Fostering entrepreneurship in GCC countries: Discovering the critical linkages of national and non-national factors

المشروع

تفاصيل المشروع

Description

Entrepreneurship is an important institution in modern economies. Entrepreneurs who bear the costs of uncertainty can be viewed as an institutional answer to the problem of uncertainty. Market uncertainty due to the oil price fluctuations has been always the driving force for Oman concentrates more on diversifying its economy free from oil and gas, strengthening the private sector to provide employment for the growing youth population, and decrease government dependency on oil revenues. The role of entrepreneurship as a potential solution for these issues and as an engine of innovation is becoming ever more important in oil-exporting countries confronting dual shocks of oil price decline and Coronavirus pandemic. Entrepreneurs, whose main characteristic is being alert to new market opportunities, keep the market in motion. Alert entrepreneurs are the driving force behind the process of acquiring more knowledge of potential demand and supply attitudes. Oman and other GCC nations have consolidated entrepreneurship in their national plans as a crucial factor in economic prosperity. As a result, they are struggling towards building a capable and inspired workforce outside the public sector and encourage entrepreneurial activities amongst the population. However, little progress has been made towards increasing youth employment in a productive and sustained manner. Based on the World Bank report on ease of doing business 2020, UAE is ranked 11th globally followed by Bahrain (62nd), Oman (78th), Qatar (83rd), Saudi Arabia (92nd), and Kuwait (97th). Recent experience of GCC countries has revealed that reforming the current labor market which has been shaped by oil revenues, requires more than economic supports. Different determinants and factors influence sustained employment opportunities and entrepreneurship activities across countries. The main macro-level determinants are classified into economic, social, cultural, and political factors. These are considered as national determinants of a country?s entrepreneurship. There is a need for a comprehensive model to identify the national determinants of entrepreneurship among GCC countries by considering all these macro-level factors in one model. On the other side, the importance of the availability of a skilled labor force to run entrepreneurial activities is acknowledged. The GCC countries are amongst the countries originating high international migration from a wide number of countries. According to the United Nations Department of Economic and Social Affairs (UNDESA), the international migration stock as a percentage of the total population in GCC countries in 2020 range from 38.8 (Saudi Arabia), 46.5 (Oman), 55 (Bahrain), 72.8 (Kuwait), 77.3 (Qatar) to 88 (United Arab Emirates). Yet, the outcome is a segmented labor market, with private sectors dominated by expatriates while citizens rely on public sector jobs (Wiseman et al., 2014). GCC initiated a localization policy that persuades the employment of more national labors in the private sectors. However, there is a need to empirically investigate the success or otherwise of localization policies in employment creation and entrepreneurship. Thus in the second step, we add non-national determinants to the model to empirically test the effect of immigrants on GCC?s entrepreneurial activities. It is well proved that diverse backgrounds of immigrants with a set of skills, knowledge, practices, and problem-solving procedures that have been attributed in different countries with the different educational system, can raise productivity by increasing the diversity of skills and ideas, fostering skill complementarity and specialization, and encouraging the upgrading of natives? skills. Thus, in this research, the diversity of immigrants takes into the model.

Layman's description

Entrepreneurship is an important institution in modern economies. Entrepreneurs who bear the costs of uncertainty can be viewed as an institutional answer to the problem of uncertainty. Market uncertainty due to the oil price fluctuations has been always the driving force for Oman concentrates more on diversifying its economy free from oil and gas, strengthening the private sector to provide employment for the growing youth population, and decrease government dependency on oil revenues. The role of entrepreneurship as a potential solution for these issues and as an engine of innovation is becoming ever more important in oil-exporting countries confronting dual shocks of oil price decline and Coronavirus pandemic. Entrepreneurs, whose main characteristic is being alert to new market opportunities, keep the market in motion. Alert entrepreneurs are the driving force behind the process of acquiring more knowledge of potential demand and supply attitudes. Oman and other GCC nations have consolidated entrepreneurship in their national plans as a crucial factor in economic prosperity. As a result, they are struggling towards building a capable and inspired workforce outside the public sector and encourage entrepreneurial activities amongst the population. However, little progress has been made towards increasing youth employment in a productive and sustained manner. Based on the World Bank report on ease of doing business 2020, UAE is ranked 11th globally followed by Bahrain (62nd), Oman (78th), Qatar (83rd), Saudi Arabia (92nd), and Kuwait (97th). Recent experience of GCC countries has revealed that reforming the current labor market which has been shaped by oil revenues, requires more than economic supports. Different determinants and factors influence sustained employment opportunities and entrepreneurship activities across countries. The main macro-level determinants are classified into economic, social, cultural, and political factors. These are considered as national determinants of a country?s entrepreneurship. There is a need for a comprehensive model to identify the national determinants of entrepreneurship among GCC countries by considering all these macro-level factors in one model. On the other side, the importance of the availability of a skilled labor force to run entrepreneurial activities is acknowledged. The GCC countries are amongst the countries originating high international migration from a wide number of countries. According to the United Nations Department of Economic and Social Affairs (UNDESA), the international migration stock as a percentage of the total population in GCC countries in 2020 range from 38.8 (Saudi Arabia), 46.5 (Oman), 55 (Bahrain), 72.8 (Kuwait), 77.3 (Qatar) to 88 (United Arab Emirates). Yet, the outcome is a segmented labor market, with private sectors dominated by expatriates while citizens rely on public sector jobs (Wiseman et al., 2014). GCC initiated a localization policy that persuades the employment of more national labors in the private sectors. However, there is a need to empirically investigate the success or otherwise of localization policies in employment creation and entrepreneurship. Thus in the second step, we add non-national determinants to the model to empirically test the effect of immigrants on GCC?s entrepreneurial activities. It is well proved that diverse backgrounds of immigrants with a set of skills, knowledge, practices, and problem-solving procedures that have been attributed in different countries with the different educational system, can raise productivity by increasing the diversity of skills and ideas, fostering skill complementarity and specialization, and encouraging the upgrading of natives? skills. Thus, in this research, the diversity of immigrants takes into the model.

Key findings

Immigration and Entrepreneurship are at the actual top of numerous national and international priorities. There is common acceptance among academics, researchers, and policymakers that immigrants are widely perceived to be highly entrepreneurial (Nkongolo-Bakenda and Chrysostome, 2020 and Fairlie and Lofstrom, 2015). The significant impact of the immigrant on the technology and engineering sectors, especially in Silicon Valley, has also been well proved (Saxenian 2000 and Wadwha et al., 2008). It is not difficult to perceive any reason why, there are most likely 582 million entrepreneurs and 258 million migrants among 65 survey countries by Global Entrepreneurship Monitor (GEM) by the end of 2017 (World migration report, 2018). Countries implement various immigration policies to absorb foreign-born talent and entrepreneurs. A group of studies concluded that business ownership is higher among the foreign-born than the native-born in many developed countries such as the United States, United Kingdom, Canada, and Australia (Borjas 1986; Lofstrom 2002; Clark and Drinkwater, 2010; Yu et al. 2017). Immigrants in the United States are also found to be more likely to start businesses than the native-born (Amin and Uyar, 2021; Deller et al., 2021 and Guerrero et al., 2021). Recently, studies on migrant entrepreneurship concluded that development of new ventures is not only due to the talent and skills of individuals, but also because of the business environment by which entrepreneur facilitate their entrepreneurial acridities (Awotoye and Singh, 2018; Duan et al., 2021). The migrants can take the benefits of both host and home-country business environment. Thus embedding dual entrepreneurial ecosystem, home ?country entrepreneurial resources and opportunities add one extra dimension to the immigrant compared to native-born entrepreneurs (You and Zhou, 2019 and Duan et al., 2021).
عنوان قصيرOman has 0.3 percent of total world proven oil reserves; compared to Saudi Arabia (15.7%), Kuwait (6%), United Arab Emirates (5.8%) and Qatar (1.5%) (BP Statistical Review of World Energy, 2020). Large governments are a common feature of oil-exporting cou
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