By Constance Van Horne and Victor Z. Huang

Entrepreneurship is one of the cornerstones of a competitive, modern, knowledge based economy, and the lifeblood of thriving local communities. There is clearly a need to ensure that entrepreneurship becomes a significant driver of future economic growth in the gulf nation, and that the many benefits associated with entrepreneurship contribute to the wellbeing of the people of the UAE across the seven emirates.

To do so, policy-makers and government agencies must identify what drives people to start new businesses, maximize the number of start-ups aspiring to and achieving high growth, and drive the elements of a healthy entrepreneurial ecosystem. The key finding of the 2011 UAE GEM Report include some continued successes and areas for attention from policy makers.

The Global Entrepreneurship Monitor (GEM) 2011 UAE report, now in its fifth year, provides thorough information on the latest trends in entrepreneurial activities and views in the UAE. The aim of the report is to assist in drawing up an Entrepreneurship Policy Framework, which provides the background and supporting information to the national entrepreneurship policy and strategy. The report is based on a survey of 3000 adults in the country, spread over the emirates and different nationalities in line with the distribution of the population in the UAE. As well, the report is based on extensive interviews with more than thirty experts in the fields of entrepreneurship in the various economic sectors.

According to the GEM survey, entrepreneurial activity in the UAE across the different stages of new venture creation in 2011 has decreased from peaks in previous years. In 2011, less than 7 adults per one hundred intend to start a new business, compared to around 43 adults in 2009. This may be attributed to the high rate of adults who do not start a new business due to a fear of failure which reaches around 51% of adults. However, it can be noted that the entrepreneurial environment has gained more sustainability as the overall rate for discontinuing businesses has decreased yearly from 4.7% in 2006 and 2007 to 2.2% in 2011.

The 2011 results show also that the UAE has the second lowest rate of established firm entrepreneurs at 2.7%, just ahead of France at 2.4% and behind the third lowest Singapore at 3.3%; well below the average of the 23 innovation driven economies of 7.2%.

To access the GEM UAE 2011 report, please follow the link:

http://www.gemconsortium.org/docs/2626/gem-uae-2011-report