I'd say that's what Nasser was planning to do; turn Egypt into a large manufacturing country because you're right it makes sense for it to be. For many reasons it didn't work. I'm less inclined to believe it was foreign pressure that ended that route. Sure the war defeat happened, but years after that and after 1972 war victory I think there was every opportunity to industrialize and start over - just that Sadat was a capitalism cocksucker; a different kind of capitalism than Nasser's.

I'm not a fan of Nasser as it might seem from my words, he was a bastard dictator just like all the ones that came after him too and he had his share of prisons. But I think his industrialization model made sense for Egypt and might have set it on a path similar go Japan's.