The Middle East and Africa are the fastest-improving enterprise regions in the world, closely followed by Asia-Pacific, according to the latest research from Barclays Wealth. A study of nearly 1,000 entrepreneurs found that all three regions had shown more of an improvement in the last ten years than the US and Europe (which came a miserable last). The economies of the West have long been seen as the best place in the world to start a business – but as costs rise and regulators tighten their grip, this may be changing…
The entrepreneurs were asked to assess the improvement or deterioration of nine different factors in their local market. And surprisingly, the regions coming up fastest were the Middle East and Africa. Respondents said international expansion prospects and scope for innovation were the most improved areas – while market reforms, privatisation and government money (often from oil) are hurrying the process along. Investment in education and financial centres is encouraging more people to start businesses – and at the same time, entrepreneurs are much more celebrated.
It’s a similar story in Asia-Pacific, which received the highest scores for its financial environment. With stock markets in India and China going through the roof in recent years (albeit in a rather unsustainable-looking fashion), businesses have had easy access to finance, and entrepreneurs have been able to cash out at huge multiples. On the other hand, respondents suggested that availability of talent was becoming more of a problem – not surprisingly, the breakneck speed of growth has made it hard to recruit skilled workers (a problem the Middle East may soon have too).
So what’s going wrong in the West? Well, Europe received the lowest improvement rating as an environment to start a company, with 41% of entrepreneurs bemoaning the cost of doing business and 37% suggesting regulation was the biggest headache. It was the same story in the US, where 34% complained about red tape (as you’d expect, gripes about Sarbanes-Oxley figured prominently). And the danger is that governments will be even keener to keep a close eye on businesses after the events of the last year – so we’re likely to see more regulation, not less.
Of course we shouldn’t get too carried away. This study’s all about improvement – and given that the rest of the world has been playing catch-up with the benchmark set by Europe and particularly the US for the last decade, it’s perhaps not surprising that other regions have been improving at a faster rate. Then again, with Eastern economies looking a better bet than their Western counterparts at the moment, the West might not hold onto its enterprise lead for long...
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