Inclusive Growth in Egypt: A Comprehensive Index Approach to Economic and Demographic Influences

Abstract This study constructs a multidimensional inclusive growth (IG) index for Egypt (1990–2023), following McKinley’s (2010. Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress . Asian Development Bank) methodology, and empirically analyzes its macroeconomic drivers using the unrestricted-error-correction autoregressive distributed lag (UEC-ARDL) model. Findings indicate that public education spending is ineffective, while population growth exerts a significant negative impact on inclusive growth. However, the interaction between population growth and education spending is insignificant, suggesting that current education investment does not mitigate demographic pressures. Financial deepening proves detrimental due to credit misallocation, and the contributions of foreign direct investment (FDI) and trade are constrained by weak absorptive capacity and insufficient integration into global value chains. The core contribution is this integrated empirical analysis, which moves beyond measurement to show that Egypt’s path to inclusive growth requires a fundamental policy shift from quantitative expansion to qualitative reforms: prioritizing education efficacy, strategic demographic management, and reorienting finance toward productive sectors to build the domestic capabilities needed to leverage global investment.