Conference Paper
Oil Income and Entrepreneurial Activity in MENA: A Panel Analysis of Six Countries using GEM Data (2016-2022)
No.
ERF32AC_111
Publisher
ERF
Date
May, 2026
Topic
Q3. Nonrenewable Resources and Conservation
O5. Economywide Country Studies
E. Macroeconomics and Monetary Economics
O1. Economic Development
This paper examines whether oil income influences entrepreneurial activity in Middle Eastern rentier states, and whether institutional quality or digital connectivity condition this relationship. Using a multi-country panel dataset covering six MENA economies - Egypt, Israel, Iran, Qatar, Saudi Arabia, and the United Arab Emirates - between 2016 and 2022, the study links Global Entrepreneurship Monitor (GEM) indicators with an updated measure of oil income per capita constructed following Ross. Fixed- and random-effects panel models, supported by Hausman tests and cluster-robust standard errors, reveal no statistically significant relationship between oil income and total early-stage entrepreneurial activity (TEA). Moderation analyses likewise show that neither government effectiveness nor mobile connectivity alters this null effect. Robustness checks using alternative indicators (Nbgood, Nbstat, and New Business Density) confirm that the absence of an oil-entrepreneurship link is consistent across behavioral, perceptual, and firm-creation outcomes. Complementing the panel analysis, a comparative assessment of Saudi Arabia and the UAE demonstrates that divergent entrepreneurial trajectories arise not from resource-income fluctuations but from differences in institutional maturity, policy coherence, and ecosystem development. Overall, the findings challenge conventional resource-curse expectations and suggest that entrepreneurship in rentier economies is driven primarily by institutional and socio-cultural conditions rather than hydrocarbon rents. The results underscore the need for policies that strengthen governance quality, improve ecosystem coordination, and address behavioral barriers in order to foster innovation-led growth in resource-rich MENA economies.