Long before President Nasser took over in 1952, Egypt was considered a very attractive location for foreign investment, particularly from Europe. A large number of Italian, French, and British firms established their own subsidiaries and joint ventures to produce a variety of consumer products to meet domestic demand. Banking, tourism, and petroleum exploration and production were also among the favored sectors. Under the rule of President Nasser, however, foreign investors grew skeptical about Egypt's official policy of welcome. Their doubts were partially confirmed in 1956 when Nasser nationalized the Suez Canal. Their apprehensions were fully realized in 1961, when all foreign and Arab investment in Egypt was nationalized.
From 1956 until his death in 1970, President Nasser directed his attention to the East and adopted the socialist system. He was convinced that this was the only system that would permit Egypt and its people to fulfill the objectives of accelerated social and economic development. Unfortunately, these objectives remained unfulfilled. During this period debate of Government policies in the press was prohibited. The Arab Socialist Union, the nation's sole political organization, established in 1962, reflected only one political opinion. Formal censorship of international communication was instituted. Tight security at home coupled with censorship of the press was common practice following the nationalization of Arab and foreign investment in the early 1960s. Property of nationals was confiscated without due process of law. These measures and others isolated Egypt from other Arab countries and encouraged Egyptian professionals to leave the country. In addition, the increase in armaments expenditure and the neglect of infrastructure maintenance weakened the Egyptian economy.
Egypt's Policy Towards Foreign Investment,
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