Stiglitz in Egypt: On Crucial Questions of Public Policy

22 January 2011

GENEVA, SWITZERLAND - On a visit to Egypt, I received an invitation from the Access to Knowledge for Development Center (A2K4D), headed by Professor Nagla Rizk at the American University in Cairo (AUC), to attend a lecture last Thursday by the Nobel Prize-winning American economist Joseph Stiglitz. Though I’ve been involved in debates about globalization, in which Stiglitz has been a key figure, I’ve never had the chance to hear him speak in public. So I was naturally thrilled at the prospect of attending his talk in my own country and even more so at my alma mater.

Stiglitz’s address titled “Creating a Learning Society: An Agenda for Dynamic Societies in Uncertain Times” was no disappointment. With eloquence and wit, he highlighted some of the lessons to be drawn from the recent financial crisis, particularly the limits of “market fundamentalism”—the absolute faith that unregulated markets will always maximize economic growth and well-being.

Stiglitz then went on to describe five key elements he considered essential for the realization of “dynamic societies”: the importance of quality in education, openness to new ideas, competition, sound industrial policy, and the creation of a national innovation system. He particularly underscored the role of knowledge and technology in bridging the development gap. He concluded by emphasizing the need for “balance” between states and markets, adding that this was perhaps the most important challenge for any society.

While I was familiar with some of Stiglitz’s views, I was struck by the relatively little echo they received in the local press and among the Egyptian intelligentsia. Is it possibly because Stiglitz’s criticisms of neoliberal orthodoxy do not resonate well with the prevalent views among most of Egypt’s economic elites, who have largely embraced conventional economic thinking in recent years?

Pondering the matter further, it appeared to me that while Stiglitz did not make any direct references to Egypt in his address, several of his remarks and examples seem to have been carefully chosen to allude subtly to many of the public policy choices Egypt is grappling with.

For instance, commenting on how to encourage local innovation, Stiglitz applauded the choice by the Brazilian government to adopt open source software for its governmental and public institutions. In contrast, Egypt’s communication and information technology policies have almost exclusively championed proprietary software.

On the importance of promoting competition, Stiglitz pointed out that Mexico , a North American Free Trade Agreement signatory that has nearly unrestrained access to American markets, has suffered in terms of competitiveness because of the continued existence of large Mexican monopolies. Here again, the parallel with Egypt is relevant as the country is struggling to effectively implement competition laws in the face of entrenched monopolies in many sectors.

Responding to a question about universities in developing countries increasingly “commercializing” their research through ownership of intellectual property assets, following the model of the US Bayh-Dole Act, Stiglitz cautioned that universities should not become profit-maximizing entities. While he recognized the important role of the private sector in research, he underscored the critical role of publicly funded initiatives, particularly in developing countries. He pointed again to the fact that many of Brazil’s industrial successes, such as the aircraft manufacturer Embraer, originate in government-funded research and investment. Much food for thought for Egyptian policy makers who are endeavoring to modernize Egypt’s scientific and technological infrastructure.

In the area of intellectual property rights, Stiglitz encouraged developing countries to take advantage of the flexibilities in the WTO TRIPS Agreement, particularly in relation to public policy objectives such as public health, which are crucial for development efforts. He pointed to the example of India, which is using these flexibilities to oppose the “ever greening” of pharmaceutical patents (i.e the practice by some pharmaceutical companies to seek extensions to the term of a patent beyond the normal legal limit, usually through repeated small modifications). In this area, Egypt has fared relatively well as it has not, so far, taken on major new obligations which go beyond those set by the TRIPS Agreement, although of course it could do more to use the flexibilities in the agreement.

Finally, in a veiled reference to Cairo’s urban chaos and congested traffic, Stiglitz could not resist underlining the importance of urban planning and effective transportation for the realization of a dynamic society.

This overview of some of Stiglitz’s remarks doesn’t suggest that his thought-provoking views are the only key to solving many of the pressing and complex policy challenges Egypt is facing. However, they are certainly relevant and can enrich the debate about public policy in this country.

Research centers, such as A2K4D, also have an important contribution to make by fostering new research on issues of knowledge production and accessibility, which can better inform these debates.

“One size fits all” policy prescriptions, which claim to be valid for all countries regardless of their differences, should be subject to scrutiny, especially in uncertain times like the present. Stiglitz’s invitation to think critically about the public policy challenges we face merits our attention.

Ahmed Abdel Latif is Programme Manager for Intellectual Property and Technology at the International Centre for Trade and Sustainable Development (ICTSD), based in Geneva. This piece was originally published on the Al-Masry Al-Youm website.

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