B&E | Egypt Inequality in the Global Context

B&E | Egypt Inequality in the Global Context

The World Bank

B&E | Egypt Inequality in the Global Context |  Image Attribute: Arria Belli, Creative Commons

Image Attribute: Arria Belli, Creative Commons

Between 2005 and 2009, the overall income Gini for Egypt decreased from 34.6 to 33.1. The decrease is not statistically significant (at 5 percent level), and thus we can basically speak of an unchanged level of income inequality around 33–35 Gini points. This is a level very similar to that of the developed European Organisation for Economic Co-operation and Development (OECD) members. It is significantly lower than income inequality in the United States (which exceeds 40), and is likewise lower than inequality in most countries that are close to Egypt in terms of gross domestic product (GDP) per capita. For example, in 2009, Georgia, Guatemala, and China that, according to GDP per capita (measured in purchasing power parities [PPPs] terms), are around Egypt’s income level had all higher inequality: Guatemala had an income Gini of 57, Georgia a consumption Gini of 39, and China an income Gini of 47.

The situation in Egypt, however, is not so special when it is compared with other Arab countries for which we have the data. Arab countries are distinguished by relatively low inequality (this may not be however the case for the countries for which we lack data, as for example Saudi Arabia). Table 1 shows some illustrative results. None of the countries shows an outstanding level of inequality. Their Ginis range between around 33 and 40, and Egypt’s inequality is the lowest. Although we cannot be sure about the rankings because the welfare concepts and survey methodologies differ, there is no evidence that Egypt’s inequality level is any different from what is found in other Arab countries.

Table 1 Income and Expenditure Ginis in Arab Countries (on Per Capita Basis)

Table 1 Income and Expenditure Ginis in Arab Countries (on Per Capita Basis)

Figure 1 Egyptian Gini within Global Distribution of Ginis, 2008–09

Figure 1 Egyptian Gini within Global Distribution of Ginis, 2008–09

Using the most recent 2009 data for Egypt, we can also situate Egypt within the international inequality spectrum around the same year. As figure 1 shows, if we plot a cumulative worldwide distribution of country Ginis, Egypt’s inequality would be around the 40th percentile (see the vertical line). In other words, Egypt’s inequality is below median international inequality.

Figure 2 Gini and GDP Per Capita, 2008–09

Figure 2 Gini and GDP Per Capita, 2008–09

In figure 2, we plot the same Gini from around 2008–09 against GDP per capita in the same year. We have data from 88 countries, based on comparable or same definitions of income or expenditures, and the same definition of household per capita Gini. As is often the case in cross-sectional results, inequality is negatively associated with GDP per capita. Egypt’s Gini lies clearly below the regression line, that is, it is (again) relatively low for its income level. 

Figure 3 Egyptian Income Distribution Compared to that of Selected Countries and the World

Figure 3 Egyptian Income Distribution Compared to that of Selected Countries and the World

In figure 2, we contrast Egyptian income distribution to that of several selected countries. We aim to show where in the global income distributions are individuals situated at different percentiles of Egyptian income distribution. The horizontal axis shows percentiles of national income distributions, ranging from 1 to 100, and the vertical axis shows their positions in the global income distribution, ranging also from 1 to 100. Thus, for example, the bottom US percentile is at the 55th global percentile, indicating that the poorest Americans are better off than more than one-half of world population. The poorest Egyptians are at the 15th global income percentile, and each richer Egyptian percentile of course stands higher in the global income distribution. Egyptians at the median of national income distribution are also around the median of the global income distribution. The richest 1 percent of Egyptians are at the 92nd global percentile.

We can easily compare the positions of various Egyptian percentiles with that of people from other countries. It is thus remarkable that the poorest people in Egypt are not as destitute as those in India, China, and Brazil. In effect, up to the 10th percentile, people in Egypt are better off than similarly placed people in Brazil; up to the 50th national percentile, they are better off than similarly placed people in China, and throughout the income distribution Egypt dominates India. This means that at any given point of the income distribution, people in Egypt are better off than similar people in India. Egypt’s distribution thus displays the first-order stochastic dominance. 

The relationship between incomes in China and Egypt is interesting. After the median, Chinese incomes exceed those of similarly placed Egyptians. However, at the very top of the income distribution, richest 1 percent of Egyptians catch up with the richest 1 percent of the Chinese.

Finally, and not surprisingly, in a similar way that Egypt shows first-order dominance over India, so does the United States first-order dominates Egypt. Around 60 percent of Egyptians live at the income levels inferior to that of the poorest 1 percent of Americans. Even upper middle income Egyptians barely reach the level of income enjoyed by the lower-middle-income population in the United States. This is of course not surprising because the main determinant of one’s overall position in the global income distribution is the mean income of his/her country. Thus, disposable mean per capita household income in the United States is 25,500 international dollars while it is only 2,000 in Egypt (the ratio is more than 12 to 1). Measured by GDP per capita in international dollars, the gap in 2008 exceeds 8 to 1 (43,000 against 5,000). Thus, even if the two distributions were exactly the same, we would expect to find at any point of national income distribution an American to be 8 to 12 times richer than an equivalent Egyptian.

About the Author:

Branko Milanovic is Lead Economist in the World Bank Research Department in the unit dealing with poverty and income inequality and is a professor at the School of Public Policy, University of Maryland, College Park. He tweets at @BrankoMilan

Cite this Article:

Inside Inequality in the Arab Republic of Egypt: Facts and Perceptions across People, Time, and Space. World Bank Studies. Washington, DC: World Bank. Pg-38-41, doi:10.1596/978-1-4648-0198-3.

Publication Details:

This article is an excerpt from a work titled - Egypt Inequality in the Global Context, Chapter 2: Spatial Inequality, Inside Inequality in the Arab Republic of Egypt,World Bank Studies, which is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http:// creativecommons.org/licenses/by/3.0/igo.

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