Import vulnerability in the Middle East: effects of the Arab spring on Egyptian wheat trade
Import vulnerability in the Middle East: effects of the Arab spring on Egyptian wheat trade
Willeke Veninga 0
Rico Ihle 0
0 Agricultural Economics and Rural Policy Group, Wageningen University , Hollandseweg 1, 6706KN, Wageningen , The Netherlands
The 'Arab Spring' spilled over to Egypt from neighbouring Arab countries in the first half of 2011. General chaos during the political instabilities suddenly caused high uncertainty for consumers and traders, and temporarily rendered institutions dysfunctional. This eventually might have led to a negative market shock, impeding economic activity in general and, in particular, trade. Wheat is the main ingredient in the Egyptian diet and is heavily subsidised in the country. The general availability of cheap wheat flour creates a very high domestic demand for wheat. Therefore, Egypt is highly dependent on wheat imports from other countries for ensuring food security. This dependency makes the country vulnerable to increasing food prices and other shocks to the world market which might challenge flows of imports. This paper investigates the effects of domestic political instability on the wheat trade in Egypt. We analysed monthly trade data for wheat from the Comtrade Database of the United Nations, particularly imports and exports of wheat and wheat flour in Egypt from 2010 to 2014. The analysis showed pronounced and stable seasonal patterns whereby the pattern of 2011, the year of most intensive political turmoil in Egypt, was found to differ significantly from other years. We found robust evidence for a strong, negative demand shock in the second half of 2011 caused by the substantial and enduring political instabilities in the country which resulted from the Arab Spring.
Arab spring; Food insecurity; Mena; Trade shock; Violent conflict; Wheat
Wheat plays an important role in the Egyptian national diet. It
is one of the primary food sources in Egypt, next to maize and
. Egyptians get more than one-third of their
daily calories and 45% of their daily protein from wheat,
mainly in the form of bread (IFPRI 2000). Wheat is a major
domestically-produced as well as traded food crop in Egypt.
However, Egyptian wheat production is far from sufficient to
satisfy the domestic demand for wheat. The most limiting
factors for wheat production in Egypt are arable land and
capital, and to a lesser extent, water and labour
. Its population was estimated to be 92 million people
(World Bank 2016a)
. The country continues to have a high
population growth rate of 2.7% annually
(World Bank 2016b)
so that it grows by about 2 million persons per year, which
represents a large, sustained demand-driving factor.
Additionally, Egypt is the most populated country of the
Middle East and North Africa (MENA) region. Therefore,
45–55% of the wheat consumed has to be imported, which
makes Egypt the world’s largest wheat importer
Woertz and Keulertz 2015)
. The dependence on wheat
imports makes Egypt vulnerable to increasing food prices or
other market shocks to the world market which might impede
its import needs.
Egypt is classified as a middle income country, but it still
faces development challenges due to regional inequalities.
The country can be divided into two parts: Lower Egypt and
Upper Egypt, representing the North and the South,
respectively. In Lower Egypt, the river Nile stretches out while
Upper Egypt consists of mainly rural areas and desert.
Upper Egypt is ranked lower socio-economically than the
country average. Therefore, in these areas the World Food
Programme provides assistance to improve food security,
nutritional status and access to socio-economic opportunities
for the most vulnerable parts of the population, mainly for
women and children
. However, food insecurity
also increased in Lower Egypt between 2009 and 2011, which
shows that food insecurity is not only a rural issue anymore
. In Lower Egypt, Greater Cairo has the largest
population with poor access to food
. From 2005
on, food security in Egypt became worse as a consequence of
(an avian influenza epidemic in 2006; food, fuel
and financial crises in 2008 and rising global food prices in
and increasing poverty
Egyptian government provides a food subsidy programme
for the most vulnerable part of the population to protect them
from rising food prices.
On January 25, 2011, the major political instability in the
recent history of the MENA, the ‘Arab Spring’, arrived in
Egypt with uprisings spilling over from the neighbouring
countries of Algeria and Tunisia
(for economic details, see,
for example, World Bank 2015)
. Consequently, Egypt entered
into a politically unstable situation. Protests showed
dissatisfaction about the regime of President Hosni Mubarak in
different cities across Egypt. Demonstrations, protests and riots
continued until February 11, when Mubarak decided to resign.
The political situation of Egypt remained unstable throughout
2011 experiencing frequent cases of arrests, violent clashes,
shootings and other violence from both the government and
protesters. By the end of the year, the political instability had
caused at least 850 fatalities in the country (BBC 2011). Such
violent political instability can have manifold negative effects
on the economic performance of a country and the economic
activity of its citizens
(Blattman and Miguel 2010)
. It is
harmful for total productivity growth and discourages physical and
human capital accumulation
(Aisen and José Veiga 2013)
a consequence of the political unrest, consumers and
institutions relevant to trade suddenly faced extremely high
uncertainty. Trading partners who previously exported wheat to
Egypt were less certain about receiving payments. This might
have led to increasing prices of imports and a devaluation of
the Egyptian Pound, which would have made imports more
expensive. At the same time, a fall in consumer confidence
might have occurred. People may have spent less money and
saved a larger part of their income. As aggregate demand is
determined by the money supply, the velocity of money, price
level and output (Mankiw and Taylor 2008) and import
demand might have decreased when prices increased and money
supply decreased. This fall in aggregate demand might have
led to a negative shock to wheat imports into Egypt.
The analysis of food security and vulnerability in the
MENA has attracted considerable attention in recent years.
However, scientific evidence on the economic and food
security dimensions of the Arab Spring is scarce although this
uprising had substantial and lasting effects for large parts of
the population in the region.
El-Dukheri et al. (2011)
the farmers’ response to high food prices before the Arab
Spring. They found several countries whose domestic markets
were strongly affected by the global price rises but also
identified several limiting factors.
Wright and Cafiero (2011)
analysed the response of governments in the MENA to the
global food price crisis in 2007/2008. They called for an
increase in stocks instead of pursuing higher degrees of food
self-sufficiency. They stressed the disadvantage of substantial
subsidies for food consumption, since these subsidies distort
domestic price stabilization.
Khouri et al. (2011)
lessons learnt from this price crisis for the MENA and
discuss several policy options.
Lampietti et al. (2011)
suggested three strategies that would be feasible and effective in
the MENA for reducing the region’s vulnerability to price
shocks which are the extension of domestic safety nets, the
increase of domestic food production and the reduction of
consumers’ exposure to food price volatility.
In this paper, we extend the analysis of vulnerability and
food security in the MENA by assessing the effect of political
instability on international trade. To our knowledge, it is the
first paper which analyses trade-relevant externalities of the
Arab Spring. This analysis is therefore a first step towards a
comprehensive analysis of the economic and food security
dimensions of the Arab Spring which has been the most
comprehensive and most far-reaching wave of political
destabilisation experienced by the MENA in recent decades.
We analysed monthly wheat trade data from the Comtrade
Database of the United Nations
(UN Comtrade 2014)
2010 to 2014. We statistically tested if the level of wheat
imports in the months immediately after the outbreak of the
Arab Spring in Egypt significantly differed from the seasonal
import pattern in normal years.
The remainder of this article is structured as follows:
section 2 describes the role of wheat in the Egyptian
economy and policy making. The Arab spring in
Egypt and the vulnerability of the Egyptian population
are reported in sections 3 and 4, respectively. The next
two sections give a theoretical background and describe
data and methods. Results are given in section 7 and
are discussed in section 8.
2 The role of wheat in the Egyptian economy and policy making
Average wheat consumption per capita at the global level is
about 100 kg per year, but in Egypt the amount is substantially
higher at about 225 kg per capita per year
Since baladi bread1 is the cheapest food due to high subsidies,
Egyptian consumers have high incentives to take advantage of
1 Baladi bread is made from 82% extraction (baladi) flour
consuming it (Mansour 2012). Baladi bread and wheat flour
are available to all consumers in Egypt, without restrictions
and regardless of income level
(Ramadan and Thomas 2011)
Figure 1 shows the difference between the production and
consumption of wheat in Egypt from 2009 until 2015.
Agricultural reforms in 1987 encouraged Egyptian farmers
to produce wheat. In the following years, crop yields improved
due to several factors such as higher relative wheat prices, better
rotation of crops, use of seed varieties that are more resistant to
heat, drought and salinity, implementation of more productive
cultural practices and a more liberal policy that encouraged
producers to invest in modern technology
During the period from 2004 to 2013, grain production went
up from approximately 6.8 million t in 2004 to 8.5 million t in
(International Grains Council 2014)
. However, the
domestic production of wheat is, by far, insufficient to satisfy
the demand, which is almost 20 million t (Fig. 1). The most
limiting factors are scarcity of agricultural land and water
(Solieman et al. 2015)
. Other factors that limit domestic
production of wheat are high costs of seeds, pesticides and
. Fluctuating prices of these input factors
discourage farmers from investing in new technology and in
improving production practices. Egypt has a shortage of high
yielding wheat seed because of a shortage in resources and land
on which to produce seeds
Importing wheat to meet the excess demand makes Egypt
highly dependent on other countries and responsive to world
market developments. Egypt imported 54% of its wheat in
(Ramadan and Thomas 2011)
. The main wheat trading
partners of Egypt are the Ukraine, France and Romania.
Together they provide 52% of the total wheat imported by
Egypt (UN Comtrade 2014). Greece is the source of 98% of
all wheat flour imported by Egypt.
The wheat sector in Egypt has experienced considerable
government intervention since World War II. From 1945 to
1955, the government began to control the country’s wheat
production and trade. Its goal was to provide the poor with
access to bread and wheat flour in order to make Egyptian
society more equitable
. After the 1987
Agricultural Reform Program was implemented, the
government installed a floor price that was announced before the
planting season to encourage farmers to plant wheat
. Since that time, production has not been determined by
the government, only indirectly stimulated via the minimum
farm-gate price. However, the government also currently
continues to have considerable influence on the wheat supply
chain. It gathers the locally-produced wheat through
cooperatives, the Principal Bank for Development and Agricultural
Credit (PBDAC) and public mills. This wheat is transformed
into baladi flour. Baladi flour and bread are sold at
government-licensed warehouses and bakeries at subsidized
(IFPRI 2000, 2001)
. About 66% of the bread produced
in Egypt is subsidized baladi bread (Mansour 2012).
Egypt knows a long history of subsidized food. Currently,
baladi bread, wheat flour, sugar and cooking oil are the
principal and most highly subsidized food commodities. The
availability of cheap bread and wheat flour for every
household in combination with the high population growth rate
creates a huge and continuously rising demand for wheat.
Consequently, Egypt has the highest wheat consumption level
per capita in the world. Since Egyptian consumption of wheat
is about twice as much as its production, Egypt is highly
dependent on the world market for wheat imports.
3 The Arab spring in Egypt
Figure 2 shows that domestic food prices started to rise
significantly after 2004. The food price volatility index is
calculated as the standard deviation of the deviations from the trend
over the previous 5 years
. As Egypt’s dependence
on wheat imports makes the country vulnerable to increasing
food prices in the world market, the global price rises of 2007/
2008 are also visible in the domestic food price index. This led
to minor protests and strikes in 2007/2008, which called for
more than just a reduction of food prices.
that the political movement united a number of previously
divided forces, which jointly and publicly expressed their
critique of the president, widespread corruption in the
government and brutality of security forces. Between 2010 and 2012,
the currency exchange rate gradually decreased
, domestic food prices were additionally driven up and
food price inflation accelerated.
Beissinger et al. (2012)
, Bthe Arab Spring
revolutions were massive political upheavals, with citizens
in multiple countries taking to the streets against their
respective regimes^. The Arab Spring started in Tunisia and spread
to almost all MENA countries. This political movement had
initially no features of what is specifically characterized as
‘Arab’ or ‘Muslim’
. The demonstrators were
mainly concerned about their individual citizenship and not
about religion or the geopolitical conflict in the Middle East
between the Israelis and the Palestinians. They called for
Bdignity, elections, democracy, good governance and human
Egypt has been ruled by former military officers since 1952
. Before the revolution of 2011, three
presidents ruled the country: Gamal Abdul Nasser (1952–1970),
Anwar Sadat (1970–1981) and Hosni Mubarak (1981–2011).
During the period of President Sadat, the foreign debt
increased from US$1.3 billion to US$19.5 billion, mainly due
to financing domestic consumption paired with its quickly
growing population. Therefore, Mubarak was forced to start
with improving the economic situation of Egypt when he
came into power
. At the beginning of his
presidency, Mubarak also took some steps to make governance
more democratic. In 1981, a state of emergency was
proclaimed in Egypt. The Emergency Law was prolonged
every 3 years by the parliament. In 1992, the Anti-Terror
Law came into play as an addition to the Emergency Law.
As a result, authorities acquired more power such that they
could limit the basic freedoms of Egyptians. There was no
(fair) trial for suspects. Strikes, demonstrations and public
meetings were prohibited. Newspapers were censored or
closed down. Civil society organisations were impeded from
organising protests. In 2004 the start of the first wave of
protests was marked by the establishment of the Egyptian
Movement for Change (Kifaya). In the collective protest
movements, three waves of protests can be distinguished.
The first was mainly against corruption. And the second was
focused on improving living conditions, such as higher wages
and better working conditions. In 2008, the third wave of
protests was launched in another form. Young people started
a political ‘Facebook’ group and mobilized more than 70,000
members. Members debated mainly about concerns regarding
free speech, nepotism in the government and the country’s
economy. They also suggested new ideas for reform in
Fig. 2 Domestic food price
volatility index in Egypt. Source:
Based on FAO (2013)
The literature discusses several economic, social and
political factors which decisively contributed to the outbreak of the
Arab Spring. Between 2002 and 2008, the gross domestic
product (GDP) grew each year by an increasing percentage.
After 2008, GDP growth dropped from 7.2 to 4.7% in 2009
. This economic stagnation could have led
to dissatisfaction and possibly contributed to the revolution. It
seems implausible that unemployment contributed to the
revolution, since total unemployment as a percentage of the total
labour force decreased in the years prior to the Arab Spring
. However, youth unemployment was high.
In 2000 and 2011, youth unemployment was more than 25
and 35%, respectively
argues that the revolution was primarily created and owned by
the country‘s youth. Frustrations stemming from bad
employment prospects might have been another important reason for
the outbreak of the Arab Spring.
After 18 days of increasingly violent protests, President
Hosni Mubarak resigned on February 11, 2011. From April to
August, protests took place against the slow pace of political
change. In November, people protested against the military,
which was still in power. In that month the parliamentary
elections started. The Muslim Brotherhood won the
parliamentary elections and Mohammed Morsi was nominated for the
presidential elections in May 2012. Also in May, the state of
emergency was ended. Mohammed Morsi won the presidential
election in June, and he became the new president of Egypt.
The Morsi government quickly restricted the rule of law and
political freedoms, yet they did nothing to tackle Egypt’s
(Beissinger et al. 2012)
. Two years after the
protests against Mubarak, Egyptians started to protest against
Morsi. Finally, the military intervened and removed President
Morsi from office on July 3, 2013. Interim President Mansour
announced that new presidential elections would be held before
the parliamentary elections. In May 2014, the former chief of
the Egyptian army, Abdul Fattah al-Sisi, was elected as the new
4 Vulnerability of the Egyptian population
The human population pyramid of Egypt in 2010 shows that
the Egyptian population is very young: 51.2% of the
population is under 24 years of age, 43.3% of the population is aged
between 24 and 64 and only 5.5% is older than 65
. Over the past three decades, Egypt’s population has
grown from 45 to 85 million, which explains the so-called
demographic ‘youth bulge’. According to
phenomena are connected with this youth bulge. Since
Mubarak came into power, both corruption and youth
unemployment reached very high levels. This combination led to
despair and frustration among young graduated Egyptians.
Egyptian society was neither able to provide millions of
young graduates job opportunities (except for a small elite)
nor prospects for a future. Despite the repressive regime,
young Egyptians took another course. They used modern
communication technology such as cell phones and the
internet in a peaceful way to express their frustrations
. Although the revolution initially was started by the
young generation, people of all ages and the rich, poor and
middleclass, educated or not, were involved in the revolution.
They were united in their desire for change and an end to
Gini coefficients of Egypt are rather similar to Gini
coefficients of western countries
(World Bank 2015)
. Gini indices
are not available for each year. The most recent numbers are
30.77 in 2008, 32.14 in 2005 and 32.76 in 2000. However,
poverty headcount ratios are 15.43 in 2008, 18.46 in 2005 and
19.37 in 2000. This shows that at least 15% of the Egyptian
population is living on less than US$2 per day
. According to
Amnesty International (2011
), around 32
million of the 80 million Egyptians were living on or near the
poverty line of US$2 a day in 2009
(see also IFPRI 2014)
Human Development Index (HDI) is an average of three
indices: a long and healthy life, access to knowledge and a good
standard of living
. Egypt’s HDI value increased
from 0.452 in 1980 to 0.682 in 2013, placing Egypt within the
medium human development category
HDI does not take into account inequality in the distribution
of human development across a population at the country
level. Therefore, the Inequality-Adjusted HDI has been
introduced. When all three dimensions are discounted for
inequality in distribution, the HDI for 2013 drops from 0.682 to 0.518
. Between 2009 and 2011, the number of
Egyptians that were food insecure rose by 21%
. Figure 3 shows that Eygpt faces a serious risk of food
According to Transparency
, Egypt is
less corrupt than most other African countries. It seems that
unique circumstances led to the outcome of the revolution in
Egypt. The permanent state of emergency, population
demography, youth unemployment and corruption together all
played a role in the revolt.
5 Theoretical framework
Violent political conflict is likely to create negative
externalities both for demand and supply in a national economy. It
induces high levels of uncertainty and impedes the proper
functioning of production and trade-related institutions, which
may lead to distrust or higher costs. The responses of
institutions, the private sector and individual actors to this
uncertainty may cause significant impediments to economic activity.
This was also very likely to be the case in Egypt in 2011
due to severe political destabilization and the general
institutional chaos the country experienced then.
Several studies show a link between violent political
instability and negative effects on national savings, investments,
income and growth
(Blattman and Miguel 2010)
to Aisen and José Veiga (2013), political instability can affect
economic growth in three ways. It can negatively affect the
accumulation of physical capital, lower technological progress
and have a negative effect on human capital accumulation.
Growth in physical capital and human capital is dependent
on investments. Uncertainty causes people to invest less, since
future returns are expected to be lower or unpredictable.
Physical capital accumulation and human capital
accumulation may stagnate as a result of declining investments in
capital and education. Uncertainty can also slow down
technological progress when research and development projects
supported by firms and the government are reduced or postponed
(Campos and Nugent 2002; Aisen and José Veiga 2013)
Leduc and Liu (2014)
, an increase in uncertainty
acts like a negative aggregate demand2 shock. It raises
2 Aggregate planned expenditure of consumers, producers and the government
for goods and services in the economy = C + I + G + (X-M)
unemployment and lowers inflation at the same time.
Uncertainty increases the real option value of waiting
and Pindyck 1994; Lambarraa et al. 2016)
. Firms will
temporarily pause their investment and hiring. This decrease in
hiring and investment causes a reduction in the reallocation of
production factors from low to high productivity firms. As a
result, productivity growth falls
. The effects are
likely to be visible in the performance of private companies as
well as public institutions carrying out the imports of food into
Egypt from the world market.
Trading countries that export wheat to Egypt may be less
certain about receiving payments. Therefore, import prices
increase and the Egyptian currency depreciates, which
makes imports more expensive. At the same time, consumer
confidence is likely to deteriorate. People start to spend less
money and save a larger part of their income. According to
Mankiw and Taylor (2008)
aggregate demand within an
economy is determined by the money supply M, the velocity of
money V, price level P and total output Y. The following eq.
M/P = kY with k = 1/V shows that money supply divided by
price level equals the velocity of money times the output. This
shows that a price increase and reduction in money supply
country name shows the prevalence of child stunting in the country in
percent. Source: Breisinger et al. (2012, p. 13)
lower aggregate demand. A fall in aggregate demand led to
a negative shock for the wheat trade of Egypt.
Conflict can create unintended economic effects for food
production and trade.
Ihle and Rubin (2013)
stress that military
or security policies have economic side effects on food markets:
including more volatile prices, commodity gluts or shortages,
unemployment and higher transaction costs. According to
Anderson and Marcouiller (2002)
, instability impedes trade by
raising the prices of traded goods as a result of increased
transaction costs. Transaction costs increase when contracts are
poorly enforced by legal systems and if economic policy is unclear
and biased. An increase in transaction costs could also have
contributed to the fall in wheat demand in Egypt. General chaos
in the country may have caused uncertainty among traders.
Wheat sellers are less certain if wheat buyers will abide by the
contract. In order to create more certainty, contracts should be
adjusted. Adjustments of contracts involve higher costs, which
can result in lower demand.
Public institutions can become temporarily dysfunctional
because agricultural resources or storage facilities are destroyed,
specialists of the national food system are removed from their
positions or food distribution networks are disrupted causing
individuals to be prevented from obtaining food
. Probably, the revolution in 2011 disrupted food
markets and distribution channels in Egypt. Egypt has limited
storage capacity, which could have been full due to lower sales.
Difficulties in the storage and marketing of wheat could have
contributed to a fall in wheat demand.
Blattman and Miguel
point out that conflict can also be a consequence of food
insecurity. Terms of trade volatility can stimulate armed conflict
in two directions. Increased import prices can trigger conflict by
suppressing the real wage. Although consensus exists around
the negative impacts of political instability in the short run, there
is no consensus in the literature on how long the economic
(Blattman and Miguel 2010)
temporary food insecurity and vulnerability caused by trade
disruptions are likely to be one major socio-economic consequence of
violent political conflict. Recent empirical evidence confirms
Koren and Bagozzi (2016)
found a robust
association between the degree of food insecurity and armed
Natalini et al. (2017)
develop a model for simulating
this causal link based on observed data.
6 Data and methods
The following empirical data analysis focuses on seasonal
patterns of wheat grain and wheat flour imports into Egypt between
2010 and 2014 since no monthly data prior to 2010 are
available. Data was obtained from the Comtrade Database of the
(UN Comtrade 2014)
, which contains detailed
merchandise data that is provided by countries and given to the
United Nations Statistics Division
. We focus on
‘wheat’ and ‘wheat flour’. The database provides detailed
information about the trading partners, net weight of wheat grain or
wheat flour traded in tonnes per year and its value.
The analysis aims at finding evidence for a significant
deviation in wheat imports per half year between 2011 and the
other years. For this aim we performed a t-test complemented
by a dummy time-series regression. The data is split into the
first and second half year of 2011 and the first and second half
year of all other years. In this way, the period from July to
December 2011 can be compared to the same period in the
other years. An independent samples t-test has been carried
out. This test assumes the null hypothesis of the average
monthly imports during the second half of other years is equal
to the average monthly imports of the second half of 2011.
Under the null hypothesis, the test statistic is distributed with
22 degrees of freedom.
As a second approach we used a time-series dummy
regression model in order to test for differences in the level of
imports and exports in the second half of 2011 relative to all
other observations. As the emphasis of the model lies in the
level of the imports, we were not interested in the
autoregressive dynamics, but only in the average trade level
per half year. Therefore, the model takes the following form:
tradem ¼ β0 þ β1D2011DH2 þ εm:
The variable tradem is the observation of the m-th month of
one of the four trade variables: imports of wheat, exports of
wheat, imports of wheat flour or exports of wheat flour. The
dummy variable D2011 takes the value 1 if the observation falls
into the year 2011 and the dummy variable DH2 takes the value
1 if the observation was made in the second half (that is, in one
of the months between July and December) of any of the
4 years. Therefore, the interaction between both dummies, i.e.
D2011DH2, marks the observations which have been made in the
second half of 2011, which is the period of interest for this
analysis. Thus, the two parameters to be estimated have the
following interpretation. The parameter β0 denotes the monthly
average of the variable tradem of the observations from all
months except the ones in the second half of 2011. The
parameter β1 denotes the difference between this average and the
monthly average of the second half of 2011. The sign of this
parameter signals whether the average monthly quantity of
tradem in the second half of 2011 was larger or smaller than
the average of the other months. If this parameter is significant,
then the result signals that there was indeed a statistically
significant deviation in the pattern for the given trade variable in
the second half of 2011 in comparison to the other months.
Figure 4 shows a remarkably stable seasonal pattern of wheat
import quantities, which has its maximum in the second half
of each year. Except for 2011, imports peak around October or
November of each year since wheat is grown as a winter crop
in Egypt. The crop is sown in November and harvested in
. During the growing season, Egypt has to
import wheat from abroad. In the months following May,
when the domestic harvest is obtained, imports decrease.
Wheat has to be imported partially because the quality of the
wheat produced in Egypt is poorly suited for bread-making.
Therefore, domestically produced wheat is mixed with
imported wheat to improve the quality (Ahmed et al. 2013).
After July, wheat imports increase and peak around October
until November. The General Authority for Supplies and
Commodities (GASC) is responsible for purchasing wheat
on the international market and for its domestic distribution.
‘GASC tries to keep a 5-month supply of strategic wheat
. In recent years, the private sector
has also kept at least 2-months of stock, or more
. The smaller peak in March each year, almost 5 months
after the peak in autumn, is likely due to the run-down of the
strategic wheat stocks. The visual assessment of Fig. 4
indicates the substantial deviation of the import pattern of wheat in
2011 from the other years with no peak in wheat imports
during the autumn of that year.
Imports of wheat flour are much smaller in magnitude and are
spread far more throughout the year. Wheat flour is also partly
exported to other African countries, such as Madagascar,
Burundi and Ethiopia
(UN Comtrade 2014)
. Fig. 5 shows the
seasonal pattern of wheat flour imports in t per month. Except for
some peaks in November, no distinctive pattern could be found.
Remarkably, from February until the middle of May in 2011 no
wheat flour was reported to be imported.
For the independent samples t-test, equal variances cannot
be assumed since the Levene’s Test is significant. The t-test
leads to a test statistic of 4.48, which corresponds to a p-value
of less than 0.01. Since this p-value is less than 0.05, we
rejected the null hypothesis and obtained strong evidence that
the mean monthly import quantity of the second half of other
years was not equal to the mean for the second half of 2011.
Table 1 presents the regression results of model (1) for all
four trade variables of interest. A first look at the overall
model significance shows that only the wheat import model is a
meaningful statistical formulation (since it is the only model in
which the p-value of the overall model significance test is less
than 0.05). This goes along with the finding that in the
remaining three regressions β1 is never significant, meaning that it
could be dropped. A second look at the economic significance
also clearly indicates that only the wheat import model is of an
economically relevant magnitude as intercept and the dummy
coefficient estimates amount to 486,000 t and −300,000 t,
respectively. Wheat imports amounted on average to about
400,000 t per month in 2010 and to about 340,000 t per month
in 2011. The models for the other three dependent variables
lack statistical significance, and are economically not relevant
as the two coefficient estimates of each of them are of
negligible magnitude of a few thousand tons or less.
The results of the wheat import model provide the following
insights. On average, Egypt imported 485,000 t of wheat per
month except for the months in the second half of 2011; 95% of
these observations fell into the range of about 385,000 to
585,000 t. The estimate is significant at the 5% level, which
indicates that this monthly average is statistically significant.
The large magnitude of about half a million t also stresses the
economic significance of these imports for the country and
confirms the trade analysis above. Of key interest is, however,
the magnitude, sign and significance of the parameter β1. The
point estimate illustrates that average monthly quantities
strongly differed from the reference period during the second
half of 2011; almost 300,000 t less than the average were
imported in each of these 6 months. The sign is negative,
stressing that the imported quantities indeed decreased on
average. As the p-value amounts to 0.04, the analysis shows that
this negative difference is not only large in economic
magnitude, but also significant in statistical terms. This strong
evidence for a substantial economic side-effect of the Arab
Spring on wheat import quantities appears to be even stronger
because the model is estimated by using only a small number
of observations (49 observations), which stresses the
relevance of the effect found.
8 Summary and discussion
This analysis aimed at assessing food-trade related
externalities of violent political conflict in Egypt. It examined whether
the Arab Spring, the most important phase of major political
instability that shook the MENA in recent years, affected
imported quantities of a key staple food. The Arab Spring
broke out in Egypt in early 2011. It led to the eventual
replacement of the Mubarak government and was accompanied by a
major shock to political and economic institutions and actors
as well as roughly 1000 fatalities.
While imports of wheat grain are of substantial magnitude
of several hundreds of thousands of tonnes and show a
pronounced seasonal pattern, which is closely related to the
domestic cropping season, wheat flour imports do not show such
a pattern and are of negligible magnitude. Exports of both
commodities are also negligible. The quantity of wheat
imports shows a general upward trend between 2010 and 2014.
The main trading partners of Egypt for wheat imports are
Ukraine, France and Romania. As wheat is a winter crop in
Egypt, which is sown in November and harvested in May,
imports decrease after May. After July, imports increase and
peak around October or November.
To our knowledge, this paper is the first analysis of
traderelevant externalities of the Arab Spring and can, thus, be a first
step towards the comprehensive analysis of the economic and
food security dimensions of the Arab Spring. The quantitative
analysis is based on a dummy time series regression,
complemented by a t-test for obtaining statistical evidence on
whether the Arab Spring in Egypt indeed impeded wheat
imports. Both approaches provide strong evidence that the outbreak
of the Arab Spring in Egypt indeed yielded a negative shock to
the country’s wheat imports. General chaos during the
revolution, causing sudden high uncertainty for consumers and traders,
which led to a fall in wheat demand, is likely to be the main
cause. This is strong evidence that the Arab Spring led to
temporarily impeded wheat imports, which are likely to have
temporarily raised food insecurity and vulnerability in Egypt.
This insight contributes a valuable case study evaluation of the
economic effects of violent political conflict that
called for. Our results complement evidence from
the MENA that economic relations through trade have an
inherent pacifying potential leading to reconciliation across the hostile
parties of political conflicts (see, e.g. Dobers et al. forthcoming).
Although the empirical approaches adopted are quite
straightforward to cover such a phenomenon, which might
seem very complex on first sight, we believe the empirical
strategy serves the purposes of the analysis very well. The
research question focussed on assessing whether or not wheat
was imported in the second half of 2011 in quantities
comparable to other years in which the Arab Spring played no role.
Such an analysis can straightforwardly be based on trade flow
data. As regards trade flows, the question reduces then to
testing with a suitable model whether there was a statistically
significant deviation of significant economic magnitude from
the otherwise stable annual pattern of Egyptian wheat imports.
Institutional reasons causing the identified significant drop in
imports might be complex and lie beyond the interest of this
analysis since they are also only hardly quantifiable. We hope
that further qualitative research will clarify them.
We can exclude the hypothetical argument that imports of
wheat grain might have been replaced by derivatives produced
from processed wheat grain during the second half of 2011 or
Average in 2010 (t)
Average in 2011 (t)
cereal substitutes (we thank an anonymous referee for pointing
this out). As we show in Fig. 4, wheat flour imports to Egypt are
of negligible magnitude amounting to about 600 t/ month while
wheat grain imports amount to 200,000 to 1,200,000 t/ month.
Moreover, baladi bread itself is not traded internationally so that
we can also exclude the case that the grain imports were replaced
by bread imports.
states that the special type of
bread favoured by Egyptian consumers (baladi bread) is made
almost exclusively of wheat flour. Such consumption preferences
are not plausibly influenced by political instabilities. Moreover,
they certainly do not abruptly change in the short run. Egyptian
import data for 2011
(UN Comtrade 2014)
confirms that wheat
has not been replaced either by wheat flour, bread or by other
cereals in grain or in flour form. The evidence found of the
substantial economic side-effect of the Arab Spring on wheat
import quantities is emphasized by the fact that the effect is found
to be significant although the underlying model is estimated by
using only a small number of about 50 observations.
The quality of results of any quantitative analysis depends
on the reliability of the underlying data. The data which is
available in the Comtrade database and analysed here are
provided by the Egyptian government. The database contains
missing information for several months. The only continuous
period of data was between 2010 and 2014. The quality of the
collection of economic data at national level might be
inversely related to the magnitude of political unrest. Political
destabilization might have yielded an increased challenge to correct
and complete measurement of trade flows during the Arab
Spring. It might also be the case that only part of the data
has been made public due to political sensitivity of this topic.
However, we are not aware of objective evidence that trade
data covering the second half of 2011 differed in their quality
from data quantifying the trade flows in the remaining years.
Thus, this analysis is based upon the implicit assumption
that data quality was not negatively affected by the political
destabilization. This assumption seems reasonable as the
target of the Arab Spring were mainly political symbols of the
old political system of Egypt while rather technical tasks of
the government such as the collection of statistical data were
barely targeted. Future research on the link between data
reliability and political destabilisation might yield interesting
results but at the current point of time, this remains speculative.
The analysis of
Rubin and Ihle (2016)
, however, implies that
(enduring) political conflict and political destabilization might
also result in increased data collection efforts by governmental
of non-governmental stakeholders for the sake of detailed
documentation of human rights issues or conflict monitoring
as it is in the case of the Israeli-Palestinian conflict.
This argument of data reliability might also be relevant for
data on Egypt’s wheat stocks. It would be ideal to control for
these stocks in the analysis as argued by
Wright and Cafiero
. Since stock data disaggregated on a monthly basis is
not publicly available, the amounts of food commodities
stocks considered to be strategic by MENA governments
during the course of the Arab Spring remain speculative. Hence,
data availability and sufficient data disaggregation are likely
to be considerable threats to the comprehensive analysis of the
economic and food security dimensions of the Arab Spring.
However, research in economic history may shed light on
these questions after a couple of decades when such data from
the 2010s has lost its political weight and might therefore become
publicly available. Moreover, it might also be of interest for
policy makers in the MENA and for international institutions
concerned with food security to examine whether similar
effects such as the one found in this analysis for Egyptian
wheat imports also existed for other strategic food commodities
in Egypt or other MENA countries. Complementary analyses
could collect individual nutritional data for an even more
disaggregated analysis at the household level. Measurements of
conflict intensity in the form of fatality numbers or other suitable
variables as suggested by
Rubin and Ihle (2016)
complementary insights regarding the relationship between conflict
intensity and further economic variables.
This analysis has implications for international stakeholders
concerned with food security and for governments of MENA
countries. During violent political conflict, national
governments and their proper functioning are substantially challenged.
They may be replaced as a result of confrontations of an
equivalent magnitude to the Arab Spring or the country may slide
into a sustained civil war as has been witnessed in several
MENA countries. It is likely that the effects on food imports
are proportional to the severity and duration of the domestic
instability. Even for usually well-functioning middle income
countries, substantial effects can and will occur, as shown in
this paper. International institutions should therefore be
prepared to start early in their preparations for food security
assistance in order to dampen the likely negative effects of food
import disruptions resulting from political destabilization.
Compliance with ethical standards
Conflict of interest statement The authors declare that they have no
conflict of interest.
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