Entrepreneurship in the Middle East: Does Government Matter?

FSI HOSTS PANEL ON MIDDLE EAST BUSINESSES DURING GLOBAL ENTREPRENEURSHIP SUMMIT AT STANFORD

Startup culture is growing fast in the Middle East, despite what you have (or more likely, haven’t) heard about the region.

“There have been at least two startup conferences this year that got 5,000 people each,” said venture investor Christopher Schroeder. “If it had been 10,000 people in the Middle East getting together to talk about the Muslim Brotherhood, I guarantee you would have heard about it.”

Together with Michael McFaul, Condoleezza Rice, and Stephen Hadley, Schroeder introduced one of the first partner events of the seventh annual Global Entrepreneurship Summit. The panel, titled “From the Valley to the Wadi: How Entrepreneurship is Making the Middle East More Peaceful, More Stable and More Prosperous,” was organized by Stanford’s Freeman Spogli Institute for International Studies and the Atlantic Council’s Rafik Harari Center for the Middle East. The theme that quickly emerged, given the confluence of former Cabinet members and experienced businesspeople, was the role of government in economic growth.

FSI director McFaul, formerly the US ambassador to Russia, welcomed the audience to Stanford (this year’s GES host) and introduced former secretary of state Condoleezza Rice. Rice described the connection between prosperity and democratic development – which, as she pointed out, is not a quick or easy process. “Today people think of the US as a consolidated democracy, but they forget that it took us time to get there,” she said. “The Constitution I swore to uphold as Secretary of State originally treated my ancestors as three-fifths of a man.”

Hadley, who served as national security advisor to President George W. Bush, moderated a discussion with successful entrepreneurs from the MENA (Middle East and North Africa) region to challenge stereotypes, candidly discuss problems, and offer solutions for growth. Rice noted in her introduction that countries like Saudi Arabia must include the half of their potential workforce – women – whose economic participation is currently restricted. However, panelist Ruba Al Hassan, a UAE entrepreneur and founder of the Global Youth Empowerment Movement, reminded the audience that about 25% of MENA entrepreneurs are women, compared to 18% in Silicon Valley.

The panel discussed the roles that policy can and cannot play in economic development. “The government can help the private sector by focusing on education,” said Ahmed Alfi, whose Cairo-based venture capital firm Sawari Ventures has funded an online education platform used by millions of refugees around the region. “There is no such thing as ‘not enough money for education’ – only the misallocation of funds.”

Ala’ al Sallal, who grew up a refugee in Jordan and founded online retailer Jamalon, cautioned against resting all hopes for change in the private sector. “Businesses are not social problem solvers; when we can’t operate in one market, we move to another,” he said. While the panelists agreed with an audience member’s comment that economic growth in the Middle East is bottom-up, not top-down, they also pointed out that policy issues such as open borders, special economic zones and public infrastructure play a critical role in creating the conditions for entrepreneurship to flourish.

Follow @fsistanford on Twitter for details of this and other events at the Freeman Spogli Institute for International Studies at Stanford University.