Entrepreneurship policies in Saudi Arabia

This article covers the best practices and needs for reform in entrepreneurship policies in Saudi Arabia.
Entrepreneurship enjoys high level of support in Saudi Arabia, according to Jonathan Ortmans. The Kingdom has been leading in the Arab region in terms of regulatory reforms related to entrepreneurship. According to the latest report of Doing Business (DB), the country ranked 13th globally and maintained its position in the first place in the region on the ease of doing business. Saudi Arabia's consistent improvement in DB's six indicators propelled it to its latest ranking from 35th since 2004, using French law as a model in revising its policies. In the latest World Economic Forum (WEF) Global Competitive Index (GCI 2010-2011), it moved up by seven places from 28th to 21st place which resulted in a strong and solid institutional framework, efficient markets, and sophisticated businesses places. Real activity (real GDP) in Saudi Arabia was expected to grow at 3.4 percent in 2010 and 4.5 percent in 2011. Enactment of a new foreign investment law, establishment of the Saudi Arabian General Investment Authority (SAGIA) as well as privatizations of public companies in recent years have encouraged investments in the country.
However, businesses still face difficulties, enforcement of contracts and labor issues within the regulatory system in the country. Based on a Global Entrepreneurship Monitor (GEM) survey conducted from May to October 2009, among the factor-driven economies in the region, Saudi Arabia had the lowest total entrepreneurial activity (TEA) rate, only 4.7% of the adult population (18–64 years old) were actively involved in the start-up of a new business or owned a young business of less than three and half years old. A study by Michael Porter in 2008 noted that Saudi Arabia could build a competitive economy and diversify beyond natural resources if it was willing to take a strategic approach, make multiple improvements in its business environment, truly open up competition and entrepreneurship in the private sector, and embark on a sustained effort to equip Saudi citizens with new skills, attitudes and mindsets.
Education.
As much as the recent improvements are commendable, the country faces important challenges going forward. [[Education in Saudi Arabia]] does not meet the standards of countries at similar income levels. While some progress is visible in the assessment of the quality of education, improvements are taking place from a low level. As a result, the country continues to occupy low ranks in the health and [[primary education]] (74th) and [[higher education]] and training (51st). The youth consists of more than 70% of the country's population and many of young Saudis are looking to entrepreneurship as a career path. According to the latest survey conducted by [[The Gallup Organization|Gallup]] between July to October 2009, among the high-income group in the region, 78% of the Saudi youth believed that their local communities are good places for such entrepreneurs and 30% of young Saudis who are not already business owners say they are planning to start their own business in the next 12 months. Youth in Saudi Arabia are three times as likely to say they are planning to launch a business if they perceive the government makes paperwork and permits easy enough for aspiring entrepreneurs. If out of work for more than six months, 51% of youth indicate they would be willing to take a job beneath their skills or train in a new field or start their own business. Among youth who express entrepreneurship aspirations, 61% are employed. Saudi youth reported dissatisfaction with efforts to increase the number of quality jobs within the Kingdom. However, 93% of young Saudis say taking part in regular job training increases their chances of getting a job.
Labor market.
Based on the case study conducted by World Bank on 2007, the oil sector in Saudi Arabia made up more than half the gross domestic product (GDP) but employed only 2% of the workforce and even if the oil maintained its high price, it would not generate the new jobs to satisfy the growing number of young Saudis who will enter the labor market over the next years. The latest report from WEF ranked the country 60th in the efficiency of labor market out of 183 economies. The need to transform the Saudi economy was clear—from one based on inherited wealth to one based on innovation creating an ecosystem for entrepreneurship.
Ranking for the Arab Countries.
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Notes.
[[Category:Economy of Saudi Arabia]]
[[Category:Entrepreneurship]]