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Developing a Vibrant Entrepreneurship Ecosystem in Qatar: A Sustainable Pathway Toward the Knowledge-Based Economy?

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For countries that depend on nonrenewable resources such as oil and gas, economic diversification is vital to ensure sustainable and resilient economic development. In July 2008, the government of Qatar launched the long-term national strategy Qatar 2030 (QNV 2030), intending to transform Qatar into a knowledge-based economy capable of attaining sustainable development by 2030. Since then, the Qatari government has invested continually and implemented many policies to encourage innovation, entrepreneurship, the private sector, and the advancement of human capital competencies to turn the economy into a knowledge-based one. Indeed, entrepreneurship is a crucial engine for economic development, one of the essential engines of economic diversification and building a knowledge-based economy. Qatar has, therefore, made a significant determination to develop a flourishing entrepreneurial ecosystem, including establishing key institutions and organizations to support entrepreneurs, such as incubators and financial framework, as evidenced by the increasingly strong performances in key international indices published by multiple global organizations. Nevertheless, despite Qatar’s desire to diversify its economic base, entrepreneurs still have to contend with some challenges. Some of these difficulties are inextricably linked to Qatar’s features as a rentier state. This chapter aims to analyze the present state of the knowledge-based economy in Qatar with a focus on the entrepreneurial ecosystem. It has two objectives. Firstly, the chapter intends to investigate the features and recent development of Qatar's entrepreneurial ecosystem, especially after the COVID-19 pandemic. Second, the article intends to examine the dynamics and many challenges that shape this ecosystem.
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Chapter 18
Developing a Vibrant Entrepreneurship
Ecosystem in Qatar: A Sustainable
Pathway Toward the Knowledge-Based
Economy?
Tarek Ben Hassen
Abstract For countries that depend on nonrenewable resources such as oil and gas,
economic diversification is vital to ensure sustainable and resilient economic devel-
opment. In July 2008, the government of Qatar launched the long-term national
strategy Qatar 2030 (QNV 2030), intending to transform Qatar into a knowledge-
based economy capable of attaining sustainable development by 2030. Since then,
the Qatari government has invested continually and implemented many policies to
encourage innovation, entrepreneurship, the private sector, and the advancement
of human capital competencies to turn the economy into a knowledge-based one.
Indeed, entrepreneurship is a crucial engine for economic development, one of
the essential engines of economic diversification and building a knowledge-based
economy. Qatar has, therefore, made a significant determination to develop a flour-
ishing entrepreneurial ecosystem, including establishing key institutions and orga-
nizations to support entrepreneurs, such as incubators and financial framework,
as evidenced by the increasingly strong performances in key international indices
published by multiple global organizations. Nevertheless, despite Qatar’s desire to
diversify its economic base, entrepreneurs still have to contend with some chal-
lenges. Some of these difficulties are inextricably linked to Qatar’s features as a
rentier state. This chapter aims to analyze the present state of the knowledge-based
economy in Qatar with a focus on the entrepreneurial ecosystem. It has two objec-
tives. Firstly, the chapter intends to investigate the features and recent development
of Qatar’s entrepreneurial ecosystem, especially after the COVID-19 pandemic.
Second, the article intends to examine the dynamics and many challenges that shape
this ecosystem.
Keywords Knowledge-based economy ·Entrepreneurial ecosystem ·Economic
diversification ·Policy ·Governance ·Qatar
T. Ben Hassen (B)
Program of Policy, Planning, and Development, Department of International Affairs,
College of Arts and Sciences, Qatar University, Doha, Qatar
e-mail: thassen@qu.edu.qa
© The Author(s) 2023
L. Cochrane and R. Al-Hababi (eds.), Sustainable Qatar, Gulf Studies 9,
https://doi.org/10.1007/978-981-19-7398-7_18
349
350 T. Ben Hassen
18.1 Introduction
The concept of a “knowledge-based economy” refers to industrialized countries’
increasing dependence on knowledge, skilled labor, and innovation (OECD, 1996).
Many perspectives hold that information and communication technology (ICT),
innovation, research, and development (R&D), education, entrepreneurship, and
the economic and institutional framework are critical pillars and drivers of the
knowledge-based economy (Arundel et al., 2008). The pillars are intertwined, and
establishing a solid knowledge economy requires high performance on each of them
(Hvidt, 2015, 30). Entrepreneurship is rapidly acknowledged as a critical component
of economic development, job creation, and competitiveness (Kirkwood, 2009).
Entrepreneurship may be described as the process of seeking, analyzing, and
utilizing opportunities to develop new products and services (Shane & Venkataraman,
2000). Establishing a company is influenced by two major elements: personal
factors connected to the entrepreneur’s personal characteristics and environmental
ones relating to the location (Martin & Osberg, 2007). Accordingly, the local
context is crucial in understanding entrepreneurship since it is a socially rooted
phenomenon resulting from a collaborative organizational effort (Thornton et al.,
2011). Entrepreneurial activity is not an isolated occurrence but a network of people
with unique functions (Drakopoulou & Anderson, 2007). Entrepreneurs are socially
dependent on their operating settings (Granovetter, 1985). Most recently, in policy-
makers circles, the concept of the entrepreneurial ecosystem has gained considerable
traction (Alvedalen & Boschma, 2017; Isenberg, 2010; Malecki, 2011). According
to Mason and Brown (2014), an entrepreneurship ecosystem is a “network of inter-
connected entrepreneurial actors, entrepreneurial organizations (e.g., firms, venture
capitalists, business angels, banks), institutions (universities, public sector agen-
cies, financial bodies), and entrepreneurial processes that work together to connect,
mediate, and govern the performance of the local entrepreneurial environment”
(p. 5). An entrepreneurial ecosystem includes collaborative and fruitful interactions
between various firms. Thus, the entrepreneurial ecosystem method starts with the
enterprising person rather than the organization, highlighting the importance of the
entrepreneurship setting (Stam, 2015; Stam & van de Ven, 2021).
Developing a knowledge-based economy and a robust entrepreneurial ecosystem
are presently top priorities for economic diversification policies, especially in
emerging and developing countries such as Arab and Gulf Cooperation Council
(GCC) countries (Ben Hassen, 2021). Economic diversification is vital to guarantee
sustainable economic development, particularly for countries that rely on nonrenew-
able natural resources like oil and gas, such as the GCC countries (Al Naimi, 2022;
Al-Qahtani et al., 2022). Indeed, economic diversification is a vital component of
sustainable development since it promotes structural and long-term change in the
economy as well as other development pillars, such as social institutions (Jolo et al.,
2022). Even though hydrocarbon industries still drive the GCC’s economy, ques-
tions have been raised regarding the sustainability of resource-reliant models due
to systemic shocks, resource depletion, and changing demographics and consumer
18 Developing a Vibrant Entrepreneurship Ecosystem in Qatar: 351
preferences (Mohamed et al., 2022). It is no longer certain that oil revenues will be
sufficient to sustain oil economies in the short- to medium-term due to fluctuating oil
prices and a fast rate of energy transition (Luciani & Moerenhout, 2021). For the GCC
economies, sustainability involves adapting to changing conditions, keeping prior
advances in income per capita for their citizens, and perhaps reducing the gap with
the wealthiest countries (Luciani, 2021). Over the long term, the hydrocarbon sector’s
prospects are gloomy, and economic diversification is necessary (IMF, 2021). It is
widely accepted that diversified economies are more sustainable than oil-exporting
nations in the Gulf (Ben Hassen, 2022a; Luciani, 2021).
Moreover, in the context of the 2030 Agenda for Sustainable Development and the
SDGs, economic diversification is also essential to reach Goal 8: “Promote inclusive
and sustainable economic growth, employment and decent work for all.” Economic
diversification is especially tied to target 8.2, which intends to “Achieve higher levels
of productivity of economies through diversification, technological upgrading and
innovation, including through a focus on high value added and labour-intensive
sectors.” Simultaneously, entrepreneurship is linked to SDGs 4 and 8. Indeed, SDG
target 4.4 aspires to significantly expand the number of young people and adults with
appropriate skills, including technical and vocational skills, for employment, decent
jobs, and entrepreneurship. Further, SDG target 8.3 aims to “Promote development-
oriented policies that support productive activities, decent job creation, entrepreneur-
ship, creativity and innovation, and encourage the formalization and growth of micro-
, small- and medium-sized enterprises, including through access to financial services”
(United Nations, 2015).
In fact, several GCC countries have made structural changes in recent decades
to diversify their economies and transform them into knowledge-based ones (Ben
Hassen, 2022b). In July 2008, the long-term national plan Qatar National Vision
2030 (QNV 2030) was established by the Qatari government to transform Qatar into
a developed country ready for sustainable development by 2030 (GSDP, 2008). Since
then, the Qatari government has invested continually and implemented many poli-
cies to encourage innovation, entrepreneurship, the private sector, and the advance-
ment of human capital competencies to turn the economy into a knowledge-based
one. Indeed, entrepreneurship is a crucial engine for economic development, one
of the essential engines of economic diversification and building a knowledge-
based economy. Qatar has, therefore, made a significant determination to develop
a flourishing entrepreneurial ecosystem, including establishing key institutions and
organizations to support entrepreneurs, such as incubators and financial framework,
as evidenced by the increasingly strong performances in key international indices
published by multiple global organizations.
This chapter aims to analyze the present state of the knowledge-based economy
in Qatar with a focus on the entrepreneurial ecosystem. It has two objectives. Firstly,
the chapter intends to investigate the features and recent development of Qatar’s
entrepreneurial ecosystem, especially after the COVID-19 pandemic. Second, the
chapter intends to examine the dynamics and many challenges that shape this
ecosystem.
352 T. Ben Hassen
18.2 The Current Qatari Economic Context and the State
of the Economic Diversification Process
Since the early 1990s, Qatar has invested extensively in hydrocarbon production,
particularly in liquefied natural gas (LNG) (Qatar National Bank (QNB), 2018).
Qatar’s per capita income has risen as the country has become a significant player
in the LNG global industry (IMF, 2019). Furthermore, most industrial sectors, such
as petrochemicals, are connected to oil and gas. Accordingly, oil and gas are crucial
to most businesses and other economic activities. Even though non-hydrocarbon
activity has expanded as a proportion of real GDP over the last decade, hydrocarbon-
funded government projects continue to play a significant role (IMF, 2019). Conse-
quently, Qatar’s economy relies on oil and gas revenues to finance government
expenditures and drive economic development since there are no taxes (Tok et al.,
2020).
However, fluctuations in oil prices may cause a rise or fall in capital surplus and
capital accumulation. Oil prices have fluctuated over the last 50 years (Baffes & Kshir-
sagar, 2015). For example, Brent’s (oil) price plummeted below $50 in 2016 after
doubling from 2009 to 2011 (IMF, 2019). In 2020, due to the COVID-19 pandemic,
prices dropped 33%, from 61,41 dollars a barrel in 2019 to 41,26 dollars a barrel
(World Bank, 2021). As a result, the existing economic situation is unsustainable
(Ben Hassen, 2021). The recent drop in oil prices during the COVID-19 pandemic
posed a significant challenge to the Qatari economy. Indeed, following a 12% increase
between 2008 and 2012, growth slowed to 4.4% in 2013 and was expected to fall to
2.6% in 2019 (World Bank, 2020). Qatar transitioned from a budget surplus of 10.3%
in 2015 to a deficit of 4.07% in 2016, its first deficit in 17 years. Meanwhile, govern-
ment debt climbed from 35.8 to 47.6% of GDP (Schwab, 2017). Qatar faced its first
recession in a generation in 2019, although by just 0.2%, because of the COVID-19
pandemic. Consequently, after a 3.6% recession in 2020, Qatar’s economy started
to recover in 2021, with a 1.5% growth rate and an estimated growth rate of 3.4%
in 2022. Meanwhile, Qatar’s budget deficit in 2021 is expected to be 0.9% of GDP,
down from 3.6% the previous year, due to a rebound in hydrocarbon prices. Further-
more, the recent normalization of relations with its neighbors will benefit Qatar by
increasing profits from its worldwide state-owned airline when transport connections
resume. The resolution of the rift may potentially resurrect the hope of deeper GCC
integration and regional crisis burden-sharing (IMF, 2021).
Globally, national lockdowns and social distancing measures have resulted in a
considerable drop in natural gas use in 2020 (International Energy Agency, 2020).
Qatar’s export income has suffered due to its dependence on oil-linked gas contracts.
Overall Qatari exports fell by 42.8% in June 2020 compared to the previous year
(World Bank, 2020). There is also uncertainty in the LNG market, with fears of over-
supply with new reserves coming from Australia and the USA, which could challenge
Qatar’s position (Focus Economics, 2020). Prior to the COVID-19 pandemic, Qatar
was already in a period of economic transition.
18 Developing a Vibrant Entrepreneurship Ecosystem in Qatar: 353
Given the limitations of the traditional oil-based economy, Qatari authorities
believe that the country needs a long-term strategy to lessen its reliance on hydro-
carbon revenues and establish a more stable and diverse economy (Baabood, 2017).
Indeed, diversification is vital for a significant commodity exporter like Qatar because
it helps handle s hort-term shocks and prepares for long-term changes in the economic
environment. Qatar’s economy would be more resilient and better prepared for the
future decades if it had a diversified range of economic activities, exports, and
revenues (IMF, 2019).
In July 2008, the Qatari government established the long-term national plan Qatar
2030 (QNV 2030) to transform Qatar into a developed country capable of achieving
sustainable development by 2030. It aims “at transforming Qatar into an advanced
country by 2030, capable of sustaining its own development and providing for a
high standard of living for all of its people for generations to come” (GSDP, 2008,
2). QNV 2030 identifies the country’s long-term priorities and provides a context
for establishing national strategies and action plans. The strategy rests on four inter-
related and mutually reinforcing pillars of development: environmental, economic,
human, and social (Table 18.1).
QNV 2030 was followed by t wo National Development Strategy (NDS), five-
year plans, Qatar’s first National Development Strategy 2011–2016 (NDS-1) and the
second National Development Strategy (2018–2022) (NDS-2) (GSDP, 2011, 2018).
The strategies were prepared to define concrete steps and results to resolve obstacles
and advance QNV 2030 objectives (Ben Hassen, 2019).
Table 18.1 QNV 2030 pillars (GSDP, 2008)
Economic development Social development
This pillar seeks to build a sustainable and
diversified economy capable of maintaining a
high quality of life for its people now and in
the future
The national vision will govern the Qatari
economy, strike a balance between a
knowledge-based and an oil-based economy,
attract new investors, boost competitiveness,
and encourage growth
This pillar aims to create a fair and supportive
society founded on strong moral principles and
to be willingtoplayanessentialroleinthe
partnership for sustainable development
It requires a social welfare and protection
system and women’s empowerment by offering
equal opportunities for all people in different
fields such as education and employment
Human development Environmental development
QNV 2030 aims to educate all Qatari citizens
so that they can sustain a prosperous society
This involves a high standard educational
system and a modern healthcare system
To ensure a compromise between
developmental needs and environmental
preservation for future generations
It involves managing the environment based on
harmony between social development,
economic growth, and environmental protection
354 T. Ben Hassen
18.3 Characteristics of the Entrepreneurship Ecosystem
in Qatar: Strengths and Shortcomings
Since 1997, Qatar has established numerous institutions, incubators, organizations,
and funding structures to aid entrepreneurs and create an effervescent entrepreneur-
ship ecosystem (Ben Hassen, 2019). However, despite this success, entrepreneurs in
Qatar still face some barriers and difficulties (Ben Hassen, 2021).
18.3.1 Strengths of the Entrepreneurship Ecosystem in Qatar
Firstly, the main strength of the entrepreneurship ecosystem in Qatar is the strong
governmental implication. Indeed, government actions have influenced a variety
of facets of the knowledge-based economy. As Rubin (2012) mentioned, “Qatar
has set the bar high with its goal of becoming a knowledge-producing economy at
record speed. However, the country holds some strong cards: a clear vision, highly
committed leadership, and abundant resources to devote to the cause” (4). Qatar has
intensely focused on the relevance of small and medium-sized businesses (SMEs) and
entrepreneurship in the state’s overall development goals. Encouraging SMEs and
entrepreneurs was made a major priority by the highest levels of the state institutions
(Tok et al., 2020).
Consequently, the Qatari entrepreneurial ecosystem is primarily the product of
substantial government involvement, with the government serving as the primary
driver. This leadership is motivated by a desire to diversify the economy, as stated in
QNV 2030 and NDS-1. QNV 2030 recognizes the significance of entrepreneurship
in achieving economic diversification and reducing Qatar’s reliance on hydrocarbon
sectors (GSDP, 2018). According to NDS-1, diversification entails strengthening
the business environment and private sector development, fostering entrepreneur-
ship, and restructuring the labor market (GSDP, 2011). As Qatar attempts to meet
the objectives outlined in QNV 2030 and transition from a carbon-export-based
economy to a knowledge-based one, the private sector is expected to play a key role
(Mehrez, 2019). Indeed, since 1997, Qatar has established numerous institutions,
incubators, organizations, and funding structures to aid entrepreneurs and create
an effervescent entrepreneurship ecosystem, such as the Qatar Development Bank,
Qatar Business Incubation Center (QBIC), Social Development Center, Silatech,
Center for Entrepreneurship (Qatar University), Qatar Science and Technology Park
(QSTP), Enterprise Qatar, and Qatar Foundation (QF) (Ben Hassen, 2019, 2020)
(Table 18.2).
In fact, the vast majority of organizations in Qatar dedicated to fostering
entrepreneurship were founded or are funded by the government as part of a complex
web of initiatives and policies (Ennis, 2015). Further, the Qatari government is
making significant efforts to improve the legal and economic environment to decrease
business risk and encourage start-ups (Sahli, 2021). Consequently, start-ups and
18 Developing a Vibrant Entrepreneurship Ecosystem in Qatar: 355
Table 18.2 The leading entrepreneurship support organizations in Qatar (Ben Hassen, 2019)
Organization Est. Date Mission and goals
Social development Center (Nama
Center)
1996 Nama Center helps broaden the
opportunities available to young people,
develop their capacity, and empower them
Qatar Development Bank (QDB) 1997 Supporting Qatari entrepreneurs to help
contribute to the diversification of the local
economy by successful small and
medium-sized businesses able to
participate in international markets
Qatar Science and Technology Park
(QSTP)
2005 Enabling an open innovation, research, and
entrepreneurship ecosystem
Injaz Qatar 2007 Creating an SME environment conducive
to a creative entrepreneurial spirit and
business development helps SME achieve
business excellence
Enterprise Qatar 2008 Being the focus of SMEs and the
locomotive of Qatar’s economic
diversification process
Silatech 2008 Silatech is a global development
organization that links young people to
economic opportunities and jobs through
creative business development and
employment programs
Digital Incubation Center (DIC) 2011 Promoting ICT innovation in Qatar,
especially among millennials at the early
stages
Bedaya Center 2011 The Bedaya Center gives Qatari young
people access to several programs,
including career advice, developing
employment skills, and entrepreneurship
Qatar Business Incubation Centre
(QBIC)
2013 The QBIC is a special incubation center
offering support resources for
entrepreneurs that have an idea of starting
a new company or are willing to expand an
established business
Center for Entrepreneurship (QU) 2013 Help students and the QU community to
grow and turn business ideas into
successful start-ups
SMEs in Qatar already have access to a robust ecosystem of public assistance from
various government departments and organizations. As a result of careful planning,
Qatar has identified high-potential industries such as smart manufacturing, fintech,
sports-tech, and fashion and design as areas where the private sector can use its capa-
bilities to build global competitiveness and produce new revenue streams (Oxford
Business Group, 2021).
356 T. Ben Hassen
More recently, the COVID-19 pandemic prompted a significant reaction from the
Qatari government, which has made efforts to prevent the loss of new and developing
businesses while also aiding entrepreneurs in adapting to the new economic reality.
Government action to safeguard employees and consumers of new and expanding
businesses has also been taken, and a significant increase in the digital and online
delivery of regulations for entrepreneurs (QDB, 2021a).
Since 1995, these policies and measures have contributed to developing
entrepreneurial activity in Qatar and facilitating the process. From 2016 to 2020, the
Global Entrepreneurship Monitor (GEM) data collection provides a comprehensive
yet brief assessment of Qatar’s entrepreneurial development. There was a noticeable
rise in the number of people in Qatar launching or operating new firms (Hawi et al.,
2022). Further, the number of persons in Qatar engaged in early-stage entrepreneur-
ship has consistently climbed since 2017, and the percentage of established firm
ownership has hit an all-time high since the benchmark survey was done in 2016.
Furthermore, the rate of Entrepreneurial Employee Activity has almost doubled since
2019. As the rate of company discontinuation in Qatar decreases, so does the rate of
entrepreneurial activity (QDB, 2021b).
Consequently, in 2020, Qatar was ranked third in the GCC member states and the
Middle East and North Africa (MENA) region, and eighth globally, according to the
National Entrepreneurship Context Index (NECI).1 It scored slightly lower than the
United Arab Emirates (UAE) and Saudi Arabia, which ranked fourth and seventh
globally, respectively (QDB, 2021a). Moreover, in 2021, start-ups in Qatar received
record-level funding, and venture investment in Qatar reached a new high, with QAR
69 million invested in start-ups, a 92% increase over the previous year’s amount
(KPMG, 2021; QDB, 2021b). Also, 58% more money was invested in technology-
based initiatives in 2021 than in the previous year. Further, there has been an increase
in interest and investment in Qatar’s venture capital (VC) ecosystem from private indi-
viduals, corporations, and international corporations. In 2021, more than 90% of all
start-up investments in Qatar came from private and foreign investors. While private
and international corporations made up about half of all VC investments in 2016, there
was an encouraging rise in interest and engagement from non-governmental entities
(QDB, 2021b). Investors in Qatar decided to fund businesses such as e-commerce,
delivery services, and fintech, which witnessed increased demand throughout the
pandemic and kept the top three rankings in terms of transaction volume and value.
Additionally, entrepreneurs in the e-commerce industry received almost 60% of the
total capital obtained in Qatar (KPMG, 2021).
Second, entrepreneurship in Qatar is fueled by opportunities. Qatar was
placed eighth out of 54 participating countries for opportunity-driven early-stage
entrepreneurs in 2017. Although 82.4% of early-stage enterprises in Qatar are driven
by opportunity, this is more than any other MENA area, including the UAE (QDB,
2017). Indeed, in 2020, even though many businesses have been negatively affected
1 GEM launched the National Entrepreneurial Context Index (NECI) in 2018, which measures an
economy’s entrepreneurship environment. The NECI informs policymakers, practitioners, and other
important stakeholders on the overall strength of the entrepreneurial ecosystem (QDB, 2021a).
18 Developing a Vibrant Entrepreneurship Ecosystem in Qatar: 357
by the pandemic, COVID-19 has sparked an uptick in new company ventures in Qatar.
According to the GEM Qatar Report 2020, the Total Early-stage Entrepreneurial
Activity (TEA) rate rose from 14.7% to 17.2% throughout 2020. About 45.6% of
the respondents who are not already participating in entrepreneurial activity want to
become so within the next three years. Half of these people cited COVID-19 as an
influence. Four out of ten early-stage entrepreneurs (41.9%) and one-third of expe-
rienced company owners feel that COVID-19 has presented new business prospects
they want to explore. One out of every four persons polled in the GEMS’ Adult
Population Survey knows at least one person in Qatar who has launched a company
due to the coronavirus outbreak (QDB, 2021a). Two variables might account for this.
First, Qatar has one of the lowest unemployment rates globally among Qataris and
expats. During the first quarter of 2021, the number of job seekers in Qatar reached
3,138. In the first quarter of 2021, the unemployment rate was 0.2%, compared to
0.1% in the first quarter of 2020 (Planning & Statistics Authority, 2021). Second,
few jobless expats remain in the country since residency permits are tied to work
(QDB, 2017).
18.3.2 Obstacles of the Entrepreneurship Ecosystem in Qatar
Firstly, human capital is the most significant impediment to entrepreneurship in Qatar.
The lack of human resources and the mismatch between the capabilities needed by
the sector and those offered by the educational system are the two most s ignificant
constraints faced by start-ups in this respect.
Indeed, start-ups face a shortage of technology-related human resources, particu-
larly engineers. Most new businesses voiced concerns about lacking skilled human
resources in their respective industries (Ben Hassen, 2020). As a matter of fact, this
is a recurring problem in Qatar’s educational system. Since 1995, Qatar has made
significant efforts to strengthen its educational system, investing heavily and imple-
menting several reforms (Koc & Mohamed, 2017). Nonetheless, Qatar continues to
lag in educational achievement, particularly in science, technology, engineering, and
mathematics (STEM) sectors (Said, 2016), which are considered the main compo-
nents of achieving a knowledge-based economy (Durazzi, 2019). Although Qatari 4th
and 8th-grade students showed growth in scientific performance in the Trends in Inter-
national Mathematics and Science Study (TIMMS) and the Program for Worldwide
Student Assessment (PISA), they remain far behind the international average (Said,
2016). Furthermore, an increasing number of high school graduates cannot enter
university since their academic credentials fall short of most universities’ require-
ments. Many secondary institutions use Arabic as a teaching medium (Berrebi et al.,
2009). As a result, many students have lost opportunities to pursue their education
due to language barriers, which significantly setback the country’s aim of growing
human capability (Mohamed et al., 2022).
In addition, though just a tiny fraction of Qatari students are interested in a career
in the STEM fields, most of them are driven to work in the government (Sellami
358 T. Ben Hassen
et al., 2017). There are several advantages to working in the public sector, including
better pay, less stress, and less responsibility (Forstenlechner & Rutledge, 2010).
Consequently, Qataris have a low level of involvement in the private sector. Hence,
students are no longer enrolling in STEM professions at a pace that will contribute
to Qatar’s economic advancement in the future (Said, 2016). A decline in science
and math enrollment at the postsecondary level must be reversed to meet better the
demands of knowledge-based economy companies (GSDP, 2011, 52).
Second, according to the GEM study of 2016 (QDB, 2017), 77.3% of the Qatari
adult population feels that entrepreneurs have a high degree of social standing and
respect, and 65.9% believe that establishing a new firm is a suitable career option.
However, in 2020, over four out of ten persons who perceive the strong potential for
entrepreneurship said they would be discouraged from establishing a firm due to a
fear of failure. Qatari citizens are more likely than expats to say they would be hesitant
to establish a company because they fear failure (44.8% and 39.6%, respectively)
(QDB, 2021a). The fear of failure may deter some would-be entrepreneurs from
beginning a firm. In fact, company ownership is seen highly by Qatari society, but
only as a source of additional revenue. In Qatar, the “passive entrepreneur” is the
most popular kind of entrepreneur. The entrepreneur has a stable full-time job in the
public sector and runs a s ide company to supplement his income. It is risky for him
to quit his work and launch his own firm as a full-time entrepreneur.
Thirdly, access to finance is a major barrier for many Qatari entrepreneurs. Indeed,
according to IMF (2019), SMEs get just 2% of total credit in Qatar, indicating
that there is still room for improvement in inclusion and fostering entrepreneurial
activity in the country. Indeed, in 2020, financing options for new and expanding
businesses via private lenders such as crowdsourcing (3.6) and initial public offer-
ings (IPOs) got the lowest scores from experts (QDB, 2021a). In fact, business
owners are often unable to get appropriate financing. In Qatar, most new busi-
nesses are backed by informal financing channels (ex., family, relatives, friends,
work colleagues, neighbors, strangers, etc.) (Kebaili et al., 2015). In 2020, 74.4%
of early-stage entrepreneurs utilized personal funds to fund their businesses, 28.8%
used personal loans, and 14.8% used commercial loans (QDB, 2021a). However,
the fact that Qatar’s GDP is the highest in the world could make it seem contradic-
tory that the country has restricted access to funding (Mehrez, 2019). This problem
might be explained by the culture of banks in Qatar and the GCC in general. Most
banks in Qatar prefer to invest in more secure businesses, such as real estate. As
explained by the senior regional economist at HSBC: “most banks in GCC states
are traditionally unwilling to lend to small, little-known firms, preferring instead
the security and predictability of lending to large firms, such as those with state
connections” (Arabian Business, 2012). Simultaneously, new businesses in Qatar
confront exorbitant costs. Rent, workforce, and the initial investment in materials
and equipment are all costly (Kebaili et al., 2015). Further, to Komalasari (2016),
several external factors impact entrepreneurship in Qatar, including the difficulties
of obtaining commercial facilities or offices at a fair price, the availability of finance,
18 Developing a Vibrant Entrepreneurship Ecosystem in Qatar: 359
especially “angel investors, and the complexity of business regulations. Accord-
ingly, 49% of the entrepreneurial experts surveyed in Qatar believe that giving more
significant financial support to start-ups and expanding enterprises may boost the
country’s entrepreneurial environment (QDB, 2021a).
18.4 Conclusion
This chapter aims to analyze the present state of the knowledge-based economy i n
Qatar with a focus on the entrepreneurial ecosystem. It has two objectives. Firstly,
the chapter intends to investigate the features and recent development of Qatar’s
entrepreneurial ecosystem, especially after the COVID-19 pandemic. Secondly,
the article intends to examine the dynamics and many challenges that shape this
ecosystem.
Economic diversification is vital in achieving sustainable economic develop-
ment, especially for countries relying on nonrenewable natural resources, such as
oil and gas, in the case of the Gulf Cooperation Council (GCC) countries. More-
over, the global crisis caused by the COVID-19 pandemic underscored the signif-
icance of boosting resilience to adverse shocks (Ben Hassen, 2022b). Indeed, the
pandemic highlighted the need to promote non-hydrocarbon sectors by strengthening
the fundamental pillars of the knowledge-based economy: ICT, innovation, R&D,
education, entrepreneurship, and the economic and institutional regime. Since 1995,
the Qatari government has invested continually and implemented several policies
to encourage innovation, entrepreneurship, the private sector, and the advancement
of human capital competencies to turn the economy into a knowledge-based one.
Meanwhile, Qatar has made a significant attempt to build a dynamic entrepreneur-
ship ecosystem, including establishing important institutions and organizations to
assist entrepreneurs, such as incubators and funding structures, as evidenced by rank-
ings published by various international organizations. Consequently, Qatar is outper-
forming the other Middle Eastern countries regarding entrepreneurship development,
offering more chances for both aspiring and full-time entrepreneurs. Furthermore,
the COVID-19 pandemic increased the country’s entrepreneurial drive, resulting in
more start-ups and many projects. Therefore, the Qatari entrepreneurial ecosystem
is primarily the product of substantial government involvement, with the govern-
ment serving as the primary driver. Meanwhile, the majority of early-stage technical
enterprises are motivated by opportunities. Nevertheless, despite Qatar’s desire to
diversify its economic base, entrepreneurs still have to contend with several chal-
lenges. Some of these difficulties are inextricably linked to Qatar’s features as a
rentier state.
Firstly, human capital is the primary impediment to entrepreneurship. A minority
of Qatari students are considering a future career within one of the STEM disci-
plines, while many remain interested in public sector employment. Governments are
the primary employer of local labor in the rentier state because they provide access to
rentier capital for a portion of the population (Beblawi, 1987;Gray, 2011). Further,
360 T. Ben Hassen
there is a gap between the skills demanded by technical start-ups and those offered by
the educational system. Accordingly, the development of STEM knowledge, skills,
and competencies must be prioritized if Qatar’s educational system provides a work-
force capable of fulfilling the demands of contemporary society and the country’s
fiercely competitive job market (Sellami et al., 2017).
Secondly, in terms of social values and culture, our findings show that company
ownership is seen positively by Qatari society, but only as an additional source of
income. The “passive entrepreneur” is the most popular kind of entrepreneur in Qatar.
The entrepreneur has a stable full-time job in the public sector and a side company to
supplement his income. Furthermore, there is a significant disparity between people
who wish to start a business and those who actually do so. This may be explained by
a fear of failure, preventing some prospective entrepreneurs from launching a firm.
Thirdly, access to finance is a significant barrier for many Qatari entrepreneurs.
The culture of Qatari banks explains this challenge. Most Qatari banks prefer to
invest in more secure ventures, such as real estate. This problem is also linked to the
rentier model, which encourages high- and quick-return investments in real estate
and financial speculation over productive investments in prospective value-added
industrial sectors, which often take longer to reap the rewards (Ennis, 2015;Gray,
2011).
According to Ennis (2015), the development of Qatar’s entrepreneurial activities
is entangled between an international capitalist policy agenda and a national economy
hampered by two interrelated dependencies challenging to correct: hydrocarbons and
foreign labor addictions. The author also points out that entrepreneurship has perpetu-
ated the rentier state structure, causing a contradiction between economic reform and
the existing structural challenges. Further, Qatar’s transition to a knowledge-based
economy is facing a critical structural challenge: the rentier system, which is hege-
monic within the socio-economic and political system in Qatar and the GCC region in
general, exposes many limitations (Ennis, 2015). With little private-sector participa-
tion, the rentier model makes the government the key player in the knowledge-based
economy, which aligns with the government’s position in the rentier state (Beblawi,
1987).
The shift to a knowledge-based economy is a complex process that requires the
participation of several stakeholders from all sectors (innovation, R&D, education,
entrepreneurship, companies, etc.). As a result, a successful transition requires a
national plan that avoids the “silos mindset,” which involves all stakeholders with
defined aims, actions, and missions for each, encouraging collaboration and informa-
tion sharing. In reality, inadequate sectoral coordination and integration is a critical
institutional issue in Qatar owing to a lack of “planning culture” and “teamwork,”
as well as a silo mindset (GSDP, 2011). Further, as the IMF (2019) outlined, exports
and activity diversification may benefit from structural reforms and sector-specific
initiatives. In sectors with opportunities for exports and innovation, sector-specific
policies should be implemented. Developing knowledge in specific clusters, such as
food and water security, should be the focus since these are two significant challenges
in Qatar and the GCC region (see Chaps. 11 and 12).
18 Developing a Vibrant Entrepreneurship Ecosystem in Qatar: 361
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Tarek Ben Hassen is an Assistant Professor of Policy, Planning, and Development at the Depart-
ment of International Affairs, College of Arts and Sciences, at Qatar University. He holds a MSc.
in management of innovation (University of Quebec in Chicoutimi, Canada; 2006) and a Ph.D. in
Urban Studies, specialized in economic geography, from the University of Quebec in Montreal,
Canada (2012). Previously, he was a lecturer in geography at the University of Burgundy in France
and the University of Quebec in Montreal. His research over the past 16 years is clustered around
the following three interdisciplinary themes/topics. The first research theme falls into the subfield
of economic geography, emphasizing the study of the territorial components of innovation and
entrepreneurship, the impacts of global industrial and technological changes, and the emerging
of the knowledge-based economy and the creative economy. The second research theme focuses
on the Gulf Region’s current development dynamics and economic diversification initiatives. The
third research theme focuses on studying the dynamics of sustainability and innovation within
food systems. He has several publications in reputed international journals, including Sustain-
ability, the Canadian Journal of Urban Research, the Regional and Urban Economics Journal,
Environmental Science and Pollution Research, Journal of Small Business and Enterprise Devel-
opment, and Frontiers in Nutrition.
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-
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Gulf oil economies are commonly deemed not sustainable, but is this justified? Measurable and significant diversification of the Gulf economies has taken place. More is needed but the process is continuing. Global demand for hydrocarbons will not disappear overnight. The Gulf economies have ample opportunities to develop renewable sources, and decarbonize their oil production through carbon capture and sequestration. The progressive transformation of crude oil and gas into non-fuel products or hydrogen, and the possible advent of a hydrogen economy, may eventually eliminate emissions from burning hydrocarbons directly. The oil rent is likely to shrink, and greater reliance on taxation of domestic value added will be necessary. For that, a genuinely independent and competitive private sector must develop, which is capable of walking on its own legs and not depend solely on government procurement. Finally, social and political cohesion requires that greater attention be paid to employment of nationals and income distribution.
Chapter
This chapter draws its findings from the Global Entrepreneurship Monitor (GEM) data set for 2016 to 2019 to provide a comprehensive albeit concise overview of the evolution of entrepreneurship activities in Qatar. The results indicate that Qatar experienced an increase in the entrepreneurship activities with a significant percentage of adults starting or running new businesses. Data also revealed that, despite an equal proportion of women and men involved in early-stage entrepreneurial activities, women experience a lower transformation rate into established business ownership. In addition, to the gender gap, this study revealed that transforming new businesses into established business ownership is one of the main challenge to be addressed to develop the impact of entrepreneurship in the country further. Finally, the chapter shows that Qatar has created an entrepreneurial ecosystem of very high quality as demonstrated by its third place in the National Entrepreneurship Context Index and by having secured the first place in the MENA region. This chapter concludes by outlining a number of recommendations for policymakers to further foster the entrepreneurial activities in Qatar especially among the younger population.