a strong motor of change and promoter of quality in the American
system. There is only one private university in the country the AUC, 14 which is closely regulated
by the govemment. Proposals to establish additional ones have so far been quashed on equity
grounds. This issue is taken up in more detail below (paragraphs 3.37-3.38).
52.          In summary, policy makers in the 1980s have inherited a very difficult historical legacy
of a university system which provides much higher private than social retums. The resulting
overcrowding, low salaries, poor facilities, and lack of altemative materials have all conspired to
reduce the educational process far too often to one of rote-memorization. The poorly trained
graduates which too often have emerged from this system were for twenty years absorbed into the
government bureaucracy, as they were unable to find better employment.
External Efficiency
53.          The Egyptian higher education system suffers from serious external inefficiencies. The
supply of graduates by the universities and the demand for their services by the job market have long
been seriously imbalanced. ThiS disequilibrium was both partially created and temporarily concealed
by the government's job guarantee: by undertaking to hire all graduates, open unemployment of
graduates was averted. However, such a policy stimulated the demand for higher education, to which
the universities responded by expanding enrollments and graduates. This forced the government to
hire still more graduates, creating a vicious circle which ultimately became unsustainable for
budgetary reasons. Such a policy also had the serious consequence of reinforcing the segmentation
of the Egyptian labor market.
54.          During the twenty-one year period 1965/66-1986/87 public sector employment
increased by 373% (Handoussa, 1988, 31). (See Table 7). The wage bill soared: from 1975 to 1984,
'4This year a new francophone university Senghor University was established In Alexandria This will be quite small,
and will draw most of Its students from French-speaking African countries. Appropriately, it falls urder the authority of
the Ministry of Foreign Affairs, rather than that of Higher Education.



.16 -
wages absorbed an average of 23% of the government's currenv budget; the numbers shot up to one-
third during 1985-1988 (Handoussa, 1988). Th'e consolidated budgtt deficit, excluding debt payments,
reached an unsustainable 23% of GDP in 1986; spending cu.s became inevitable. The cuts in the
public sector wage bill were magnified by the fact that two budget categories, interest on the public
debt and military spending, were sacrosanct.
55.          The form of budget cuts had significant implications for graduates and for the long-
run demand for higher education. Because the government chose to reduce the real wage bill in the
public sector by freezing nominal wages and by imposing a hiring freeze, adjustment was born by real
wages and by new labor market entrants. Both affect the demand for higher education: a
government job is now worth much less than formerly 15, and such jobs are in any case difficult to
obtain.
56.          However, several factors reduce the responsiveness of prospective university students
to these policy changes. First, the government suspended the "job guarantee" in practice, but not in
theory. That is, the government simply ceased hiring people; the last class to be hired was the class
of 1984: the "waiting time" has increased from 10 months in 1982 (Sanyal, Nooman, et.al., 1982' to
over seven years today. It is likely that lengthening the government job queue in this way has signaled
prospective university graduates and their families that a university degree is no longer the route to
a secure, if poorly paying, job.
57.          The message would have been much clearer, however, if the govemment had simply
abolished the guarantee. By leaving it on the books, the government remains responsible for the
employment of graduates. This may lead to various employment schemes of dubious value, such as
the plan to distribute reclaimed agricultural land to graduates. The government is now distributing
more than 150,000 feddans 16 of reclaimed land in the West Nubariyya area (West of the Delta)
to some 167,000 graduates, of whom roughly 70% have earned their degrees in non-agricultural
disciplines. (FAO, 1989) Giving such graduates 6 feddans of fragile soil in an environment requiring
considerable skills and high-technology (e.g., drip irrigation) may threaten the approximately LE
6,000 per feddan which the GOE has invested in land reclamation. This example illustrates the
continuing inefficiencies created by maintaining government responsibility for the employment of
university graduates."7
'5 Indeed, *the average income level of a federal employee is only marginally above the absolute poverty line.. .for the
urban sector., (World Bank, 1990a, p. 43).
la 1 feddan = 1.038 acres = .42 hectares
17 In early May, 1991, there were (unconfirmed) rumors in Cairo that the government intended to abolish the de iure
guarantee as part of the reforms In the government's Letter of Intent to the I.M.F. Such rumors are encouraging, for
if nothing else, they show that the government Is at least seriously considering making such a decision.



* 17-
58.          The existence of the de jire job guarantee also seriously biases unemployment
statistics in Egypt. Unemployed persons are those who register as such with the Ministry v f Labor;
in effect, they are "queueing" for government employment. They must re-register every twelve
months, and must assert that they have no other job. Since the country has no system of
unemployment insurance, such individuals subsist either on the largesse of relatives or from earnings
in the informal sector. Gunnar Myrdahl's telling remark, "Unemrployment is a bourgeois luxury"
certainly applies to Egypt.
59.          Nevertheless, the problem of graduate unemployment certainly poses a challenge for
the govermment. Despite reforms, the surplus of graduates continues to burden the labor market.
Trends in the composition of unemployment are shown in Table 8. The absolute number of
unemployed university graduates has exploded, rising from 5,405 in 1960 to 56,693 in 1976 to 236,530
in 1986.
60.          The surpluses are not confined to humanities graduates, whose numbers grew most
rapidly. Engineering graduates from the public universities, for example, often require four years to
find a satisfactory job. This is in contrast to the (small) number of engineering graduates from AUC,
who seem to have few difficulties finding employment. The difference may be explained by the
English language facility and greater non-classroom materials available to students at the AUC.
However, even they have some difficulties finding the type of job which they would like. This appears
to be because many engineering firms need not so much university engineers, whose training is
primarily in design (whether of bridges, computers, chemical processes, etc.) but rather technicians
who can implement and maintain already existing designs. Quite a few engineering graduates find
themselves employed as technicians.
61.          It has been said that Egypt's most critical labor shortages are for the "sergeants of
industry"--the technicians and supervisory personnel who are so essential to the smooth functioning
of modem industry. Private sector formal sector firms also frequently complain of the paucity of
satisfactozy "middle management" personnel. Technical institutes have attempted to fill this gap, but
so far, they have had mixed success. (See paragraph 3.4) Employers tend to prefer the graduates
of the mixed secondary/post-secondary "five year" technical institutes. Not only do the students in the
latter usually receive more practical training than those in the two year institutes,'8 but they also
seem to have a better attitude toward technical work than their counterparts from the two-year
institutes.
62.          Another problem is that technical training needs to be general rather than excessively
specific. This is not only because technology and consumer tastes can change swiftly, but also because
the current structure of Egyptian industry has little to do with the country's comparative advantage
I Five-year students receive about 1750 hours of practical training, compared with about 1200 for two-year students



- 18 -
as revealed, for example, by domestic resource cost calculations (UNIDO, 198619. It would do little
good, for example, to expand the supply of technicians careful trained in the details of aluminum
production, when the economic rate of return on this industry is -20% (compared to a financial rate
of return of +12%). The stress at all levels of education should be on developing problem-solving
ability, n_1 on developing excessively specialized skills.
63.          In the final analysis, however, the olismatch between the labor market and the higher
education system is the result of non-educational labor market policies. The failiure of adequate job
creation in the Egyptian econorry is fundamentally the fault o. the capital-intensity bias of policy and
the failure of growth, in turn caused by the accumulation of debt, by the excessive reliance on
petroleum and remittances, and by macroimbalances and microdistortions.
Equlity
64.          The fundamental equity problem of the higher educaticiaal system is a common one:
the inequitably (and probably also inefficiently) excessive allocation of public funds to higher
education at the expense of lower levels. This problem was especially acute during the 1970s: while
university enrollments exploded, the school participation rate for children between the ages of 6 and
11 remained approximately stationary at just over 68%. (The rate actually fell for boys during the
decade, from 81.6% in 1970/71 to 77.8% in 1980/81). The situation improved during the 1980s. The
increased real resources allocated to primary education during the 1980s probably has increased the
overall equity of the educational system. It is noteworthy that the absolute number of unenrolled
primary school children decisively declined during the 1980s; the decline was especially notable for
girls, falling by roughly one-third.
65.          However, a comparison of the budgets of the Ministries of Higher Education and of
Education show a rather different picture (see Table 9). If one assumes that the sum of the two
Ministries' budgets is a reasonable proxy for "educational spending", then the share of higher
education in the total is approximately one-third; an alternative analysis, combining official data with
cohort analysis, suggests that the 10% of the cohort of 1970 in higher education received 50% of all
educational expenditure. It is disturbing to note that, if anything, the share of total educational
expenditure (defined as the sum of the two Ministries' budgets) allocated to higher education has
increased during the 1980s.
66.          The reason why such allocations are inequitable is the usual one: university students
rarely come from the lowest i-icome -brackets. As is true world-wide,the subsidy to higher education
is a subsidy for the middle-class. An analysis of the educational cohort of 1970 showed that those in
'l Domestic resource cost calculations measure comparative advantage by comparing the DRC ratio (the r3tio of value.
added to non-traded inputs) to the (shadow) exchange rate.



- 19.s
the "upper income" group (8% of the cohort's population) received 14% of all educational
expenditure, "middle income" group (67% of the population) received 74% of expenditure, while the
poor (25% of population) received only 12% of expenditure. Education in Egypt, as elsewhere,
subsidizes the middle and upper classes.
67.          It is difficult to determine the rural-urban equity aspects of higher education, since
no data are available on the geographical origin of university students. However, some indirect
information may be obtained by looking at the enrollment ratios at the secondary level; there is a
marked 'urban bias" in such ratios: 61.2% of urban youth of this age are so enrolled, while only 25%
or rural youth are enrolled. Since agriculture, the main rural economic activity, is taxed (Dethier,
1989), subsidies to higher education may be construed as a transfer from rural to urban areas, and
hence, as disequalizing.20
68.          Within higher education itself, a principal equity issue is the gender question. Here
some progress appears to have been made during the 1980s. Although women are still a minority
of university students, they are slightly better represented now than in the mid-1970s. (See Table 10)
Women now constitute over a third of all university students; although the absolute numbers of
women students declined along with total enrollments after 1985, they declined proportionally less
than the numbers of men.
69.          An important equity (and efficiency) issue has been raised in Egypt as elsewhere
concerning charging "user fees" for higher education. Given the generally higher socio-economic
status of most university students, such a change would be desireable. Indeed, the current structure
of fees (charged for primary, but not for higher education) is precisely the opposite of what a
genuine concern for equity would dictate. The problem of change is, as usual, political. Midd'e-class
people are everywhere more vocal and politically active than the poor. Since many of the "middle
class" people who enjoy university subsidies are far from wealthy, they feel very threatened by the
prospect of university fees.
70.          This question is linked to another issue which has been publicly discussed but upon
which no action has been taken or is even seriously contemplated: the creation of private universities.
As previously noted, one such institution already exJcs: the American University in Cairo. Despite
receiving grants and funds from the United States, tuition is high: some US$5,000 per semester,
equivalent to tuition at less-expensi ., private universities in the United States. Such fef-s are far
above the means of the vast majority of Egyptian families. However, enrollments in the AUC have
grown rapidly, and demand for entrance is strong. It is conceivable tha. other private universities,
charging lower fees than the AUC but more than the public universities, might be able to attract
students and to be self-financing.
X Average urban incomes are about 46% above rural averages. (World Bank, 1991, p. 11).



-20-
71.          The advantages and disadvantages of such a policy initiative are well-known. On the
one hand, such institutions could take some of the pressure off of the public universities and could
offer, presumably, higher quality education through higher faculty salaries, smaller class sizes, and
greater provision of library, laboratory and other "extra-classroom" materials. However, there is
considerable fear in Egypt that this might create a "two-tiered" educational system, in which the
private schools offered superior education to the well-to-do, leaving the poorer students with an
inferior education.
72.          Such fears are likely misplaced. Such a dual system already exists. In general, the
current educational system is inequit able because it is (relatively) biased against primary education.
More specifically, a "two-tiered" system already exists at the secondary level: wealthier parents send
their children to private schools, especially those offering instruction in foreign languages (English,
French, German). Finally, the "tutorial system", prevalent at both the secondary and also at the
university level, gives an additional advantage to families with greater resources. The hiring of private
tutors greatly improves the chances of a student's receiving a high mark on the General Secondary
Exam, and therefore, of his or her access not only to the university, but also to the more prestigious
faculties such as medizine. Private tutoring continues at the university level; the practice seems to
have begun in medical schools, and then to have spread to other disciplines. The outcome is the
same as at the secondary level: those who can pay receive superior instruction and achieve better
results. Consequently, and in common with most countries, the current structure of education, while
offering some important avenues for social upward mobility, by and large reproduces the existing
class structure. little would be lost by explicit recognition of this fact.
73.          In summary, reforming the system of higher education subsidies is essentially one of
finding an appropriate targeting mechanism. The most common such system world-wide is a
combination of fees with scholarships for the needy. A difficulty in Egypt is that the popular
perception of government competence is unflattering. It is widely assumed that any scholarship
system would in practice reward the well-connected, rather than the talented-but-poor. Accordingly,
many believe that a system of "targeting" in higher education would indeed exclude the less well-off,
however able and motivated they might be. The problem of increasing the equity of higher
education cannot be divorced from the political problem of the public's negative perception of
governmental administrative capacity.
Summarv: Determinants of Performance
74.          The determinants of the performance of the higher educational system may be
summarized in a supply-and-demand framework, with due attention given to the impact of policy on
both aspects of the market. On the supply side, the fundamental problem is one of quality:
university students too rarely are trained to analyze, synthesize, and solve problems. Instead, they
leam to memorize and regurgitate lecture notes. Needless to say, such graduates have not been



*21.
taught to "respond rapidly to disequilibria". The causes of such a supply problem are: 1) very large
class sizes, 2) low faculty salaries, which encourage absenteeism and the selling of lectture notes to
supplement income, and above all, 3) the inadequacy of non-class materials (libraries, assigned
readings, laboratories, computers, etc.) which are indispensable if students are to learn analytical
thinking.
75.          Such problems reflect the paucity of resources in the higher education system. This,
in turn, is policy generated. Since education is free, all resources must come from the government
budget. Since the budget is chronically and catastrophically in deficit, there is great pressure to
reduce spending. Creditably, Egypt has avoided reducing real resources allocated to education.
However, the decline in the allocation of real resources to non-salary items blocks any program to
improve quality.
76.          The absence of fees also greatly increases the demand for higher education. Students
attend the university hoping to improve their life-time earnings; this has been strongly reinforced by
the government job guarantee. Implementing this policy, combined with the absence of fees, greatly
increased the private return to higher education. Although the government has not hired new
graduates for over six years, the fact that the guarantee has not been explicitly and legally repudiated
continues to send socially wasteful signals to prospective university students and their families. The
government's program to grant reclaimed land to graduates is likely to reinforce such signals.
77.          Government policy has very likely succeeded in reducing the private rate of return
to education, not only by lengthening the waiting time for a government job (or allocation of land),
but also by reducing real wages in the bureaucracy. Yet despite such falls, university enrollments
exploded in the 1970s; the decline of the late 1980s was not the result of slackening demand, but was
ckaused by government-mandated enrollment limitations. The demand for higher education in Egypt
seems quite inelastic with respect to either the availability or the remuneration of government
employmenit.
78.          There are at least two reasons for such demand inelasticity. First, demand for higher
education may be counater-cyclical: if it is difficult to find work which is congruent with the job
seeker's aspirations, then staying in school is a reasonable strategy, particularly given its low cost.
Although government wages declined more rapidly than those elsewhere in the economy, real wages
in the last five years have declined throughout the economny and quality jobs are increasingly scarce.
The continued strong demand for higher education may be very much a response to the poor labor-
market prospects of most graduates.
79.          A second source of the inelasticity of demand for college education with respect to
real wages in government (or indeed elsewhere) is that the derived demand for university education
is based not only on the job market but also on the "marriage market". White-collar work has great
prestige in Egypt; manual labor has a distinctly lower status. Accordingly, fam.iies are reluctant to



.22 -
marry their daughters to men who work with their hands. The "effendi syndrome', democratized
under Abd-el-Nasser, reduces the responsiveness of the demand for higher education to labor market
signals. One would expect such norms to change over time; there is already some anecdotal evidence
that, at least among the lower middle-class, the higher earnings of private sector skilled workers (e.g.,
plumbers, electricians) relative to government employees has increased the attracti" eness of the
former in the marriage market. Such social norms, however, change only slowly, and contribute to
the very strong demand for higher education.
IV. CONCLUSION: RESPONSES AND REFORMS
The Government
80.          Government policy strongly shapes both the demand and supply sides of the higher
education market. Policies may be divided into the direct and indirect: the former are explicit "higher
education policies", while the latter include government budgetary decisions and, especially, labor
market and employment regulations. In general, far more change has occurred with the former than
with the latter.
81.          The government responded to the unsustainable rate of growth in higher educational
enrollments by restricting entrance; this was done by raising the scores required to pass the GSE or
thanawiyya al-amma. The reduction in the number of students was combined with an increase in total
real resources to higher education. These, however have been spent almost entirely on raising
salaries; such a decision was taken by the Ministry of Finance, which makes 'line item" allocations
to the Ministry of Higher Education. It was certainly necessary to raise salaries; even now, they are
far too low to promote quality instruction. But the paucity of non-salary resources seriously impedes
upgrading the quality of instruction and trailing. Nevertheless, the increase in real resources per
student is certainly a step in the right direction. It is also notable that this was achieved under
increasingly severe governmental budgetary constraints.
82.          The government's de facto suspension of the government job guarantee is also
helpful. Arguably, it is inadequate. Its de jure existence continues to send the wrong signals to
prospective students and creates considerable pressure on the government to provide alternative
employment for graduates. Thus, rather than simply recognizing and publicizing the fact that the
government cannot temain responsible for providing jobs for graduates, the GOE tries to provide
jobs for them by using some of its resources from outside of the bureaucracy. Schemes such as the
distribution of reclaimed land to graduates continues to signal prospective university students that
"the government will provide" if you have a degree. It would be far better simply to cancel the
guarantee outright.



-23 -
83.          Changes in government policy have not had a perceptible impact on increasing the
equity of the educational system as a whole. The fundamental weakness remains the disproportionate
allocation of resources to higher education at the expense of primary education. It is not unnecessary
to assume, of course,that funds for one need come at the expense of the other; there are many other
budgetary allocations (particularly, those covering the losses of state-owned enterprises) which could
be cut to free resources for greater human capital investment. However, if a fixed budget for all
educational expenditures is assumed, the current allocation is not only inequitable, but also
inefficient: primary schooling has a far higher social rate of return than does higher education, while
the "quality problems" encountered in the university are partly created by deficiencies in pre-tertiary
education.
84.          The Achilles Heel of government policy toward higher education is the many
impediments to job creation. The list of Egyptian "anti-employment policies" is long and familiar:
overvalued real exchange rates, negative real interest rates (both partially caused by huge
government deficits), very low energy prices, output price distortions, and a regulatory environment
which not only impedes the growth of private traded goods production but also tum labor into a
fixed cost. The rate of change in these policies is very slow; with a labor force growing at 2.7% per
year, the problems of university students' finding jobs will only become increasingly severe, despite
restrictions on enrollments.
Employers
85.          Private sector employers have relatively few direct links to the universities. Legally,
the govemment has a monopoly on all job placements. In practice, some limited private sector
placement is tolerated; there are occasional "job fairs" (e.g., at A.U.C.) and a few private sector job
placement services operate near Cairo University. Formal private sector companies also maintain
informal networks of personnel managers, who share information on needs, salaries, etc. Such groups
as, for example, the Overseas Security Advisory Council, largely composed of foreign firms, share
such information. The informal sector, of course, requires few services of university graduates as
such; many graduates are employed in this sector, since they cannot find altemative employment.
Recruitment here is through personal ties, word-of-mouth, etc. In short, formal and even informal
linkages between private sector hiring and the universities are very limited.
Students
86.          Students seem to have responded sluggishly to the new conditions. More students are
attending technical schools, but this may simply be the result of the lack of alternatives given the
increasing restrictiveness of university admission policies. There is little evidence that the demand



-24 -
for higher education has slackened significantly; the very slow change in "marriage market" conditions
offers a plausible explanation for this phenomenon.
Universities
87.          Despite the low level of autonomy of decision making power of university
administrators, a number of innovative responses are observable. Responses here include the attempt
to upgrade textbooks, to increase reliance on "self-teaching" materials, and to develop a few
innovative programs which stress greater student initiative, problem-solving, and practicality (See Box
2). It is planned to separate the college entrance examination from the secondary school completion
exam, and to change the content of the exam. It is already possible to substitute the U.K's A-level
examination for the GSE. Officials at both the universities and the Supreme Council would like to
increase the allocation of resources to non-salary areas, but they are tightly constrained by the budget
given them by the Ministry of Finance.



* 25.
REFERENCES
Clark, Burton R. (1990) "Is California the Model for OECD Futures?" Mimeo.(September).
Cochran, Judith (1986). Education in Egpt. London: Croom Helm.
Dethier, Jean-Jacques (1989). Trade. Exchange Rate. and Agricultural Pricing Policies in EMypt.
Washington, D.C.: The World Bank.
FAO (1990). "Arab Republic of Egypt: New Lands Agricultural Services Project". Rome: FAO
Investment Centre.
Handoussa, Hebba (1988). "The Burden of Public Sector Employment in Egypt". Mimeo, Geneva:
i.LO.
----(1991). "Crisis and Challenge: Prospects for the 1990s", in H. Handoussa and Gilian Porter,
editors, Labour Absorption and Structural Adjustment: Egypt in the 1990s. Geneva: LLO.
Hansen. Bent (1991). "EEmployment Strategy: Egypt in the 1990s" in Handoussa and Porter, eds.
----and Samir Radwan (1982). Employment Opportunities and Equity in a Changing Economy: Egypt
in the 1980s: A Labour Market Approach. Geneva: I.LO.
ILO (1991). "The Challenge of Job Creation in Egypt". Draft Summary Report of the ILO Multi-
Disciplinary Mission on Return Migrants from the Gulf. Cairo, mimeographed.
Osman, Mohammed Osman and Hoda Mohammed Sobhi (1989). "The Economics of Education in
Egypt" in Adnan Badran, ed., At the Crossroads: Education in the Middle East. New York:
Paragon House.
Richards, Alan (1982). Egypt's Agricultural Development. 1800-1980. Boulder and London: Westview
Press.
-(I991). "Agricultural Employment, Wages, and Government Policy in Egypt During and After the
Oil Boom" in Handoussa and Porter, eds.
Sanyal, Bikas C., Richard Noonan, et. al. (1982). University Education and the Labour Market in the
Arab Renublic of Egypt. Geneva: I.LO.



-26 -
Schultz, T.W. (1971). Investment in Human Capital. Glencoe, Ill.: The Free Press.
UNIDO (1986). Industrial Development Review Series: Egpt. Vienna: UNIDO.
Waterbury, John (1983). The Egypt of Nasser and Sadat: The Political Economy of Two Regimes.
Princeton, NJ.: Princeton University Press.
World Bank (1991). Egypt: Alleviating Povert, during Structural Ad. istment Washington, D.C
Wright, Gavin (1980). The Political Economy of the Cotton South. N.Y.: Norton Press.



27
TABLE 1: HIGHER EDUCATIONAL ENROLLMENTS
YEAR           NUMBER OF STUDENTS           % SCIENCE*
ENROLLED                STUDENTS
1971                 191,483                   55.0%
1972                 213,370                   52.8
1973                 254,537                   48.7
1974                 301,325                   45.7
1975                 348,984                   43.7
1976                 418,932                   41.4
1977                 452,027                   39.7
1978                 473,426                   39.1
1979                 482,334                   37.6
1980                 505,081                   36.2
1981                 555,970                   33.3
1982                 598,251                   29.4
1983                 643,034                   26.9
1984                 660,357                   26.3
1985                 649,140                   25.8
1986                 636,684                   25.7
1987                 609,500                   26.5
1988                 585,447                   25.9
1989                 567,682                   25.3
* Science students' defined as enrolled in the Faculties of:
Natural Sciences, Medicine and Pharmacology, Nursing,
Engineering, Agriculture, Veterinary Medicine, Technology,
Electronics, Physical Training, Applied Arts, Cotton Science,
Petroleum and Mining, and Construction Planning.
Source: CAPMAS.



28
TABLE 2: HIGHER EDUCATION GRADUATES
YEAR       HUMANITIES  SCIENCES  TOTAL
1973          14,859       15,587      32,401
1974          19,672       17,029      39,194
1975          23,532       17,542      44,407
1976          28,425       19,522      51,927
1977          37,002       20,875      62,329
1978          39,268       23,502      65,632
1979          43,223       25,327      72,389
1980          43,239       26,324      73,848
1981          47,111       29,166      77,989
1982          52,966       30,609      82,796
1983          56,874       30,878      87,540
1984          70,500       29,830     100,305
1985          80,582       30,666     111,281
1986          82,889       29,805     113,070
1987          78,580       30,699     107,254
1988          75,032       30,181     103,369
1989          70,004       28,674      95,734
Source: CAPMAS



29
TABLE 3: NUMBER OF STUDENTS PASSING THE GENERAL
SECONDARY EXAM
YEAR   SCIENCE MATH   ARTS   TOTAL
1971      56,485                22,376     78,861
1972      64,544    ----        29,444     93,988
1973       74,564    ----       33,093     107,657
1974      87,340    ----        36,918     124,258
1975       83,759    ----       38,290     122,049
1976       73,719    ----       33,360     107,079
1977       61,378    17,995     38,360     121,482
1978      56,680    22,769      39,101     118,550
1979       55,493    27,362     46,010     128,865
1980      57,579    34,401      51,402     143,382
1981      54,777    34,277      53,930     142,984
1982      53,250    36,920      53,380     143,550
1983       54,731    38,801     54,115     147,647
1984       55,850    36,629     64,312     156,791
1985      56,386    36,771      64,123     157,280
1986       71,340    45,050     71,199     187,589
1987       52,545    34,541     59,008     146,094
1988       54,317    29,718     63,146     147,181
1989       45,662    22,460     65,873     133,995
Source: CAPMAS



30
TABLE 4: TECHNICAL SCHOOL ENROLLMENTS
YEAR          STUDENTS
ENROLLED
1973               20,805
1974               25,029
1975               27,212
1976               28,829
1977               31,541
1978               36,475
1979               39,802
1980               44,722
1981               52,283
1982               55,782
1983               59,423
1984               65,256
1985               85,630
1986               101,394
1987               102,793
1988               104,812
1989               105,360
Sonrce: CAPMAS



31
TABLE 5: GRADUATES FROM TECHNICAL INSTITUTES
YEAR   NUMBER OF GRADUATES
1972              4,902
1973              5,009
1974              6,998
1975              6,890
1976              6,935
1977              7,855
1978              8,863
1979              11,469
1980              11,392
1981              14,209
1982              16,836
1983              17,027
1984              18,894
1985              20,293
1986              26,993
1987              32,541
1988              35,036
1989              35,335
Source: CAPMAS



32
TABLE 6: SPENDING ON HIGHER EDUCATION
YEAR             REAL SPENDING  %SALARIES           %OTHER**
PER STUDENT*
1980/81              331.06          55.7%            40.54
1981/82              405.34          59.04            37.29
1982/83              467.87          62.52            33.75
1983/84              573.45          61.63            35.38
1984/85              735.63          64.40            32.22
1985/86              834.23          64.94            29.32
1986/87            1038.16           66.97            24.76
1987/88            1436.04           67.44            24.57
1988/89            1684.98           72.30            22.91
1989/90            1951.36           69.30            22.29
Source: Worled Bank, 1990b.
*1980 LE
-*Subsidies and Supplies



33
TABLE 7: GOVERNMENT* EMPLOYMENT
YEAR    INDEX                  NUMBERS OF
EMPLOYEES
1960           72                 670,000
1966          100                 933,000
1967          111               1,034,000
1968          118               1,103,000
1969          122               1,135,000
1970          127               1,188,000
1971          134               1,250,000
1972          138               1,291,000
1973          158               1,471,000
1974          178               1,661,000
1975          182               1,701,000
1976          191               1,779,000
1977          205               1,911,000
1978          221               2,065,000
1979          238               2,216,000
1980/81       265               2,474,000
1981/82       283               2,645,000
1982/83       306               2,850,000
1983/84       323               3,015,000
1984/85       344               3,205,000
1985/86       360               3,329,000
1986/87       373               3,480,000
Source: Handoussa (1988), p. 31.
*General government plus economic enterprises.



34
TABLE 8: EDUCATIONAL CHARACTERISTICS OF THE
UNEMPLOYED
EDUCATIONAL LEVEL                         YEAR
1960            1976            1986
Illiterate                45.8%           23.6%            3.0%
Literate                  29.7            11.0            22.0
Primary and
Less than Secondary       3.4             7.9              3.0
Intermediate and
Less than University     17.4            35.0             57.0
(Over Secondary)       (n.a.)          (n.a.)           (5.0)
(Secondary)               (n.a.)          (n.a.)          (52.0)
University                3.2              9.6             16.0
Unspecified               0.4             12.9             0
Sources: 1960, 1976: Osman and Sobhi (1989), p. 193;
1986: World Bank (1990b), p. 51.



35
TABLE 9: SHARE OF HIGHER EDUCATION SPENDING
IN TOTAL EDUCATIONAL SPENDING
YEAR                              HIGHER EDUCATION'S
SHARE*
1980/81                                  32.9%
1981/82                                  31.1
1982/83                                  33.6
1983/84                                  35.1
1984/85                                  37.7
1985/86                                  35.8
1986/87                                  34.8
1987/88                                  36.0
1988/89                                  35.6
1989/90                                  36.7
Source: World Bank (1990b).
*Share= Budget of MOHE as percentage of combined
budgets of MOHE and the Ministry of Education



36
TABLE 10: FEMALE ENROLLMENT IN UNIVERSITIES
YEAR                 NUMBER OF WOMEN   % OF ALL STUDENTS
ENk;LLED
1976                   124,934                        29.8
1977                   136,178                        30.1
1978                   141,835                        30.0
1979                   149,077                        30.9
1980                   158.036                        31.3
1981                   181,580                        32.7
1982                   195,409                        32.7
1983                   205,633                        32.0
1984                   215,G79                        32.6
1985                   215.754                        33.2
1986                   215,129                        33.8
1987                   209,875                        34.4
1988                   203,068                        34.7
1989                   198,202                        34.9
Source: CAPMAS



37
BOX 1: UNIVERSITY EXAMS: THE CASES OF ECONOMICS AND GEOLOGY
Egyptian university students often simply memorize and repeat the basic principles of a field
of inquiry which they have learned in lectures and/or from a textbook. Far too seldom are they
challengeel to apply what they have learned to a simulated "real world" situation or problem. The fact
that the only measure of students' performance is one, end-of-the-year exam is also deleterious to
developing the kind of problem-solving skills which the country requires: problem-solving is a day-in,
day-out practice, not a once-for-all exercise. It is a state of mind, not a once-a-year experience.
For example, consider the following exam, for first year economics students at Cairo
University in 1989.
EXAM
Part I
Answer the Following:
Explain, by drawing if possible, the difference between:
1)   the marginal propensity to save and the average propensity to consume;
2)    the change in demand and the change in the quantity demanded;
3)    economic growth and economic stagnation;
4)    absolute inequality and absolute equality in the distribution of income.
Part II
Answer only two of the following:
1)    Define the consumer's equilibrium for two commodities, x and y. What is the
equilibrium condition? What effect does an increase in the price of commodity x have
on that equilibrium?
2)    Explain--by drawing--the effect that autonomous investment has if added to the total
demand on the equilibrium level of national income. And explain the effect that such
investment has on savings after the new equlibrium.
3)    Suppose that two substitutes (rice and macaroni) are in equilibrium. Explain the
effect of an increase in the subsidy for the production of rice has on both the price
and quantity of rice and macaroni.
This is a three-hour exam, in Arabic, and constitutes the only measure of a student's
performance after one whole year of concentrated study of economics. However, these question do
little more than ask for basic definitions, or for the most rudimentary application of fundamental
economic principles. Question 11-1, for example, might appear as one question on a mid-term exam
during the first semester in an American university; such a question would be only a small fraction
of a typical microeconomics midterm, requiring perhaps five minutes to answer. The "meat" of the



38
exam would consist of considerably more complicated problems. An American student would also
not typically be studying only economics at this stage of his/her academic career; nevertheless, the
testing to which he/she would be subjected would be far more difficult.
These problems of testing simply reflect (and reproduce) the problems of quality discussed
in the text: lack of alternative materials, previous training of students (and faculty), custom, large
class sizes, etc. They are found in many other fields and universities as well. Indeed, Cairo University
is the oldest and most prestigious of the universities; its economics faculty contains several world-
class scholars; obtaining admission to this faculty is difficult. If this prestigious and highly competent
faculty has such a problem, the situation is very likely to be even worse elsewhere in the higher
education system.
Much the same can be said of other disciplines. For example, consider the case of the
following 1 1/2 hour final exam in Ore Minerology (for a fourth-year student of geology at Cairo
University, May, 1988).
"Answer 2 questions only from the following (illustrate your answers):
1.    Draw  the TiO2, FeO, Fe203 triangle to show  the possible continuous and
discontinuous solid solutions referring to one of each in detail and giving examples
from Egypt.
2.    Discuss four of the following:
a.    Modern and classical methods of polishing;
b.    polishing hardness and microhardness (VHN);
C.    Reflection and bi-reflexion;
d.    Microchemical and etching tests;
e.    Apllications of ore-microsropy in mineral technology.
3.    Compare and contrast between four of the following pairs:
a.    Replacement and ex-solution textures;
b.    Colloform textures and crustification bonding;
c.    Relict and caries textures;
d.    deformation bonding and translation twinning;
e.    internal reflections and anisotropism."
This author has no expertise whatsoever in geology, nevertheless, to his naive eye, this exam,
like the one in economics, fails to test the student's ability to apply knowledge to problems. Instead,
he/she is asked to very general questions, which largely test whetl,er the student has memorized the
lecture notes.



39
BOX 2: SOME INNOVATIVE RESPONSES TO THE QUALITY PROBLEM
There now exist several innovative, interdisciplinary programs at several Egyptian universities.
These programs are specifically designed to increase the 'external efficiency" of university training
by being more practically oriented than the usual program. In particular, the stress is on solving real
world problems; since such problems often have dimensions which transcend academic disciplinary
boundaries, students are encouraged to take some courses in related areas. (This is similar to the
concept of a "minor' in American universities; the concept does not exist in Egyptian universities).
Further, since some basic principles may apply to more than one field, students with different areas
of concentration come together in one classroom. It is hoped that this will increase their interaction,
and also further promote a stress on application of principles.
For example the Insttitute of Graduate Studies and Research at Alexandria University has
instituted four interdisciplinary, post-graduate programs. Faculty and students remain in their
respective departments, but come together in certain "group' classes and activities. The groupings
are:
1)    materials--which includes faculty and students from physics, chemistry, engineering,
dentistry, and orthopedics;
2)    environmental studies--with participants from  science, engineering, economics,
administration, and law;
3)    bioscience and technology;,
4)    information studies.
The program at present has about 150 students. Success stories include architects who,
through participation in program #2, have become qualified city planners, and geology graduates
who, by a pursuing a course of study in information studies, have become adept at computer
applications in geology.
An early version of such an approach to higher education was pioneered by the Cairo
University Faculty of Agriculture at the Fayoum Campus. Students from various disciplines are
brought together, and trained through seven "course modules", which stress the mastery through
application of fundamental agricultural principles. Students are tested not merely at desks, but also
in labs and in the field. New materials such as work-books, video-tapes, slides and other visual aids
are utilized. Such a case illustrates the fundamental argument of the text that extra-classrooom
resources are essential to the development of such a "hands-on" method of teaching, which, in turn,
develops the kind of problem-solving ability which the country needs.
The Faculty of Economics and Political Science at Cairo University have recently made a
joint proposal (with the Department of the same name at the American University in Cairo) for a
master's degree program in public policy analysis (including diplomacy and management). Like the
other programs, this one aims to draw on different disciplines and to be closely linked with practical
experience and field-work.



40
Finally, the Faculty of Medicine at Suez University has been able to overcome the usual
problem in Egyptian medical training of the lack of clinical experience. This has been achieved by
a drastic limitation on the number of students admitted, and by a substantial augmentation of
resources, provided to the university by the local governorate. The success of this program illustrates
the argument of the text: greater non-faculty resources per student are essential if quality is to be
raised. Students not only receive more faculty attention, more clinical training, but also go abroad
for three years of training, which is sponsored by Suez University. The model of developing links with
overseas institutions (here, teaching hospitals) could be profitably emulated by other innovative
programs.



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Common Agricultural Policy Would   :..nald 0. Mitchell                      33716
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WPS852  How Health Insurance Affects the    Joseph Kutzin          February 1992      0. Nadora
Delivery of Health Care in Developing Howard Barnum                         31091
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Tax on Perennial Crops?                                                     33732
WPS855  Sovereign Debt: A Primer          Jonathan Eaton           February 1992      S. King-Watson
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and Participation in the Labor Force   Zafiris Tzannatos                  39244
WPS857  The Life Insurance Industry in the    Kenneth M. Wright  February 1 992     W. Pitayatonakarn
United States: An Analysis of Economic                                    37664
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WPS858  Contractual Savings and Emerging   Dimitri Vittas        February 1992      W. Pitayatonakarn
Securities Markets                                                        37664
WPS859  Macroeconomic Management and    Ibrahim A. Elbadawi      February 1992      V. Barthelmes
the Black Market for Foreign Exchange                                     39175
in Sudan
WPS860  The Restrictiveness of the Multi-    Refik Erzan         February 1992      G. Ilogon
Fibre Arrangement on Eastern    Christopher Holmes                        33732
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WPS861  Private Saving in Mexico, 1980-90    Patricio Arrau      February 1992      S. King-Watson
Daniel Oks                                31047
WPS862  Higher Education in Egypt        Alan Richards           February 1992      J.Vythilingam
33677
WPS863  Intergovernmental Fiscal Relations   Roy Bahl            February 1992      A. Bhalla
in China                        Christine Wallich                         37699
WPS864  Privatization of Natural Monopoly    Ralph Bradburd      February 1992      E. Madrona
Public Enterprises: The Regulation                                        37496
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Explaining the Levels of Nutrition in   Marito Garcia                     30464
Pakistan
WPS866  Regulatory and Institutional Impacts  Robert Pardy       February 1992      Z. Seguis
of Securities Market Computerization                                      37665
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Personal Pension Plans in Chile  Augusto Iglesias                         37664