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Promotion of entrepreneurship, innovation and creativity in the EuroMediterranean region

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DOCUMENTOS 01|Promotion of entrepreneurship, innovation and creativity in the EuroMediterranean region

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© For this edition: Consejo Económico y Social. Spain 2012

All rights reserved according to Spanish lawConsejo Económico y SocialHuertas, 7328014 Madrid. SpainT 91 429 00 18F 91 429 42 [email protected]. M-9558-2012

PrintedFareso, S.A.

CONSEJO ECONÓMICO Y SOCIAL ESPAÑAPUBLICATIONS DEPARTMENTNICES: 625-2011

Promotion of entrepreneurship, innovation and creativity in the EuroMediterranean region

INTRODUCTION

ECONOMICS AND BUSINESS DEMOGRAPHICS IN THE EUROMEDITERRANEAN REGION

Economic and social situationBusiness demographics

NECESSARY FACTORS AND CONDITIONS FOR PROMOTINGENTREPRENEURSHIP

Internal factorsExternal factors

INNOVATION AND CREATIVITYDevelopment of the information and knowledge societyR&D+i policies and technology transfer

CONCLUSIONS AND PROPOSALS

ANNEX OF TABLES

INDEX

7

13

1519

232627

333537

39

47

INTRODUCTION

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The Final Declaration of the EuroMediterranean Summit of Economic and SocialCouncils (ESCs) and Similar Institutions, held in Alexandria (Egypt) on 18 and 19 Oc-tober 2009, included within the working programme for 2010-2011 the drafting of areport on Promotion of entrepreneurship, innovation and creativity in the EuroMediter-ranean region.

This report, which has been prepared over a period of two years, is submitted inits final form to the Istanbul Summit of 2011. It aims to offer a diagnosis of the cur-rent situation and of trends over recent years in Mediterranean countries in the pro-motion of entrepreneurship, detecting difficulties for the creation and survival of Eu-roMediterranean enterprises and indicating possible strategies and actions needed topromote economic and social development in the Mediterranean region through busi-ness projects that generate employment.

At the Summit in Alexandria, the Economic and Social Council of Spain acceptedthe commitment to lead and coordinate this Report in collaboration with the Nation-al Economic and Social Council of Algeria, the National Council for the Economy andLabour of Italy, the Economic and Social Council of Jordan, the Economic and SocialCouncil of Palestine, the Economic and Social Council of Tunisia and the Turkish del-egation of the EU-Turkey Joint Consultative Committee.

As stated below in the Report, the characteristics of entrepreneurs and of enter-prises differ from one country to another. However, there is one thing that charac-terises all entrepreneurs, namely, the decision to take the risk of setting up a projectthat will turn a creative initiative into an enterprise generating income and employ-ment.

Over the last few months, the countries in the Mediterranean basin have been in-volved in a process of political change. Though the implications of this process areunclear, it should amount to an opportunity for promoting greater economic and so-cial development in the region.

These changes are taking place in parallel with a tentative, unequal recovery inworldwide economic activity and, specifically, with the slow and problematic emer-gence from the crisis by the Member States of the European Union, especially thosein the Mediterranean basin, and with political tension, high unemployment, risingfood prices, and a temporary drop in tourism and in the flow of capital into the

CONSEJO ECONÓMICO Y SOCIAL ESPAÑA

Mediterranean Member Countries (MMC). In this context, promotion of entrepre-neurship, innovation and the creation of new businesses can help generate job cre-ation activity while reducing unemployment and improving living conditions for theinhabitants of the Mediterranean region.

Business development is considered a priority because of the role that enterprisesand entrepreneurs can play as drivers of growth and creators of wealth and employ-ment and because of the shortage of entrepreneurs noted in the EuroMediterraneanregion.

Promoting business activity requires, firstly, the implementation of programmesoffering support and encouragement of entrepreneurial activity as a possible enrich-ing career for people with initiative and, secondly, highly-qualified human resources,at both management and technical levels, which should lead to improved businessmanagement and organisation.

Of special importance is the role that education can play in creating an entrepre-neurial attitude and culture, especially amongst young people, and entrepreneurshipshould be considered as one of the core competencies to be provided by the system.Education is known to be one of the most important factors for creating and consoli-dating entrepreneurship, because it helps develop skills and capabilities that encour-age an entrepreneurial spirit and helps establish a positive image for business activity.

It is also important to consider the key role played by innovation. It can work likeany change based on knowledge, on economic growth, on the promotion of trade andon the creation of jobs with a higher added value.

All these aspects should be considered and analysed in greater detail in a Reportof this type, always within the framework of EuroMediterranean cooperation, betweenthe two shores and within them, which will be the point of reference for many of theactivities. It should be remembered that activities carried out to date have been in thisdirection.

In various EuroMediterranean reports, emphasis has been placed on the advisa-bility of directing cooperation between the European Union and the MediterraneanMember Countries (MMC) towards releasing the potential of enterprises, the creationof SMEs and of enterprises in the social economy, the training of labour to meet theneeds of the labour market, improved services to support the creation of enterprisesand easier access to finance. All of this is very closely linked to priorities in the socialsphere, such as the creation of jobs for young people and women.

Matters relating to the promotion and development of business activity have re-ceived constant attention in the framework of EuroMediterranean cooperation. TheEuropean Union has launched several projects aiming ultimately to help strengthenbusiness fabric in the region, this being a key factor for competitiveness. This inter-est has been apparent in one way or another at the EuroMediterranean Summits heldover recent years.


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NOTES

1. Led by the ESC of Spain in collaboration with the National Economic and Social Council of Algeria,the Economic and Social Council of Greece, the National Council for the Economy and Labour of Italy,the Council for Economic and Social Development of Malta, the Economic and Social Council ofTunisia and the Mixed Consultative Committee of the Economic and Social Council of Turkey.

At stated in the Report on factors for competitiveness and social cohesion for the con-struction of an integrated EuroMediterranean area1 presented at the Athens Summit in2007, the creation of wealth and jobs and improved competitiveness require a firmproduction fabric in which entrepreneurial initiative can play a key role as a driverfor growth. For this reason, the promotion of entrepreneurship and a broad entrepre-neurial culture are key elements that must be reinforced in the framework of Eu-roMediterranean cooperation.

This Report shows that in the MMCs, as in other European countries, there is apreponderance of small enterprises, which are behind most of the jobs being createdeither formally or informally. However, the data show that the quality of the businessenvironment is still insufficient in the region as a whole, since there are a number oflimiting factors such as the institutional framework, the weakness of existing regula-tions, and the difficulties faced by governments for controlling and reducing the in-formal economy and employment. Other factors are the weak financial system andproblems for gaining access to credit.

The differences noted between countries indicate that the macroeconomic envi-ronment and, especially, factors promoting entrepreneurship determine to what ex-tent enterprises can be created and can survive. Here it should be noted that the weaksituation regarding sources of statistics on business demographics and other charac-teristics relating to entrepreneurship, and the fact that the businesses that do exist arevery heterogeneous, on both sides of the Mediterranean, mean that the analysis andcomparisons of the countries in this Report cannot be considered fully reliable.

On the basis of all the above considerations, the Report begins with a diagnosisof the economic and social situation and a description of business demographics inthe region. It then covers the factors that explain why in the EuroMediterraneancountries the quantity and quality of entrepreneurial initiatives differ. A whole chap-ter is devoted to innovation and creativity, these being especially relevant factors forthe creation of enterprises. Finally, the Report closes with some reflections and rec-ommendations for strategic guidelines to be adopted for creating a climate in whichentrepreneurs’ initiatives can prosper.


11PROMOTION OF ENTREPRENEURSHIP, INNOVATION AND CREATIVITY...

ECONOMICS AND BUSINESS DEMOGRAPHICS IN THE EUROMEDITERRANEAN REGION

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2. These matters were covered in greater detail and with full statistical information in the Joint Report:Factors for competitiveness and social cohesion for the construction of an integrated EuroMediterraneanarea, which was presented to the EuroMediterranean Economic and Social Summit held in Athens inOctober 2007. This will be referred to below as the Athens Report of 2007.

Economic and social situationA country’s economic and social situation is the framework for the development ofactivity by a private sector which should help achieve economic growth and job cre-ation. The quality of the country’s institutions and proper market regulation are alsodetermining factors for promoting private investment and contributing to economicdevelopment. Therefore, before analysing the private sector and the promotion of en-trepreneurship in the EuroMediterranean area, a brief reference must be made to therecent macroeconomic and social and labour context of Mediterranean countries, es-pecially the MMCs, as well as to their institutional quality and governance2. The re-lation between some of these factors and their influence on the development of thebusiness sector in the region are analysed below.

The MMCs form a mixed group of small-scale economies that have been mak-ing a great effort to achieve growth in recent years, especially prior to the interna-tional economic crisis, leading to growth in GDP above the rates recorded by Euro-pean Union countries. In this context, and although the economic crisis led to a dropin the rate of growth in GDP in the European Union, with negative rates in 2009 inalmost all the Member States, most of the MMCs did not experience reductions inGDP, indicating growth that was more sustainable in relation to external macroeco-nomic conditions. In 2009, with the exception of Israel, which recorded growth of0.8%, and Turkey with a drop in GDP of 4.7%, the rates of change in GDP in the restof the area dropped slightly but still remained in all cases above the European av-erage. In 2010, recovery in the MMCs continued to be greater than in the EuropeanUnion, with growth of 8.2% in Turkey. In general, prospects for 2011 show the samepositive trend, except for Egypt and Tunisia which are expected to record growthof about 1%.

However, in relative terms, there has been little progress because growth has beeninsufficient for improving standards of living, largely because of the rising populationand because it is difficult to create jobs at a rate that can absorb the increase in the


3. The exception in this case is Algeria where the weight of the industrial sector is 60% in line with itsproduction structure.

working-age population. In fact, the gross domestic income per capita in the MMCs,with the exception of Israel, is far from that of most of the European countries.

Moreover, the production structure in the MMCs has changed greatly in recentyears, with the weight in GDP of the primary sector falling gradually against the in-crease in services. In general, industry accounts for about 30% of GDP while servic-es have gradually increased their share, rising to over 55%3. As a result, employmenthas been concentrated in the services sector although agriculture remains an impor-tant source of employment for the working-age population.

Investment flows have contributed to this change in production structure in thatthey have focused on construction and telecommunications and the financial and serv-ices sectors. But their impact is still limited and was held back by the crisis, especial-ly in construction and finance.

The main effects of the crisis have been in foreign trade flows, which depend large-ly on countries that were especially affected by the crisis, such as the European Unionand other developed countries. In fact, the general shrinking of world trade has ledto a slowdown in developed countries even though in previous years there had beengrowth in both absolute and relative terms. This growth took place in spite of ele-ments that made trade flows with the MMCs difficult, preventing them from openingup to foreign trade.

These obstacles to trade are especially marked in intra-regional trade. Tradeamongst the MMCs continues to be very limited because of the lack of regional in-tegration, with barriers that continue to hold back trade within the Mediterraneanarea and undermine the region’s competitiveness. They include the limited harmon-isation of regulatory frameworks, the embryonic state of intra-regional trade agree-ments, the various regimes regarding places of origin of goods, the persistence oftariff and non-tariff barriers and the lack of regional infrastructure, especially trans-port.

This lack of commercial integration amongst the countries of the southern bankof the Mediterranean and, therefore, the lack of a regional business strategy, make itdifficult for foreign and domestic companies to set up activities and hold back bothdomestic and foreign investment, which is a determining factor for economic growth.

International experience over the last three decades shows that processes ofmarked economic growth are associated with high rates of investment, with gross for-mation of fixed capital reaching levels of over 30% in emerging countries. However,in the MMCs, investment in terms of gross formation of fixed capital is relatively low,at about 20-25% of GDP, although in the years preceding the crisis there was a slightincrease over previous levels.


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1. In absolute terms foreign direct investment flows have increased considerably inrecent years, but in relative terms they are still low in comparison with those head-ing for other countries that have important relations with the European Union.

Such flows of worldwide and European direct investment to the MMCs have fall-en in comparison with investment in other, more attractive areas such as the emerg-ing countries of Asia or the countries of central and eastern Europe in spite of the ad-vantages offered by MMCs for foreign investment, such as their geographicalproximity to the European Union, the size of their markets, the availability of relative-ly well-trained labour, low labour costs and the availability of natural resources.

Efforts are therefore needed to resolve these weaknesses, with priority beingplaced on saving and domestic investment, but progress must also be made in open-ing up to these countries, strengthening trade ties and promoting the entry of foreigndirect investment.

However, it is still necessary to work on matters relating to good governance, onnational, regional and local levels, to build a better institutional, legal and administra-tive framework in which democracy, social and labour rights and participation by so-cial agents are essential elements.

In recent years, the MMCs have made progress in this area and in the develop-ment of infrastructure, financial markets and taxation. It is hoped that the recent po-litical changes and the process of transforming institutions in some MMCs will movein this direction and help improve institutional and regulatory quality, while promot-ing a more favourable climate for investment and business leading to the creation ofproductive activity and employment in the EuroMediterranean area.

The traditional weight held by the public sector in economic activity in the MMCsshould be complemented by the promotion of private initiative and entrepreneurshipas drivers for growth and for the creation of wealth and employment.

Although the presence and dependence of the public sector in economic activityhas fallen back in comparison with previous decades, largely because of the arrival offoreign capital, it is still necessary to reform and strengthen the role of the State in ar-eas that are linked to sustainable development and quality of life, such as education,health and infrastructure, in order to guarantee the quality and effectiveness of pub-lic initiative, while ensuring it is compatible with the promotion of private initiative.

It is also important to consider the existence of a large informal sector in theMMCs, partly the result of an insufficient regulatory framework. One of the problemsfaced by the MMC economies in general and the business sector in particular is theweakness of market regulation and the difficulty of controlling and reducing the “non-structured” economy and employment. These cover both what can be defined as theunderground or irregular economy and employment, such as activities in the informalsector, that is, traditional, family-type activities for the self-production of goods and



services, and also the provision of such goods and services in a more or less disinter-ested fashion at a local level.

From a macroeconomic approach, the non-structured sector of the economy mayplay an important role in the generation of dynamic production fabric in these coun-tries, but bringing the underground economy to the surface should be a recognisedtarget that is shared by society as a whole.

With regard to social and labour matters, it is essential to continue advancing to-wards observance of, and compliance with, fundamental, universal regulations andrights for workers and establishing basic social and labour rights with equal opportu-nities for both men and women. Moreover, collective bargaining and social dialogueamongst strong economic and social partners should be an objective that is shared byall the countries in the Mediterranean area.

The MMCs face three essential challenges relating to demography: populationgrowth, increased unemployment and the phenomenon of migration. The populationin the EuroMediterranean area has grown fast over recent years, with rates of 1-2%,as against 0.5% in the European Union. Although the United Nations population pro-jections for the next 25 years indicate that there will be a slight slowdown, rates willstill be 0.5-1%. Moreover, unlike the European Union, the population differs greatlyon the two shores of the Mediterranean, with fast ageing in the EU-27 but a youngpopulation in the MMCs.

This marked growth in population and, therefore, in working-age population, hasmeant that in recent years growth has been insufficient for them to all find jobs. Inaddition, against the pressure of this large young population, which will continue incoming years, the labour markets in the area are characterised by: a low rate of for-mal employment, a very low level of participation by certain groups, especially women,and a high rate of unemployment, especially for women and young people.

This in turn has a negative effect on social cohesion, generating exclusion andpoverty, but also stimulating migratory flows. The EuroMediterranean region is oneof the main geographical areas for the size and intensity of such migratory flows.

The latest data available show, for all the MMCs, unemployment at 11.9%, rising to25.2% for young people aged under 25, with an employment rate of 42% and partici-pation in the labour market by women, measured by the labour force participationrate, of just under 24%. These data are for the last period of marked economic growth,of over 5%, in the region. In 2009, growth was lower because of the international eco-nomic crisis but, for 2010, according to recent estimates, it should reach 4.2% in theMaghreb and 5% in the Mashreq.

Promotion of employment for women in the EuroMediterranean area requires achange in the traditional social function of women within the family. Entrepreneur-ial activity is an option allowing women and young people to avoid unemployment so,when promoting entrepreneurship, it is important to include initiatives addressing


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4. Sergio Alessandrini, “The role of EuroMediterranean relations facing the economic crisis”, in Mediter-ranean Yearbook 2009, 2010.

women, such as training and support programmes, including the design of more ac-cessible financial tools. This would also lead to a greater presence of women in thestructured economy.

Given the high rates of unemployment among young people, specific measuresshould be drawn up to help them find jobs. Young people should be encouraged toconsider entrepreneurial activity.

All of these matters are especially important in an economic context of crisis. Theglobal nature of the crisis requires coordination of responses on an international lev-el. In the MMCs, the responses have focused on individual, short-term measures aim-ing to stimulate domestic demand, increase investment, guarantee deposits and re-duce interest rates with a view to strengthening local markets, rather than coordinatedmeasures for the whole area4. Yet the latter are essential not only for overcoming themost negative effects of the crisis, but also for stimulating economic growth and em-ployment in the EuroMediterranean region.

Business demographicsThe objective of promoting entrepreneurship laid down in this Report requires an in-depth study of the business environment in the Mediterranean countries, with the aimof analysing its dynamics and size as keys for fostering innovation and competitive-ness and, consequently, economic growth and job creation. This is the purpose behindthis analysis of business demographics in these countries. However, there are prob-lems relating to the limited scope and insufficiency of the statistics available. In manycases, the data are not up-to-date, so knowledge of the business environment in theEuroMediterranean area is necessarily limited.

Analyses of business demographics make it possible to characterise the dynamismof the business fabric, as measured by entries and exits of companies and by their po-tential for survival, without going into the characteristics and behaviour of every sec-tor as such studies generally offer markers with an added dimension.

According to the latest data from the World Bank (Annex 1) for 2007, Turkey wasthe MMC with the largest number of companies, with 764,240 registered companies,followed by Egypt with 367,559. Of all the enterprises registered in all these countries,about 10% were created that year, a similar rate to the average for the European Union.In this general context, Israel and Turkey stood out with rates of 11.6% and 12.3% re-spectively, while Egypt and Lebanon, with rates of 2.6% and 4.9%, recorded the low-est rates of company creation.

On the other hand, business fabric in the MMCs, as in other European countries, ischaracterised by a preponderance of small and medium-sized enterprises, with 1-49



5. Femise, Femise Report for 2005 on the EuroMediterranean partnership, February 2006.6. Sergio Alessandrini, “The role of EuroMediterranean relations....”; op. cit.7. Declaration by the EuroMediterranean Network for the Social Economy to the EuroMediterranean

Summit of Heads of State and of Government, 16 November 2005.

employees, which account for almost 90% of total enterprises, including those of an in-formal nature5. SMEs and microenterprises participate in most of the production ac-tivities in the EuroMediterranean region and their competitiveness and capacity for re-sponding to globalisation as well as to the current crisis depend on their capacity forexpanding and innovating6.

This preponderance of SMEs and microenterprises means that they can make asignificant contribution to sustainable growth and employment. In fact, they are re-sponsible for most of the jobs created, both formal and informal (60-70% of jobs cre-ated), but they are also a channel for small investments with a resulting increase inadded value for economic growth (30-50% of the added value in their respectiveeconomies). The development of SMEs is therefore essential for promoting job cre-ation in the area, contributing to social stability and integration of the economies onboth sides of the Mediterranean while facilitating the transfer of technology and in-novation.

At the same time, SMEs and microenterprises are the enterprises that find it hard-est to develop because of the difficulties for finding finance and sufficient investment,for employing qualified human resources and for receiving administrative and tech-nical assistance, and they show higher rates of mortality. For example, in Egypt 97%of enterprises are SMEs and are responsible for 62% of jobs created. In Lebanon, 96%of enterprises are microenterprises, accounting for 50% of total jobs. In Morocco,SMEs account for 99% of total enterprises, with over 70% of total employment. How-ever, the rate at which businesses close down in these countries is high, with an av-erage of 5.8% of the working-age population, as against 2.1% in the European Union.Morocco stands out with just 3.7%.

Enterprises in the social economy (cooperatives, benefit societies, development as-sociations, foundations and other types of enterprise involving worker participation)also play an important role in the development of business activity in these countries,because they contribute to social cohesion, the promotion of entrepreneurship, thecreation of wealth on a local level, the promotion of better governance, sustainable de-velopment and, especially, job creation7.

In the European Union, this type of enterprise accounts for 10% of the total andis responsible for 8% of employment. Although there are no similar data for theMMCs in general, in Algeria, Egypt, Morocco and Turkey there is a large numberof cooperatives and benefit societies, with 8-12 million people belonging to them orbeing beneficiaries.


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8. ESCE, Report by the Economic and Social Council on “Promoting entrepreneurship amongst womenin the EuroMediterranean region”, 2007.

9. The markers provided by the Global Entrepreneurship Monitor are based on the Adult Population Sur-vey on aspects related to entrepreneurial activity and the aspirations, attitudes and perceptions of peo-ple starting or who have at some time started an entrepreneurial activity.

Participation by women in entrepreneurial activity is still insufficient in the MMCs.Women shareholders reach the levels of European countries only in Israel and Turkey,with 34 and 40.7% respectively. This is one of the main matters to be resolved withregard to the promotion of entrepreneurship, because it forms part of the overall aimof strengthening the role of women in society. This also means that greater relevanceand support must be given to small entrepreneurial activities of a traditional naturecarried out by women, including non-remunerated activities within the family and tra-ditional work8.

The data provided by the Global Entrepreneurship Monitor9 on the developmentof entrepreneurial activity show that, for the working-age population in MMCs, thepercentage for starting an entrepreneurial activity is higher than in the EuropeanUnion, especially in Algeria, Lebanon and Morocco where, over the last three and ahalf years, over 15% of the working-age population and in Jordan over 10% have be-gun an entrepreneurial activity. The European average is about 6%.

A perception of greater business opportunities in these countries confirms thesehigher rates of recent entrepreneurial activity. Necessity is seen to be one of the maindrivers for new entrepreneurs, whereas in the European Union, an improved personalsituation holds greater weight.



NECESSARY FACTORS AND CONDITIONS FOR PROMOTING ENTREPRENEURSHIP

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Entrepreneurship arises from a number of very different factors, although the special-ist literature tends to classify these in two main groups: internal factors related to themotivations and characteristics of entrepreneurs, and external factors linked to theeconomic, political and social context of a country (graph 1).


GRAPH 1. FACTORS INVOLVED IN THE CREATION OF ENTERPRISES

Source: Based on the Global Entrepreneurship Monitor, 2009 Executive Report.

10. Global Entrepreneruship Monitor, Executive, 2005.

For entrepreneurial activity there must be both a favourable social and cultural con-text and an attitude in favour of entrepreneurial activities amongst the population.These are therefore two equally necessary and important areas which mutually sup-port each other. Positive attitudes towards the business world will promote morefavourable conditions for the development of entrepreneurial initiatives such as theregulatory or institutional framework, and vice versa.

While the internal factors are necessary in all economies for starting up and de-veloping an entrepreneurial activity, the set of external factors are also necessary butmay vary depending on the stage of economic development of the different economies.In principle, less developed economies should focus their efforts on achieving a cer-tain degree of macroeconomic stability and sufficient quality in their institutions andinfrastructure and their education and health systems. From then on, countries shouldconcentrate on achieving efficient functioning of their markets for goods, services andfactors, gradually moving on to the development of factors that promote innovativeentrepreneurial activity.

Internal factorsEntrepreneurship is an essential element for a country’s economic development andlargely depends on positive attitudes towards business amongst its population, withpeople feeling motivated and prepared to embark on the creation of new enterprises.The people’s attitude may therefore be a good marker of the possibilities and short-comings of a country’s business dynamics.

Although there are many markers of attitudes towards the world of business, the mostrelevant are those which provide information on motivation for creating a new compa-ny, such as perception of business opportunities, either for career improvement or out ofnecessity, and of risk, and personal skills for creating and running a new company.

Business opportunities are closely linked to opportunity costs, that is, to the linkbetween the benefits expected from the business activity and those coming from analternative occupation. The specialist literature points to the existence of a U-shapedlink between a country’s level of development, measured via its GDP per capita, andbusiness dynamism10. That is, a high level of entrepreneurial activity is detected inboth areas with a high GDP per capita and, paradoxically, in countries with a lowerlevel of economic development. In the former, it is entrepreneurs who detect busi-ness opportunities whereas, in the latter, entrepreneurial activity is seen as a strate-gy to overcome unemployment in situations of limited or zero opportunities to work.

The perception of risk is another determinant when setting up a new company be-cause, if the risk is considered too high, the idea may be rejected even if it is the most


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attractive option. The perception of risk is influenced by several factors, especially in-stitutional factors, such as the regulatory framework or institutional quality, althoughothers relating to individuals’ personal characteristics (age, sex, nationality, etc.) mustalso be taken into account.

It must also be remembered that, when a business opportunity is perceived, peo-ple must feel able to face the challenges of setting up and consolidating a company.Clearly, education is a prime element in training citizens for work but entrepreneur-ship also requires specific training which should be given via formal mechanisms suchas the education system, although sometimes it may come via informal mechanismssuch as family or social networks or even business cooperation or prior professionalexperience. Perception by individuals of their own personal abilities in this field is abasic added value for entrepreneurial activity.

The data on these factors in the MMCs indicate that people’s attitudes to businessactivity are mainly positive (see attached Tables). Intentions to set up a business orcarry out some entrepreneurial activity are high amongst the population, well abovethe levels in European countries. However, as stated above, while the main motiva-tions for entrepreneurial activity are related to career development in both the Euro-pean Union and the MMCs, in the latter greater weight is held by actual necessity (asa strategy to overcome unemployment).

In addition, these intentions often come together with positive perceptions of busi-ness opportunities and of personal ability, in both cases more so than in other Euro-pean Union countries. Another important fact is that risk aversion is not high, beingat very similar or even lower levels than in European countries.

These data therefore indicate that these countries have a great potential for devel-oping entrepreneurial dynamism. But these are intrinsic factors that to a large extentdepend on improved regulations and institutions in the country, as explained below.

External factorsA country’s macroeconomic, institutional and social environment has a decisive ef-fect on entrepreneurship, determining to what extent a new company is likely to beset up, survive and be successful. Evaluation of factors relating to the economic, po-litical and social context is therefore key to finding out what aspects should be in-cluded in policies aiming to promote business creation and consolidation in theMMCs.

Business policy in many countries in the EuroMediterranean region has been a pri-ority for governments but it has generally been framed within conventional industri-al policies focusing on developing and promoting specific sectors and companies thatare considered key to the country’s economic development, at the expense of a morecross-cutting business policy.



11. Implementation of industrial policy in general and of the Charter for Enterprise in particular is car-ried out by a working group (Working party on Euro-Mediterranean Industrial Cooperation) made upof representatives of the EU Member States, representatives of EuroMediterranean countries and var-ious business associations and international organisations (Businesseurope, BusinessMed, Eurocham-bres, Ascame, etc).

12. This initiative evaluates progress achieved in ten different areas of action, noting any shortcomingsand needs: 1) Administrative simplification; 2) Promotion of entrepreneurship through education andtraining; 3) Improved knowledge; 4) Easier access to financial resources; 5) Improved marked access;6) Promotion of innovative enterprises, 7) Strengthening of business associations; 8) Guaranteed qual-ity of business support services; 9) Stronger links between Europe and the EuroMediterranean region;and 10) Improved access to information.

It is therefore necessary to draw up a policy covering regulation (simplification of ad-ministration, the financial system and taxation), training/education and innovation,development and creativity, all in a framework of regional and local institutional co-operation.

Various initiatives have been adopted in the framework of cooperation between theEuropean Union and the MMCs, including the “EuroMediterranean Charter for En-terprise” in 2004, which establishes the common principles for developing industrialpolicy in the EuroMediterranean region11. The purpose of this was to facilitate andfoster investment and private sector development as well as to define national and re-gional strategies. The charter establishes macroeconomic stability as an essential re-quirement for the success of business strategy, alongside transparency and a reliablejudicial system12. Participation by economic and social representatives in both the pri-vate and pubic arena is also considered a key factor for the development and imple-mentation of business promotion policies.

The start of an entrepreneurial activity is directly linked to the ease with which busi-ness can be done in a country. In comparative terms, the quality of the business envi-ronment is still insufficient in the region as a whole and both the climate for investmentand the business environment continue to be limited by many factors, including the ex-istence of excessive regulatory bureaucracy, lack of transparency, a complex legislativeand institutional network, a weak financial system, difficult access to credit and owner-ship. At the same time, education and training continue at low levels and training in en-trepreneurship is insufficient. Moreover, the predominant culture in the social contextis one of local entrepreneurship that is firmly rooted in the informal economy.

In addition, according to the experience of most of the developed countries andespecially of the European Union, to achieve business development it is essential toencourage innovation and new technologies in the framework of the knowledge soci-ety. These aspects are therefore covered in a specific section of this Report.

INSTITUTIONAL AND REGULATORY ENVIRONMENT

As stated above, amongst the problems faced by the business sector in these countriesare the weakness and complexity of market regulations which, alongside the poor


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13. European Commission SEC (2004), of 17 September 2004. Report on the measures implemented by theMediterranean partners to stimulate entrepreneurship and competitiveness (Med Best Report).

quality of institutions, limit the setting up of new business projects or development ofany existing projects.

The information available for evaluating these aspects in the MMCs is insufficient,so it is not easy to make comparison with other countries, especially with those onthe northern shore of the Mediterranean. So the analysis carried out in this Reportmust be relativised. On this basis and with a view to analysing some determining fac-tors for starting up an entrepreneurial activity, the only data available come from theWorld Bank’s “Doing Business” project. This aims to evaluate the ease of doing busi-ness in a country based on certain aspects of the legal and regulatory framework thatare considered important for decisions on entrepreneurial projects. It makes it possi-ble to list countries in order of ease for doing business. However, the results shouldbe treated with caution as these markers have been criticised because of methodolog-ical limitations and a partial bias in the criteria used.

According to this source and giving value 1 to the country in which it is easiest todo business, practically all the MMCs, with the exception of Israel, Tunisia and Turkey,are ranked above 100, above most of the European countries excepting Greece whichis in position 109. Israel is in position 29, followed by Tunisia at 69 and Turkey at 73.These three countries lead the MMCs..

The difficulties faced at the start of business activity in all countries are espe-cially marked in the MMC, even though great efforts have been made in recentyears13. The procedures, duration and even the cost of starting up a business areshown to be higher than the European Union average. Up to 8 procedures are re-quired on average for starting an activity, and in Algeria, the National Authority ofPalestine and Tunisia 10 or more are required. This is also the case in some north-ern Mediterranean countries such as Spain and Greece. With regard to the numberof days needed to start up a business activity, there is a wide variety amongst thedifferent countries.

However, where most differences are noted regarding the start of activity is in costin terms of GDP per capita. While in the European Union the cost is not above 5% onaverage, in the MMC it is five times greater, with excessively high levels in Lebanon(78.2), Egypt (55) and Jordan (49.2), with Israel and Tunisia at the average levels forthe European Union.

Difficulties for creating and for winding up companies as well as high costs for en-trepreneurs encourage the development of informal activities.

In addition, the number of years needed to resolve cases of insolvency is 4 in mostof the MMCs, with the exception of Morocco and Tunisia, where it is only 2, this being the average in the European Union.



14. European Commission SEC (2004), of 17 September 2004. Report on the measures implemented by theMediterranean partners to stimulate entrepreneurship and competitiveness (Med Best Report).

However and in spite of the efforts made by all the Mediterranean partners to fa-cilitate the creation of enterprises and to overcome these deficiencies, the difficul-ties for creating and winding up companies, together with the costs for entrepre-neurs are still high, placing most of the MMCs among the group of European Unioncountries with the greatest difficulties for starting up a business. The MED BESTreport14 stated, in 2005, that all the partners had made efforts to facilitate the cre-ation of enterprises but that these had been insufficient. The main obstacles for agood business environment were a lack of transparency, efficiency and predictionof the administrative procedures needed to start up, maintain or wind up a businessactivity.

ACCESS TO FINANCE

Access to credit and ownership rights are also basic elements for the development ofthe business sector.

While credit for the private sector is at similar levels to those of the EuropeanUnion in many of these countries (Israel, Jordan, Lebanon and Turkey), in others suchas Tunisia and Algeria it is no more than 15% in terms of GDP per capita. Althoughthe limited information available does not allow analysis of how much of this fundingis devoted to entrepreneurial activity, it seems that the main difficulties for access tocredit are in Syria, the Palestine National Authority, Algeria and Jordan, which are ina worse situation than the other countries.

It can therefore be concluded that access to credit by the private sector is still lim-ited in the MMCs, especially for SMEs and microenterprises, because in many of thesouthern Mediterranean countries, the banks and non-banking financial institutionsare poorly developed, credit mostly goes to State enterprises, high guarantees are re-quired and it is sometimes difficult to claim payment of debts through the courts.Moreover, difficult access to credit is one of the elements that encourages develop in-formal activities.

It must be stressed that microcredits can be a determinant financial tool for pro-moting entrepreneurial activity in the southern Mediterranean countries. Such smallloans for SMEs and microenterprises which, as stated above, are those that face mostdifficulties for gaining access to credit, are essential for facilitating the creation of en-terprises. They encourage the appearance of entrepreneurs and help achieve balancedeconomic and social development in the region.

With regard to ownership rights, the MMCs as a whole still need to cooperate morein order to help consolidate a legal and institutional framework that facilitates accessto ownership.


30 DOCUMENTOS

EDUCATION AND TRAINING

Education is an important tool for creating an entrepreneurial attitude and culture,especially amongst young people. Education is known to be one of the most impor-tant factors for creating and consolidating enterprises, because it facilitates the devel-opment of entrepreneurship skills and abilities and helps give entrepreneurial activi-ty a positive image.

As stated in the Report on vocational training as a factor for competitiveness and jobcreation: priorities for economic and social agents, over the last three decades, theMMCs have been making noteworthy progress in improving human capital, althoughthere are still serious problems such as the high level of secondary school drop-outs,the poor participation in higher education and poor supply and quality, especially ofVocational Training options. All this make the transition from school to work difficult,especially for young people.

Greater efforts should therefore be made in the fields of education and training,especially with regard to improved access and quality of education systems, but plac-ing special emphasis on entrepreneurship within the core competencies to be provid-ed by the system.

Several fora are recommending the promotion of entrepreneurship through teach-ing, based on both a broad concept of education in attitudes and business skills, in-cluding the development of certain personal qualities and awareness of self-employ-ment as a career option, as well as a more specific concept of training on how createa business, providing the necessary skills for setting up a business activity, with learn-ing through practice being an essential component.

Entrepreneurship would therefore have to be included in educational systems fromthe start, as a cross-cutting subject and a teaching methodology. It must also contin-ue to be taught through lifelong learning, as recognised for some time now in Euro-pean circles.

CULTURAL FACTORS: SOCIAL RECOGNITION

Social recognition of entrepreneurial activity is another important factor for the de-velopment of entrepreneurial dynamism. Cultural and social norms can promote ordisincentivate business activity and may even affect the approach to economic andbusiness activity and the way it is carried out.

As stated above, the weight of the informal economy in the MMCs is very high, be-ing based to a large extent on the family economy and on self-production of goods andservices. The social conception of this type of entrepreneurial activity, which is most-ly carried out by women, differs from the conventional concept of entrepreneur inother sectors of the formal economy and may be associated to a lesser degree with theeconomic and social development of the country.



It is therefore necessary to enhance the general social and economic worth of entre-preneurial activity in order to generate and develop a strong, dynamic entrepreneur-ial culture.

Also, as has been done in the European Union for some time now, business sup-port services and networks should be set up by the public authorities, with a high degree of participation by entrepreneurial organisations.


32 DOCUMENTOS

INNOVATION AND CREATIVITY

34 DOCUMENTOS

15. I Seminar on “Mediterranean co-developmetn and new forms of competitiveness in the sustainableknowledge society” (Nebrija University, 9-10 December 2008).

For promoting entrepreneurship, the subject of this Report, it is essential to broadlystimulate innovation in the sense of incremental or radical changes in technological,or non-tecnological, processes. In all cases, the incorporation of technological inno-vations in both processes (production methods or the distribution of goods and serv-ices) and products (design of goods and services) or of non-technological innovationsrelating to organisation or commerce (new practices in work organisation, improveduse or sharing of information, knowledge or skills within enterprises, adoption of neworganisational methods to optimise decision-making and the sharing of responsibili-ties) requires strategies aiming to increase market share, the quality of goods and serv-ices, production capacity, business visibility, and health and safety guarantees.

As an essential base for the long-term sustainability of a proper infrastructure forresearch, development and innovation, an electronic communications sector must beset up to maximise synergies between regional or bilateral projects, as part of what istoday known as the “information society”.

In the framework of cooperation under the Barcelona Process - Union for theMediterranean, there is a move towards innovation going beyond traditional Eu-roMediterranean cooperation, with the promotion of active participation in key sec-tors, especially SMEs. Environmental sustainability is seen as a source of business op-portunities that can contribute to economic growth and development in this region15.Moreover, the adoption of a biennial system of co-presidencies, shared for the first man-date between France in the north and Egypt in the south, amounts to a new organisa-tional concept which brings the two shores together from an institutional approach.

Development of the information and knowledge societyProgress in the “information society” has become a great challenge for the economicand social development of the Mediterranean countries, to the extent that the new in-formation and communication technologies are considered key elements for growth.In general, the emphasis is on knowledge as a production factor, and great efforts arebeing devoted to human capital as a source of competitiveness for the future.


However, in the region today there are considerable differences in the promotion ofsuch technologies. These are often related to the availability and quality of telecom-munications infrastructure, the use of applications, regulation and policies. In fact, inmost of the MMCs, both telecommunications and the Internet have achieved only lim-ited penetration, making it difficult for people to adopt and understand this concept.

European involvement in the EuroMediterranean region’s process of developmenttakes the form of the Regional Programme to support development of the Informa-tion Society in the EuroMediterranean region (EuMedRegNet), with funds amount-ing to 5 million euros. This aims to maximise information society synergies betweenthe EU and the MMCs, and to help create a favourable, harmonised environment forfurther investment in electronic communications, based on the results achieved by theprevious projects, EuMedis and NAPT II, as well as other regional initiatives.

Although significant progress has been made in the use of new information andcommunication technologies in the EuroMediter-ranean region, access still varies for the differentgroups of population. There is a large digital dividewhich is largely related to cost and income, defects inthe technological network and/or service supply andliteracy levels.

In comparison with the best results achieved in European countries (Luxembourgwith 1,060 mobile line subscribers for every 1,000 inhabitants, or Sweden with over570 Internet subscriptions for every 1,000 inhabitants), Israel is in the lead fortelecommunications on the south bank of the Mediterranean, with 955 mobile linesand 243 PCs for every 1,000 inhabitants, reaching 301 Internet connections. Howev-er, levels are much lower in the other MMCs (see attached Tables).

Improved access to ICTs requires maximum funding and the reform of education sys-tems in order to meet the needs of a knowledge-based economy, promoting mobility forstudents, teachers and researchers between the two shores as an essential requirementfor the dissemination and learning of ICTs, thus helping to mitigate the differences.

Along these lines, the Report on “New knowledge, new jobs: effects of new technolo-gies”16 expressed the need for balancing the two regions with regard to access to sourcesof knowledge, and gave priority to the creation of centres of technology and excellencein the MMCs, as well as the setting up of virtual universities that would be open to bothcompanies and civil society for the dissemination of knowledge. Moreover, the reportinsists that it is the responsibility of political authorities in charge of national or localtraining programmes to ensure that the use of new ICTs form part of educational pro-grammes from primary school level, and that teachers receive appropriate training. Also,the private sector must be encouraged to facilitate learning in this field.

Access to ICTS as an element for

development and added value

16. Drawn up by the Economic and Social Councils of Algeria, Spain, France, Greece, Italy and Tunisia,and presented at the Malta Summit in 2003.


36 DOCUMENTOS

17. This programme (Medibtikar - Innovation and Technology) covers the period 2006-2009 and has aprovision of 7.25 million euros. Development of the programme included a number of activities in var-ious areas: area 1, local training for the development of business incubators; area 2, creation of mech-anisms for the transfer of technology and knowledge; area 3, promotion of new innovative companies;area 4, review of innovative infrastructure in beneficiary countries; and area 5, focus on the prioritysectors in the region - textile processing and food.

18. Euromed Innovation and Technology Programm, Mediterranean Innovation Scoreboard (MedIS) (Jor-dan, 25 April 2007).

19. Implementation of the Euro-Mediterranean Charter for Enterprise 2008 Enterprise Policy Assessment).

Moreover, the development of a “contents” (software) sector adapted to the specificneeds of the MMCs, which today is practically non-existent, is a tremendous challengewhich can only be overcome if there is greater cooperation between the two shores.

R&D+i policies and technology transferPromotion of innovation in businesses, especially in SMEs, began in the MMCs afterthe start-up of the Euromed Innovation and Technology Programme17. This programmeaimed to disseminate good innovation practices in these countries and to build andstrengthen relations with European public and private bodies by establishing activenetworks.

The Mediterranean Observatory for Innovation (MedIS)18 has monitored the tech-nological markers for innovation in these countries to analyse their progress and es-tablish comparisons allowing for the detection of less mature domestic systems for in-novation and the identification of needs, especially considering the shortage ofstatistics on innovation.

In all the MMCs, steps have been taken to establish the components of a systemof innovation. Such efforts have mostly focused on relations between businesses anduniversities, the development of business incubators, the improvement of human cap-ital and implementation of an appropriate level of technology in business programmes.Most of these countries have innovation and technology centres (with Egypt and Mo-rocco having especially strong institutions), although the number and degree of so-phistication of such bodies varies considerably (See Table 1).

All these countries have launched initiatives for research and innovation although,in some cases (Palestinian Authority, Lebanon and Syria), development of a clear strat-egy is in the very early stages, partly because the volume of investment is limited bythe regional institutions19 so, in general terms, the MMCs have hardly any presenceon the global scene as sources of innovation.

Therefore, in general terms, the MMCs hold very little weight in technological in-novation on a world or regional scale. In number of researchers and of scientific arti-cles published, Israel and Jordan are both on a similar level to European averages,whereas in the other countries figures are much lower. The situation is very similarfor the presence of technology centres or business incubators.



In previous reports, the Spanish ESC has mentioned the need to step up R&D efforts.Amongst the comments made in the report entitled “Towards an economic and em-ployment strategy based on the knowledge society in the EuroMediterranean Re-gion”20, it was proposed that the European Union’s commitment to increase public ex-penditure on R&D should be strengthened, placing priority on strategic sectors andpromoting the development of scientific/technical, transport and telecommunicationsinfrastructure in order to help the MMCs become more competitive. This is becauseinvestments in R&D contribute to trade and create jobs with a higher added value, im-proving productivity and improving conditions for the assimilation of transferredtechnology. The proportion of resources devoted to R&D is still insufficient, and thelow levels of high-technology exports or of patents granted to residents confirm theneed for greater efforts in this area.

The flow of investments towards the MMCs is marked by the importance of busi-ness projects but those developed by SMEs or new companies require funding at thedifferent stages of development and by their nature are risk projects. It is thereforenecessary to identify financial partners with competencies in scientific managementand evaluation, which hardly exist in the southern Mediterranean countries.

The limited data on R&D expenditure in this region indicate that not only is it in-sufficient but that 90% of R&D budgets come from thepublic sector in comparison with 30% in the EuropeanUnion, in spite of the fact that most industrial researchtakes place in large companies. It therefore seems clear that the private sector needsto take a more leading role in achieving these countries’ objectives.

These data reflect the weakness of the industrial or services fabric in the MMCs,and the predominant role played by small enterprises with limited funds. R&D financ-ing therefore depends almost entirely on the public sector, which has to make up forthe shortage of investments by private enterprises.

The ANIMA Network21 plays a key role by suggesting that all parties can work ac-cording to an agreed plan in the EuroMediterranean area. This entails the launch ofnew innovative offers for enterprises, better reciprocal knowledge of research proj-ects, a greater effort to identify and monitor projects, support for the return ofMediterranean researchers and scientists to their countries of origin, simplificationof joint research and innovation projects in the EuroMediterranean area and, aboveall, a change of perception by the southern Mediterranean countries, placing greatervalue on technological capacity.

R&D expenditure

20. Agreement on the drafting of this report figures in the Final Declaration of the EuroMediterraneanSummit of Economic and Social Councils and Similar Institutions (Rabat, 14-16 October 2008).

21. The ANIMA network for investment in the Mediterranean, a multi-country platform for economic de-velopment, brings together over 70 government agencies and international resources in the Mediter-ranean region, with the aim of contributing to higher levels of investment.


38 DOCUMENTOS

CONCLUSIONS AND PROPOSALS

40 DOCUMENTOS

Over recent months, countries in the Mediterranean basin have been involved in aprocess of political change. The implications of this change are not clear but it shouldat least amount to an opportunity to promote economic and social development in theregion. In this context of change, promoting entrepreneurship, innovation and the cre-ation of new enterprises is important for generating added value and jobs and, there-fore, for reducing unemployment and improving living conditions.

It is therefore necessary to foster business development because of the role that enter-prises and entrepreneurs can play as drivers for growth and creators of wealth and em-ployment, and because of the shortage of entrepreneurs in the EuroMediterranean region.

Although policies to promote entrepreneurship have been amongst the prioritiesof EuroMediterranean countries, they have not been sufficiently developed in a com-mon framework of cooperation and collaboration. Moreover, such initiatives have of-ten focused on the development and promotion of specific sectors and enterprises con-sidered to be of priority for the economic development of each of the countries,without there being any complementary, horizontal business policy.

Considering the framework for EuroMediterranean cooperation, policies to promoteentrepreneurship and innovation should form part of a strategy that is shared by bothshores of the Mediterranean and amongst the countries on either side.

A diagnosis of the business environment in the MMCs comes up against problemsand difficulties relating to the limitation and insufficiency of statistical information,which is often neither up-to-date nor comparable. It is therefore impossible to knowexactly what the business situation is in the EuroMediterranean area or its dynamicsand size. This is essential for encouraging innovation and competitiveness to improveeconomic growth and job creation.

Greater efforts must therefore be made to lay the foundation for better knowledge ofbusiness in the region, with comparable and updatable statistical information. This re-quires the design of suitable information systems so that the dynamics of the businessfabric as a whole can be determined on the basis of companies being created or woundup and, thus, the possibility for companies to survive. As far as is possible, the charac-teristics and specific behaviour of different sectors should also be studied.

Business fabric in the MMCs, as in other European countries, is characterised bya preponderance of SMEs and micro-enterprises. These account for almost 90% of


businesses and are responsible for most job creation (60-70%), both formal and infor-mal. They also amount to a channel for small investments leading to increased addingvalue for economic growth (30-50% of added value in their respective economies).

Enterprises in the social economy (cooperatives, benefit societies, development as-sociations, foundations and other types of enterprise involving worker participation)also play an important role in developing business activity in these countries becausethey contribute to social cohesion, help promote entrepreneurship and the creationof wealth on a local level and foster better governance and sustainable developmentand, above all, job creation.

It is therefore fundamental to encourage business activity by both small and mediumcompanies and by companies in the social economy, because it is they that can contributeto sustainable growth and employment in the most significant way. The development ofsuch enterprises is essential for encouraging job creation in the area, contributing to so-cial cohesion and integrating the economies on the two sides of the Mediterranean.

A country’s changing economic and social reality is the framework for activity bya private sector that should contribute to economic growth and job creation. The qual-ity of the country’s institutions and its market regulation also condition private invest-ment and economic development. Although the MMCs have been making great ef-forts over recent years, the quality of the business environment is still insufficient overthe region as a whole. The investment climate and the business environment are there-fore still limited by many factors, including excessive bureaucracy, lack of transparen-cy and legislative and institutional complexity.

It is still necessary to deal with matters relating to good governance on national, re-gional and local levels in order to set up a better institutional, legal and administrativeframework in which democracy, social and labour rights and participation by socialagents play an essential role. The recent political changes and the process of transfor -ming institutions in some MMCs can be expected to move in this direction and to con-tribute to improved institutional and regulatory quality while promoting a favourableinvestment and business climate for the creation of productive activity and employmentin the EuroMediterranean area.

Moreover, it is still necessary to re-align and strengthen the role of the State in areaslinked to sustainable development and quality of life such as education, health and in-frastructure, guaranteeing the quality and efficiency of public initiative but in a way thatcomplements the promotion of private initiative.

Participation by economic and social representatives, in both the public and privatespheres, is also key for the development and adoption of business creation policies.

Companies and especially SMEs find it very difficult to develop and survive. Theyface problems for accessing finance and investment, for finding qualified human re-sources or for receiving administrative and technical assistance. This results in highbusiness mortality.


42 DOCUMENTOS

It is therefore necessary to improve access to sources of funding which can come throughforeign direct investment or microcredits and cooperative loans. Such elements are es-sential for faciliting the creation of enterprises, especially SMEs, for promoting entrepre-neurism and for achieving balanced economic and social development in the region.

It is also necessary to guarantee proper training in the competencies that are needed forsuccessful entrepreneurship and for accessing networks for business support and assistancewhich might be a key element in the framework of EuroMediterranean cooperation.

Entrepreneurship largely depends on people having a positive attitude towards en-terprises and feeling motivated and capable of setting up new businesses. The exist-ing data on these factors in the MMCs indicate that the prevailing attitude towardsbusiness activity is positive. So many people have the intention of setting up a busi-ness or entering business activity. These intentions often go together with positiveperceptions of business opportunities and of personal capacity for taking them up aswell as low levels of risk aversion.

These data indicate that such countries have great potential and intrinsic factors forcreating a dynamic business environment. These should be promoted and strengthenedbecause they can have a decisive effect on entrepreneurship, determining the creation,survival and success of businesses.

Positive attitudes towards entrepreneurship can be promoted by education. How-ever, education and training remain at low levels and training in entrepreneurship isinsufficient. Moreover, the social context is one in which business culture is local androoted in the informal areas of the economy.

It would therefore be advisable to make greater efforts in the fields of education andtraining, in particular improving access to and the quality of educational systems. Spe-cial attention should be paid to entrepreneurship as part of the basic competencies to beprovided by the system.

This would require including entrepreneurship in educational systems from the start,mainstreaming it and converting it into a teaching methodology. It is also extremely im-portant to encourage it through on-going learning, as has been recognised for some timenow in Europe.

Social recognition of entrepreurial activity is another important factor for the de-velopment of entrepreneurship. The informal economy holds great weight in thesecountries, being based largely on family economies and on self-production of goodsand services, most of which is carried out by women.

It is therefore necessary to promote the social and economic value of business activ-ity in a broad sense with a view to generating and developing a strong, dynamic, busi-ness culture.

Services and networks providing support for entrepreneurs and enterprises shouldalso be set up by the authorities, with a high level of participation from entrepreneurs’organisations.



Greater participation by women should be encouraged, giving them a more relevant roleto play and fostering greater presence of women in the structured sector of the economy.From a broader perspective, business activity provides women with an option to escapefrom unemployment so, when promoting entrepreneurial activity, specific measuresshould be adopted for women such as training and support programmes. These shouldcover the most accessible financial tools.

Given the high rates of unemployment amongst young people, specific measuresshould be devised to help them find jobs. Business activity is a possible option that shouldbe promoted.

Special emphasis should be placed on the need to advance towards observance andcompliance with fundamental, universal rules and rights for workers and towards theestablishment of basic social and labour rights guaranteeing equal opportunities formen and women. Collective bargaining and social dialogue should also be strength-ened amongst strong economic and social partners. This is an objective that shouldbe shared by all the countries in the Mediterranean area.

Closely related to the adoption of business initiatives is innovation. The inclusionof technological, process or product innovations and of non-technological innovationsof an organisational, commercial or social nature requires, in all cases, strategies thataim to increase market share, the quality of goods and services, production capacity,business visibility and health and safety guarantees.

Progress of the so-called “information society” has become a great challenge forthe economic and social development of all countries, so new information and com-munication technologies are now considered key to growth.

Knowledge should therefore be considered a production factor and greater effortsshould be devoted to improving human capital, which is one of the keys for competitive-ness. This requires improving access to ICTs and reforming educational systems to meetthe needs of a knowledge-based economy. Also, with a view to long-term sustainability,it is essential to create suitable infrastructure for research, development and innovation.

The current situation in the region indicates that there are considerable differencesin the promotion of information and communication technologies, which are often re-lated to the available and quality of telecommunications infrastructure and use of thecorresponding applications, regulation and policies. Promoting innovation in businessin these countries has aimed to increase links between businesses and universities, todevelop business incubators and to reach a suitable technological level in businessprogrammes.

In the framework of intra-regional cooperation, an electronic communications sectorneeds to be developed to maximise synergies between regional and/or bilateral projects,creating what is today known as the “information society” in the region. Priority shouldalso be placed on greater cooperation amongst businesses and the creation of technolo-gy centres.


44 DOCUMENTOS

The countries in the region do not have a clear strategy on innovation to give them greaterpresence on the global scenario as sources of innovation. It is therefore necessary to adoptsuch a strategy on national levels but also in a coordinated way for the region as a whole.

This strategy must receive sufficient funding. The data available indicate that re-sources for R&D in these countries are still insufficient, with a majority presence ofthe public sector which provides 90% of funds. Also, most industrial research is car-ried out in large enterprises, in contrast to the predominance of SMEs in the businessstructure of these countries.

It therefore seems necessary to increase involvement by the private sector in R&D.This requires new innovative offers for companies, greater reciprocal knowledge of re-search work, a greater effort to identify and monitor projects, support for Mediterraneanresearchers and scientists to return to their home counties, simplification of joint researchand innovation projects in the EuroMediterranean area, and a change of perception plac-ing greater value on technological capability.

Inter-regional and intra-regional cooperation should also be promoted. This re-quires participation by economic and social partners in the development of afavourable political environment and, more specifically, in the adoption of commonpolicies to promote the determining factor of entrepreneurship.



ANNEX OF TABLES

48 DOCUMENTOS

TA

BL

E 1

.M

AC

RO

EC

ON

OM

IC C

ON

TE

XT

OF

TH

E E

U A

ND

TH

E M

ED

ITE

RR

AN

EA

N M

EM

BE

R C

OU

NT

RIE

S Gros

s Dom

estic

Publ

icAv

erag

e an

nual

Inco

me

per c

apita

defic

itPu

blic

deb

tgr

owth

in G

DP

(%)a

Sect

oria

l GVA

(% P

IB)

in P

PP (i

n $)

Infla

tionb

(% G

DP)

b(%

GD

P)b

2008

Coun

trie

s20

01-2

008

2009

Agri

c.In

dust

.Se

rv.

2008

2009

2009

2009

Euro

pean

Uni

onGe

rman

y1,3

–4,9

0,9

30,2

69,0

35.9

500,

2–3

,373

,2Au

stria

2,1–3

,51,9

30,9

67,2

37.36

00,4

–3,4

66,5

Belg

ium

1,8–3

,00,

823

,276

,135

.380

0,0

–6,0

96,7

Bulg

aria

5,6–5

,07,3

30,5

62,2

11.37

02,5

–3,9

14,8

Cypr

us3,6

–1,7

2,119

,678

,324

.980

0,2

–6,1

56,2

Denm

ark

1,3–4

,91,3

26,1

72,6

37.53

01,1

–2,7

41,6

Slov

akia

6,2

–4,7

3,138

,058

,921

.460

0,9

–6,8

35,7

Slov

enia

4,3

–7,8

——

—27

.160

0,9

–5,5

35,9

Spai

n3,1

–3,6

2,828

,968

,330

.830

–0,2

–11,2

53,2

Esto

nia

6,7–1

4,1

2,929

,168

,019

.320

0,2

–1,7

7,2Fi

nlan

d3,0

–7,8

2,732

,464

,935

.940

1,6–2

,244

,0Fr

ance

1,7–2

,62,0

20,4

77,6

33.2

800,

1–7

,577

,6Gr

eece

3,9–2

,03,3

19,7

77,0

28.30

01,3

–13,6

115,1

Hol

land

1,9–4

,01,7

25,5

72,9

40.62

01,0

–5,3

60,9

Hun

gría

3,4–6

,34,

329

,466

,218

.210

4,0

–4,0

78,3

Irel

and

4,5

–7,1

——

—35

.710

–1,7

–14,

364

,0Ita

ly0,

8–5

,02,0

27,0

71,0

30.8

000,

8–5

,311

5,8La

tvia

7,4–1

8,03,1

22,7

74,2

16.0

103,3

–9,0

36,1

Lith

uani

a7,4

–14,

8—

——

17.17

04,

2–8

,929

,3Lu

xem

bour

g3,8

–3,4

0,415

,983

,752

.770

0,0

–0,7

14,5

Mal

ta1,8

–1,5

——

—22

.460

1,8–3

,869

,1Po

loni

a4,

21,7

4,5

30,8

64,6

16.71

04,

0–7

,151

,0Po

rtug

al1,0

–2,6

2,423

,973

,722

.330

–0,9

–9,4

76,8

CU

AD

RO

1.

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9.

PROMOTION OF ENTREPRENEURSHIP, INNOVATION AND CREATIVITY... 53


TABLE 3. BUSINESS DEMOGRAPHICS

New WomenEnterprises enterprises Rate of creation Microenterprises holding

registered created of enterprises and SMEs shares(% of new

enterprises over Accrued Per 1,000 (% of totalMarkers (Nº) (Nº) total enterprises) in nº inhabitants enterprises)Countries 2007 2007 2007 2000-2005 2008EuropeanGermany 573.985 — — 3.162.111 38,3 —Austria 76.374 3.484 4,56 252.399 30,9 —Belgium 354.489 28.016 7,90 686.533 66,2 —Bulgaria 315.037 49.328 15,66 216.489 27,7 33,93Cyprus — — — — — —Denmark 200.060 28.811 14,40 257.950 47,8 —Slovakia 135.330 16.025 11,84 70.553 13,1 30,90Slovenia 47.312 4.957 10,48 91.066 45,6 42,18Spain 2.435.689 145.593 5,98 3.168.735 73,0 —Estonia — — — 65.194 48,4 36,26Finland 120.294 10.424 8,67 221.000 42,4 —France 1.267.419 137.481 10,85 2.612.960 43,2 —Greece — — 771.000 69,9 —Holland — — — 735.160 45,0 —Hungary 273.549 28.153 10,29 — — 42,38Ireland 180.891 18.704 10,34 97.000 24,3 —Italy 638.987 77.587 12,14 4.486.000 77,9 —Latvia — 12.017 — 32.571 13,8 46,26Lithuania 67.095 6.578 9,80 56.428 16,5 38,70Luxembourg — — — — — —Malta 30.049 2.711 9,02 — — —Poland — 26.388 — 1.654.822 43,3 47,91Portugal 423.719 30.934 7,30 693.000 66,4 —Czech Republic 244.417 16.395 6,71 — — 25,01United Kingdom 2.546.200 449.700 17,66 4.415.260 73,8 —Romania 870.195 103.733 11,92 392.544 18,1 47,93Sweden 326.052 27.994 8,59 898.454 99,6 —Mediterranean Member CountriesAlgeria 105.128 10.662 10,14 580.000 18,7 15,03Palestinian Nat. Authority — — 97.194 27,7 18,00Egypt 367.559 9.595 2,61 — — —Israel 162.910 18.814 11,55 468.338 67,6 33,96Jordan 102.716 7.706 7,50 141.327 26,7 13,10Lebanon 63.423 3.127 4,93 — — 27,90Morocco 155.947 13.407 8,60 450.000 15,4 13,12Syria 2.268 216 9,52 — — —Tunisia 63.584 6.675 10,50 — — —Turkey 764.240 93.634 12,25 210.134 3,1 40,68

Note: The data in italics are for the last year available, generally the previous year.Source: World Bank, World Development Indicators 2010.

TA

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Euro

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Port

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486

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143

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56 DOCUMENTOS


TABLE 5. PRIVATE PARTICIPATION IN PROJECTS TO INVEST IN INFRASTRUCTURE

(Millions of dollars)

Water andCountries Energy Telecommunications Transport sanitationAlgeria 2320,0 264,0 161,0 874,0Egypt 469,0 1414,0 640,0 —Israel — — — —Jordan 104,0 90,3 675,0 —Lebanon — — — —Morocco — 843,0 200,0 —Syria — 95,4 37,0 —Tunisia — 99,0 840,0 —Turkey 3434,0 3954,0 1843,0 —Palestinian National Authority — — — —

Source: World Bank, World Development Indicators 2010.

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58 DOCUMENTOS


TABLE 7. PERCEPTIONS AND ATTITUDES TOWARDS BUSINESS ACTIVITY

Entrepre-neurship Media

Perceived Perceived Fear of Entrepreneurial as a good interest inOpportunities capabilities failure intentions career choice entrepreneurship

EuropeanGermany 22 40 37 5 54 50Belgium 15 37 28 5 46 33Denmark 34 35 37 3 47 25Slovenia 29 52 30 10 56 57Spain 16 48 45 4 63 37Finland 40 35 26 4 45 68France 24 27 47 16 65 50Greece 26 58 45 15 66 32Holland 36 47 29 5 84 64Hungary 3 41 33 13 42 32Italy 25 41 39 4 72 44Latvia 18 50 40 10 59 51United Kingdom 24 47 32 4 48 44Rumania 14 27 53 6 58 47Mediterranean Member CountriesAlgeria 48 52 31 22 57 39Palestinian National Authority 50 56 36 24 88 52Israel 29 38 37 14 61 50Jordan 44 57 39 25 81 70Lebanon 54 77 21 22 85 65Morocco 53 78 24 27 82 74Syria 54 62 18 54 89 55Tunisia 15 40 34 54 87 70

Source: Global Entrepreneurship Monitor 2009, Executive Report.

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60 DOCUMENTOS


TABLE 1. R&D POLICIES IN MEDITERRANEAN MEMBER COUNTRIES

Algeria: There is still no R&D or innovation policy as such, although an R&D strategy is cur-rently being drawn up as well as some elements for the creation of an infrastructure for in-novation. The National Agency for Evaluation of Research Results is trying to step up thelink between research and business development. It has a venture capital fund (FINALEP),and is changing the regulations to improve conditions for participation by private capital.Plans have been drawn up to improve the availability of venture capital and to provide fi-nance for SMEs. Recently, in the framework of the Medibtikar programme, services havebeen offered to support the creation of business incubators (axis 1).

Egypt: An innovation policy has been set up with measures to stimulate investment, venturecapital, business incubators, business modernisation and the development of innovativeSMEs, although there is no coordinating body. This policy is adopted through programmesamongst the main ministries, with assistance from donor organisations. The Social Fund forDevelopment (SFD) is a landmark, in that it finances business centres and incubators, an In-dustrial Modernisation Programme (IMP), and the General Authority for Investment (GAFI).There is also a network providing support for technology transfers with Europe, helping toachieve integration in the European business network (EEN).

Israel: There are two main challenges. The economy is considered highly innovative in com-parison with the main industrialised economies, so many activities offered by the Medibtikarprogramme might amount to limitations on recent innovative capacity, and the current po-litical situation might hold back participation in some activities. However, some tangible re-sults have been achieved, such as the promotion of joint research projects between Palestin-ian and Israeli entrepreneurs and researchers, and the strengthening of relations betweentextile organisations and their partners in Jordan, Morocco and Egypt.

Jordan: Although there is no specific innovation policy for business transformation or thedevelopment of human resources, the aim is to create an innovative society by adopting aninnovation strategy. The Ministry for International Planning and Cooperation (MoPIC) co-ordinates and evaluates any international initiatives - from work aiming to map out indus-trial sectors and clusters to the analysis and evaluation of sectors with a view to improvingtheir competitiveness. The Jordanian National Competitiveness Team (JNCT) is currentlysetting up an observatory on industrial competitiveness, since it has potential for providinginputs to domestic industry and the innovation policy. The results of the Medibtikar pro-gramme have made it possible to transfer knowledge on processes and methods in supportof business incubators, promoting the export capacity of the agrifood sector through certifi-cates of origin, or providing new opportunities for networking to the textile sector.

Lebanon: In 2007 negotiations began for participation in the Framework Programme forCompetitiveness and Innovation, through the Medibtikar programme, which also aims tosupport the food and textile sectors, promoting specific products having quality and intrin-sic characteristics for international recognition.

Morocco: There is a clear policy for innovation, with competencies allocated to a numberof ministries, especially Industry, which deals with scientific research and technological de-velopment. This has been the result of joint initiatives and proposals between this body andthe Ministry of Education, the National Council for Research in Science and Technology(CNRST), the National Organisation for Intellectual Property and R&D and the Moroccan

PROMOTION OF ENTREPRENEURSHIP, INNOVATION AND CREATIVITY... 61


Association for R&S on matters relating to innovation. Amongst the goals set are the devel-opment of business incubators, programmes to achieve radical changes to improve access forindustries to infrastructure, knowledge and information, and projects for interfaces betweenuniversities and industry. There is a good level of coordination of the innovation policythrough the Standing Inter-Ministerial Committee for Scientific Research and Technologi-cal Development, set up in 2009. Currently, the government is developing a new “Networkfor Innovation and Creativity”. The Medibtikar programme has stimulated government in-terest in setting up structures for innovation, contacts between national and regional agentsand the training of specialists in providing support for innovation.

Palestinian territories: In 2006, much of the Palestinian infrastructure for innovation wasin an incipient state of development, with limits for adopting activities in the framework ofthe Medibtikar programme. However, some results have been achieved since it was set up,such as the establishment of relations between researchers and entrepreneurs from Israeland the Palestinian Territories, the transfer of knowledge and best practices for the drawingup of markers, or the extension of European networks to include Palestinian innovators.

Syria: There is a policy for innovation that involves all the ministries, although there is nocoordination or evaluation structure. This policy places the priority on technological re-search and distribution is carried out by research institutes. Moreover, since 2003 there hasbeen a business incubator (MAWRED), although the rate of enterprise creation is still low.Links between industry and schools are still very weak. One result of adopting the Med-ibtikar programmes has been to establish a basis for analysing statistical information, with acampaign for disseminating aspects relating to innovation.

Tunisia: Policies emphasise the development of new enterprises and businesses, althoughthere is no formal mechanism for coordinating innovation. Progress has been made over thelast five years with the creation of a system of business incubators and technology parks, andthe preparation of the infrastructure needed for Tunisia to be able to participate as an effec-tive member of European networks.

Turkey: There is a mature system of innovation in comparison with other nearby countries.Also, a Regional Innovation Strategy (RIS) was recently adopted, starting in Ankara (23 May2008), in response to the request made by the Ministry of Industry and Trade and the Turk-ish Regional Authorities for assistance from the Medibtikar programme for training of theiremployees and those in other related national organisations. Amongst the objectives achievedsince the adoption of this programme are the establishment of networks (technology, R&Dand innovation) between SMEs, the transfer of knowledge and markers under internationalstandards, and the Turkish system of business incubators.

Source: Medibtikar Project - Innovation and Technology.

62 DOCUMENTOS


PROMOTION OF ENTREPRENEURSHIP, INNOVATIONAND CREATIVITY IN THE EUROMEDITERRANEAN REGION

Composition of the Working Committee in charge of making the report(*):

President: Joan Pujol Segarra

VicePresident: Roberto Marín Acevedo

Members of the first group: Jorge Aragón MedinaJulián Ariza RicoMáximo Blanco MuñozAntonia Ramos YusteLuis Burgos Díaz o Iñaki Zabaleta Aramendia

Members of the second group: Alejandro Couceiro OjedaEnrique de la Lama Noriega CardúsEduardo Montes Pérez del RealJosé Guillermo Zubía GuineaAntonio Romero Mora

Members of the third group: Juan M.ª Concha AspirozJosé María Algora JiménezDionisia Manteca MarcosDomiciano Pastor MartínezCarlos Sánchez-Reyes de PalacioJosé Antonio Suárez Llanos

Technical team of the Area of studies and analysis:

Luis Sauto (coord.)Emma CerviñoMarta GalianoVictoria Mestre

(*) Composition of the Working Committee on the date of approval of the report.

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