ABSTRACT
Relative prices of farm machinery, labor and commodities play an important part in influencing the spread and type of mechanization adopted. Egypt’s economy remains relatively closed with a major role in resource allocation being held by the State and carried out by direct allocation and price manipulation. This chapter looks at: Egypt’s experience in using administered pricing to influence farm mechanization; whether the mechanization goals are attainable as defined and desirable given the opportunity cost; and proposes an alternative approach to stimulating sectoral growth. The Five-Year Plan set a nine percent gain in the value of farm production at constant prices as a target for mechanization during the 1978–82 Plan period. One of the penalties associated with using factor price intervention to induce accelerated mechanization is that it may also bring private benefit into conflict with social benefit. Farmgate prices and delivery quotas for major agricultural products are set annually.
