Economic complexity and entrepreneurship: Evidence from countries in the Middle East and North Africa

Document Type : Research Paper

Authors

1 Department of Administrative and Economic Sciences, Faculty of Humanities and Sports Sciences, Gonbadkavos University

2 Department of Administrative and Economic Sciences, Faculty of Humanities, Gonbad-e-Kavous University, Gonbad-e-Kavous, Iran

10.22059/jed.2023.352982.654113

Abstract

Aim: This study aims to examine the impact of economic complexity on entrepreneurship in the Middle East and North Africa (MENA) region. Economic complexity refers to the diversity and complexity of a country's production and export capabilities. The objective is to determine whether higher economic complexity creates a favorable environment for entrepreneurship.

Method: The study employs an applied research method with a descriptive-correlational approach to gather information. The econometric approach used is the generalized systemic moments (GMM-SYS) method. The statistical sample consists of data from 12 selected countries in the MENA region, covering the period between 2010 and 2020.

Results: The research findings reveal several key insights. Firstly, there is a positive and significant impact of economic complexity on entrepreneurial activities in the MENA region. This suggests that higher economic complexity promotes and encourages entrepreneurship. Secondly, the analysis indicates that the positive effect of entrepreneurship is strengthened by higher levels of human capital and governance quality. Conversely, higher natural resource rents have a dampening effect on entrepreneurship. Thirdly, the results demonstrate that the relationship between economic complexity and entrepreneurship is influenced by factors such as natural resource rent, institutional quality, and human capital accumulation.

Conclusion: In conclusion, the findings affirm that economic complexity significantly influences the entrepreneurial activities in the MENA countries. Policymakers can anticipate stimulating the entrepreneurship of MENA economies by implementing appropriate policies aimed at enhancing technical capabilities for producing complex products and expediting development. However, it is important to note that the specific relationship between economic complexity and entrepreneurship can vary based on contextual factors such as institutional quality, human capital, and the presence of natural resources. Thus, understanding these interactions and contextual factors is crucial for policymakers and researchers seeking to comprehend the effect of economic complexity on entrepreneurship in the MENA region.

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Journal of Entrepreneurship Development

Articles in Press, Accepted Manuscript
Available Online from 27 August 2023

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