Use of Special Economic Zones for the Development of Mechanical Engineering in North Africa (Algeria, Egypt, Morocco)

Abstract

The article examines the use of special economic zones to develop mechanical engineering in North African countries. Given their dependence on foreign technology and low initial level of mechanical engineering development, these countries are interested in interacting with foreign companies in various forms. Each country places significant emphasis on developing its own industry and achieving specialization in specific sectors. Each of the three countries has its own approach to the use of special economic zones, in particular, the development of mechanical engineering. Morocco has attracted foreign anchor investors in the automotive industry, Renault and Stellantis, to the zones. Car production in Morocco in 2025 is largely export-oriented, reaching 1 million units for the first time in the history of Arab countries. per year. The localization level exceeds 65%. Successes in the automotive industry have led to the development of the zone system and other sectors of the machine industry. Algeria is not interested in developing special economic zones and, by providing a large local market, includes foreign manufacturers in its economic system and seeks to localize the production of components. In Egypt, machinery exports increased from $3 billion to $5 billion in 2023–2025 and will continue to grow. The country has stepped up its policy in the field of special economic zones, using the territory along the Suez Canal, and is also developing production in conventional industrial areas. The article analyzes Egypt's machine–building exports in detail, and concludes that there is a fairly high degree of diversification - cables, monitors, washing machines, refrigerators, ships, and weapons, while the local company is the leader in terms of volume. Egypt attracts foreign investors in two forms: to replace imports with domestic production followed by localization, for export with minimal integration of producers into the local economy, in the second case, the instrument of special economic zones is used.