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Innovation is an important driver at the heart of the development process. Innovation creates new products, new uses for existing products, and more efficient use of inputs. Entrepreneurs are catalysts for implementing new ideas. Entrepreneurship is increasingly prevalent on the global development agenda as an important vehicle for both productivity growth and job creation.

Entrepreneurial Activity in the Arab world

In Arab countries, there were about 0.77 newly registered corporations per 1,000 working-age people (aged 15–64) in 2011, with Morocco, Oman, and the United Arab Emirates leading the pack; overall, however, levels are below other developing regions such as Europe and Central Asia, Latin America and the Caribbean, and Sub-Saharan Africa.

New Business Entry Density: A Global Perspective, 2011

Source: World Bank World Development Indicators (accessed November 2013).

New firm entry density rates per 1,000 people also vary across the region, from high of 1.67 in Oman to a low of 0.11 in Iraq. Since the mid-2000s, a number of countries are seeing a rising trend in new firm entry density.

Broader measures point to relatively low levels of entrepreneurial activity across the population, relative to Sub-Saharan Africa and Latin America and the Caribbean. A significant portion of this movement is also considered to be “necessity” entrepreneurship that is concentrated in small firms, relative to Latin America and the Caribbean, as shown below.  

Total Entrepreneurial Activity in the Arab World and Other Regions (%)

Source: Xavier et al. 2012.

Note: Total Entrepreneurial Activity (TEA) is calculated as the percentage of adults (18–64) who are nascent and new entrepreneurs.

Globally, entrepreneurship activity also tends to be concentrated among people ages 25–34. Prevalence among youth is also high, particularly in non-European Union countries. The West Bank and Gaza are an exception, with participation levels roughly even across all age groups.

Overall, attitudes toward entrepreneurship and the perception of market opportunities are relatively high in the Arab world; entrepreneurship is generally viewed as a good career choice. This is in contrast to the European Union, for example, where employment alternatives with more established institutions tend to play a significant role.

Globally, men tend to dominate early-stage entrepreneurial activity; in Arab countries, men are nearly three times more likely to start a business than women. In Egypt, Palestine, and the Republic of Korea, for example, less than 20 percent of entrepreneurs are women. Only a handful of countries in Latin America (Ecuador, Panama) and Sub-Saharan Africa (Nigeria) show the reverse pattern.

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Julia Devlin is nonresident senior fellow in the Global Economy and Development program at Brookings Institution. She formerly worked as consultant at the World Bank Group and as a lecturer in economics at the University of Virginia. Her focus is economic development, private sector development, energy and trade in the Middle East and North Africa. She holds a Ph.D. in Economics.