Economic experts call for a slow and studied post-revolution transition "Reform will not happen overnight. Focus on rapid progress in a narrow domain and leave the rest for later." This is how economist Lant Pritchett of Harvard University said Egyptians should go about business post the revolution. Speaking at the 17th annual Economic Research Conference, he said that policy-makers should make the transition slowly focussing on reforming certain areas during the transition, and continue with business as usual with the rest, Niveen Wahish reports. Pritchett said that if everything were to change at once, it would create an environment that is unpredictable thus bringing the whole society to a halt. "Extending the period of uncertainty is inimical to growth. Every single country that had above average growth and had a rapid transition towards democracy had a deceleration of growth." This is also what people from the region are calling for as well. Ragui Assaad, professor of planning and public affairs at the University of Minnesota, told Al-Ahram Weekly that as much as what is happening in the region is fairly positive, he was worried that in the short run expectations and the ceiling of demands has risen so high that everybody thinks they should get something now. Furthermore, he is worried that "the politicians do not have the backbone to resist that and they will behave in a populist way giving everybody everything they want and bankrupting the country." While acknowledging that the political pressure is strong, politicians have to resist the temptation to have populist policies. Ahmed Ghoneim, professor of economics at Cairo University agrees. He believes the government is doing too much "patting on the back" and not putting its foot down enough. "People need to know the economic consequences of the situation we are in." He said focus is more on the political aspects of the transitional phase rather than the economic although the latter is just as important. "In the short run, the economic team have to make sure to redirect the country to its productive path by reducing the amount of panic, by making sure that the production and distribution can take place again and not take decisions they know are bad in the long run," said Assaad. "There has to be fiscal discipline because that is what will make short-term cost become long-term problems," he added. "There is always a cost to pay when you are making a transition. The longer the transition, the sharper the cost," he said. Assaad also acknowledged that this situation is bound to take its toll on investors. "Investors are weary because they are watching what the politicians are doing. If they see these politicians bankrupting the country, they are going to see inflation coming along the line, and they are not going to return to the country. But if they see the politicians are managing the transition fairly well, then they will come back fairly quickly," he noted. Wafik Grais, chairman of Viveris Mashreq, a financial consultancy firm, agrees. He told the Weekly that investments, local and foreign, want security and stability of laws and being able to forecast the future. "There will be people who believe in the potential of Egypt as an investment destination, but they will look, and will not come now. They will come if Egypt manages to give them a sense of stability in that the rules of the game are not going to change on them," he said. He added that Egypt changed and as a result investors that used to come might have to change as well. "They were used to come and having government support and having access to people who could mitigate the risk. Now they are at a loss." He stressed that "an investor chooses an investment destination because he wants to be profitable and does not want to lose his investment. If he does not have enough confidence, he will not come."
