Entrepreneurship and unemployment nexus in MENA: Does institutional quality matter?

Abstract

Entrepreneurship has been identified as a panacea to abating the rising unemployment rate in MENA. However, the region’s institutional quality could influence whether entrepreneurship would generate/stall employment. Thus, we examined the role of institutional quality in the entrepreneurship-unemployment nexus for seven MENA countries using the dynamic ordinary least square method to analyse data covering the period, 2006-2019. The results show that opportunity-driven entrepreneurship and total-early-stage entrepreneurship have the potential to reduce unemployment while institutional quality seems to augment the unemployment-reducing effect of entrepreneurship. This implies that promoting entrepreneurship and strengthening the institutional apparatuses in the MENA region should be prioritised.