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e 30's, the private sector succeeded in producing intermediary goods like cement, fertilizers, paper, and chemical products. However, textiles, clothing and food processing remained to be the dominant manufacturing activities in Egypt. Moreover, Egypt's strategic position in the Middle East during the second war stimulated the growth of the manufacturing of several engineering and construction-material industries to meet the needs of the Allied Forces (Aglan, 2003, p.160).

As the 1952 revolution took place, a new phase of Industrialization began. In this phase, there was a state led industrial push, a major shift towards heavy industries, by the end of the 50s, has been witnessed, where the textile industry continued to have the highest attention, and then came the other industries like: iron and steel, fertilizer, paper and mineral industries. The pattern and levels of investment allocation led to a remarkable short-term growth However, in 1965 due to rising imports of raw materials and capital goods; large expenditures on construction and social services; the missing of a comprehensive set of policy tools and the overemphasis of social targets, the sector had been stuck, investment slowed down, and finally growth was interrupted, turning negative in some years. (Chang et al, 1995, p.3).

It took a decade, from 1965 to 1975, for a new Industrial Development phase to begin. The following phase (1975-1985) was associated with the implementation of the 'Open Door Policy'. This new policy aimed at encouraging domestic and foreign investment. Although this phase coincided with the oil boom of the 1970s, Suez Canal dues and Tourism, and large

Capital inflows from abroad in the form of borrowing and aids, these resources were not directed to the productive sectors of the economy, particularly manufacturing. It is worth noting that, most of the manufacturing activities were run and financed by foreign investments.

Finally, since 1985 the Egyptian government viewed the manufacturing sector as the engine of growth for the economy, as it creates jobs for people, develops the skills and knowledge of the workforce in different industries, achieves high added value, achieves economic prosperity and raises the standard of living for all individuals, increases the production and service capacity in the society, and contributes in decreasing the need for imports, so it aimed at reducing protection on the domestic industry, with emphasis on the removal of import barriers, increasing exports and the rapid strengthening of the role of the private sector in industrial development (Aglan, 2003, p.162). Egypt witnessed a radical decrease in many of Egypt's external sources of revenue. However, surprisingly, there was a positive trend towards Industrial Development, as many of the import-oriented entrepreneurs were shifted to industrial activity, due to the encouragement by the state through the 'new industrial cities' law that was coupled with import restriction policies that aimed at protecting the 'domestic industry'. However, from 2001, value added growth has set out on a declining trend due to the general sluggish situation that the economy was trapped in as shown in table (4.1). It appears from the table that Egypt's Manufacturing, value added (average annual % growth) is relatively high in comparison to North Africa and Low and Middle Income countries till 2000. However, the manufactured value