Leading the Charge in Global Business Innovation – The UAE on the Rise in Entrepreneurial Developments
Introduction
An Entrepreneur is a person with the vision to see a gap in the current stage of innovation and the ability to market this very innovation. They act as the bridge between invention and commercialization, bringing the contents of the research labs to the markets.
One could argue that many small business owners are ‘Entrepreneurs’, but most organizations looking to study Entrepreneur-ism make a clear distinction between small business owners applying existing concepts: think of a street vendor, versus actual innovators bringing change to the front lines of their local market.
One thing is for certain: Entrepreneurship brings economic growth. It is for that reason that ‘true’ Entrepreneurship is seen as focusing on opportunity, not necessity. Over the past 2 decades, most countries observed an influx in the total level of Entrepreneurial activity.
This is not different in the UAE, a country that is gradually establishing itself at the top of the charts when it comes to furthering local Entrepreneurs in the region. With its high percentage of Employee Entrepreneurship Activity, the UAE is at the forefront of the global Entrepreneurial development.
“GEM (Global Entrepreneurship Monitor) has a reputation for feeling the pulse of the economic, social and policy developments that specifically affect entrepreneurs and their ability to thrive in their economies. We, at GEM, think that entrepreneurship is a key means for empowerment of economies and contribution to prosperous, inclusive and sustainable development of societies.”
Ulrike Guelich, Board of Directors GERA (Global Entrepreneurship Research Association) and Team Leader at GEM Thailand
GEM’s Global Entrepreneurship Index
The Global Economic Monitor (GEM) has established a rating that aims to combine several framework conditions into one composite index that provides a holistic overview over global Entrepreneurial developments. They conduct nationally representative interviews with over 150,000 people from over 50 countries to estimate the range of the key entrepreneurship indicators, before their local experts analyze these in further depth.
Their framework covers these conditions:
Access to Entrepreneurial finance. This condition looks into sufficient existing funds for new startups
in the form of informal investment, bank loans and government grants.Government Policies, dealing with:
a. Support and relevance: Do the policies support or hinder entrepreneurship?
b. Taxes and bureaucracy: Are taxes and fees affordable for startups?
Government Entrepreneurship programs and their general quality support.
Entrepreneurship Education at school & post school, looking into the teaching of
Entrepreneurial values such as inquiry, opportunity recognition and creativity at both schools and universities.Research and Development transfer dealing with turning research into commercial ventures.
Commercial and professional infrastructures: the scope of access to affordable professional services assisting in a new venture.
Ease of entry: This condition looks into the market dynamics and market burdens/regulation.
Does regulation in the country facilitate of restrict entry into the market?Physical Infrastructure: looking into roads, internet access & speed, as well as access to physical squares
and how adequately accessible they are to such startups.Social and Cultural norms: Does the national culture stifle, or encourage and celebrate Entrepreneurship?
Are role models promoted, and is there wide ranged support for risk taking?
These nine conditions form the composite index that is known as the National Entrepreneurship Context Index (NECI). This index represents the weighted average state of all analyzed National Entrepreneurship Framework Conditions. In 2019, the top 5 countries according to those were:
Switzerland 6.05
Netherlands 6.04
Qatar 5.91
China 5.84
UAE 5.80
Interestingly, the United States of America were 10th with a score of 5.31, while Germany was ranked 16th with a score of 5.04.
The UAE: A detailed View
The findings of the GEM representative survey show that the UAE is perceived as a frontrunner in many entrepreneurial matters. For example, of those surveyed, 61.5% of adults know someone who started a business. That places UAE 12th of the 54 countries. Further, 66.1% feel that there are good opportunities to start a business in their field: Rank 13. The same percentage of people (66.1%) say it is generally easy to start a business. Of the questioned, 62.2% claim they personally have the skills and knowledge to conduct Entrepreneurial activity, putting them at rank 19/54 for this segment. Interestingly, 51.7% fear failure – placing the UAE 29th and indicating an educated awareness of risks in the field. Overall, 38.5% had Entrepreneurial intentions. These may simply appear to be opinions, but it does show what the sentiment towards the topic of Entrepreneurism is in the country. Together with a total entrepreneurial activity (TEA) rating of 16.4%, which is rather high, the GEM metric rankings will shed light on whether or not these surveyed opinions hold true according to the data.
The 9 framework conditions with their scoring and global rank will be listed for the UAE.
These results showcase that the perceived opinion of the representative survey holds true when paired with the data. Especially remarkable is the UAE’s ranking of Government policies when it comes to taxes and bureaucracy, their post-school entrepreneurial education and their cultural and social norms, finishing first, second and third respectively. These are factors that the UAE excels in when matched with countries all around the globe and solidify their overall global 5th rank in this composite index in 2019.
A further positive development in the UAE’s path to Entrepreneurial development is their policy roadmap.
Policy Roadmap UAE
Planned policies such as the 100% foreign owned businesses in specific sectors as well as extended visas for investors and Entrepreneurs are heavily in favor of the Entrepreneurial sector as a whole. The plan of bringing forth additional funding and support for smaller businesses, as well as official developments like the Dubai Future Council on Entrepreneurship and Innovation Ecosystem which was recently formed to further shape the direction the country is headed in when it comes to Entrepreneurship. Lastly, an element of furthering the development is the Expo2020 with its focus to promote the UAE, Support SMEs and boost Entrepreneurial activity even further as a whole. These policy aspects will certainly play hand in hand towards pushing the UAE to new heights when it comes to Entrepreneurship and its development.
Conclusion: Dubai Vision
The United Arab Emirates is a country at the forefront of Entrepreneurial development. It ranks tremendously well in all 9 of GEM’s framework conditions, but especially excels in tax & bureaucracy related Government Policies, their post-school entrepreneurial education and their cultural and social norms in regard to Entrepreneurship. This excellence in a field that has seen growth over the last decades can be attributed to the UAE’s general mentality to lead the charge in terms of adoption of technologies and innovation. They are, in this sense, innovation visionaries. This can be seen by the UAE being the first country with a ministry for Artificial Intelligence and a ministry for Happiness.
For the UAE, a big focus is to bring Emiratis away from Government jobs into Entrepreneurship. These continued and enhanced measures reflect directly in aspects such as the Dubai Start-Up Hub from the Ministry of Commerce reporting 263% growth year on year, which is helping more and more Entrepreneurs in the UAE to start their business. While still in a developmental phase, the UAE has set course on becoming a global leader for Entrepreneurial Development and Innovation.
Author’s note:
In 2020, the UAE further improved upon its NECI ranking, finishing 4th overall. Upon official release of the figures by GEM, an adequate update will be published.