Development of MENA SMEs: Constraints and Success Factors

Small and medium-sized enterprises (SMEs) play a critical role in socioeconomic development globally, especially in emerging markets. However, in the MENA region, despite efforts by both the public and private sectors, SMEs face persistent challenges, particularly in countries affected by economic instability and political crises. Policymakers typically rely on governmental data to assess SMEs ecosystems, highlighting the need to identify and understand the key factors influencing the Ease of Doing Business Index in the region. This study aims to identify the key determinants of the Ease of Doing Business Index in three selected countries from the MENA region- Lebanon, Jordan, and Turkey. Using panel data spanning 2004 to 2022, the empirical analysis reveals that factors such as firm investment in R&D, e-government development, the use of bank financing by firms, gender-inclusive policies, commercial and professional infrastructure, and the simplification of business registration procedures, positively influence the Ease of Doing Business Index. Conversely, GDP growth, taxation, and bureaucratic hurdles exert a significant negative impact on the index. Additionally, variables such as startup costs, physical and service infrastructure, and governance show varying degrees of significance across models, highlighting their context-dependent effects. These findings underscore the complex interplay of economic, social, and regulatory factors that shape the business environment in the MENA region.