Entrepreneurship and Economic Growth: An Emirati Perspective

Abstract

Entrepreneurship has assumed massive importance in the face of global economic challenges. Together with innovation, entrepreneurship offers a means to overcome present challenges through sustainable development. This study uncovers entrepreneurship motivations in the United Arab Emirates and highlights criteria ideal for establishing a fertile environment for entrepreneurs to flourish. Through entrepreneurship, achievement of economic growth and diversification can be accelerated. This empirical study posits hypotheses to test the relationship between entrepreneurship and economic growth using secondary data, in a 20-year time-series (1996–2015), obtained from three principal sources: The International Bank database, the general statistics of United Arab Emirates, and data of the Global Entrepreneurship Monitor (GEM). Validity of data was rigorously confirmed through a battery of statistical tests including: normal distribution tests, time-series stationarity tests, autocorrelation and multicollinearity. In the regression analysis, essentially, entrepreneurial activity among Emiratis serves as the independent variable and economic growth in the UAE serves as the dependent variable. Empirical results, to a statistically significant extent, conclusively demonstrate that entrepreneurship positively impacts economic growth in the United Arab Emirates. These empirical results underscore the need for the United Arab Emirates to devise a national strategy promoting entrepreneurial activities through fostering a culture of entrepreneurship institutionally, providing would-be entrepreneurs with access to seed capital including grants and subsidies as well as low-interest loans, and embedding entrepreneurship in educational training at all levels putting an accent on specialized vocational training in curricula delivered by teachers endowed with entrepreneurial skills. Encouraging formation and proliferation of entrepreneurial networks, which serve not only to match would-be entrepreneurial innovators with sources of venture capital and angel investment but also channel and disseminate entrepreneurial know-how though mentoring the same, also needs to receive official sanction as a key element of national strategy. Infusing entrepreneurship in education, formally and informally, would serve to build an innovation knowledge-base and a culture that respects and encourages innovation discounting the risk of failure inherent in innovation as a deterrent stymying progress. Securing sustainability of entrepreneurship provides a viable path to achieving economic diversification for coming generations. Institutional and organizational development underpins such sustainability.

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