Testing the socio-economic stimulus of pro- employment growth for inclusion: the case of Egypt

Abstract EN

This study tests the impact of key structural socioeconomic factors on the productive employment channel of inclusive growth in Egypt from 1976 to 2022.

this includes initial incomes, public spending on education, foreign direct investment, population growth, and openness.

the unrestricted-error-correction-autoregressive distributed lag (UEC-ARDL), proposed by Pesaran and Shin (1999) is utilized to capture the short- and longrun dynamic effects.

the PP and ADF unit root, and “ARDL-bounds” cointegration tests were employed at a preliminary stage.

the results revealed that initial incomes have a long-term positive impacts on inclusive growth from productive employment channel.

additionally, FDI inflows and the working- age population exert no effect on fostering pro-employment growth.

moreover, a negative influence was detected from trade openness and the government’s role in managing education expenditures.

this study provides useful insights for the Egyptian government in handling the unexpected negative or insignificant influence of some structural socio-macroeconomic variables.

to promote inclusive growth, pro-employment policies have to be placed at the center of the policy agenda in coordination with macroeconomic stability policies.

additionally, providing adequate FDI incentives to the right investors, monitoring public spending on education and providing sound subsidies to infant industries to draw benefits from exports are necessary.

this study adds to the existing literature; as it is the first attempt to test the influence of major socioeconomic variables on the productive employment aspect of inclusive growth in Egypt.

covering an extended period.