Egypt has built a research base that beats most EMs, but our private sector doesn’t know what to do with it

Egyptian universities are now publishing in the world’s top-cited journals at rates that beat the OECD average. Research output has grown fivefold since 2009, the university count has doubled in five years, and only 3% of large Egyptian firms collaborate with academia on innovation activities.

The gap between a globally credible research base and a private sector that isn’t quite sure what to do with it is the binding constraint on our knowledge economy, a recent OECD Innovation Policy Review (pdf) finds.

The number of universities jumped from 53 in 2018 to 100 as of 2023, and research spending crossed 1% of GDP. The share of Egyptian publications appearing in the world’s top 10% most-cited journals rose from 6.6% in 2014 to 11% in 2022 — above the OECD average.

On paper, this is what the foundations of a knowledge economy are supposed to look like. But the demand side hasn’t kept pace. Egyptian businesses spend 0.2% of GDP on R&D — a fraction of OECD levels. Only 7% of innovation-active SMEs and 3% of large firms collaborate with universities on innovation activities. Employment of PhD holders in industry is, in OECD words, “very low.” Many firms still operate on legacy products and show limited interest in engaging research institutions at all.

Patent activity is low and stagnant despite the surge in publications. The structural reason is two economies operating side by side. One is the startup ecosystem — one of the largest in the region, with strong fintech depth and several scale-stage companies that absorb researchers and commercialize university work. The other is a much larger base of traditional firms in agriculture, basic manufacturing, and rent-generating sectors. These firms face limited competitive pressure to modernize and have little reason to invest in research.

This is what the OECD calls a “science-push” model — universities and researchers trying to push innovations into the market after the fact, rather than building products and research agendas with industry from the start.

The result? The country produces increasingly sophisticated human capital and globally credible research, yet much of that knowledge stays within academia because the surrounding economy lacks the absorptive capacity to use it. Graduate unemployment runs at roughly twice the national average. Publication numbers go up; patents and commercialization don’t.

Some institutions are working to close the gap. AUC’s Innovation Hub embeds corporates, startups, and researchers in the same ecosystem to co-develop solutions and shorten the distance between research and deployment. The recently launched Alliance and Development Initiative by the Ministry of Higher Education aims to link universities, research centers, industry, and investors through regional clusters.

The OECD’s argument is that these kinds of co-creation models — rather than isolated academic research — are what produce meaningful technology transfer. Egypt has spent the past decade building the supply side of a knowledge economy. The harder work now is to build an economy that can use what those universities and labs are producing.