Entrepreneurship Support Still Rent-Based
03 Feb. 2018
kuwaiti-economy
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A critique of Kuwait’s entrepreneurship support, arguing that incentives should favor export-driven ventures over rentier consumer projects.
The state’s financial support for entrepreneurs has become increasingly visible through its encouragement of ministries, authorities, and relevant funds to finance startups, offer incentives, and raise awareness in this field by organizing workshops and training courses. It is a mature direction that seeks to achieve a shared benefit serving the citizen, whether entrepreneur or consumer, and serving the state’s macroeconomy — a benefit whose value is realized only if it contributes tangibly to moving this economy from rentierism to sustainability. But are we truly moving in that direction?

The primary concern of every entrepreneur is to gain market share, aiming in one way or another for cash flow that creates the viability of a successful business project. That viability is what generates enthusiasm among state institutions to support such projects, or to present their success as a model to be emulated, organizing workshops and training courses around its foundations for a new generation of entrepreneurs, thereby creating a culture passed from one group to another.

The sharp rise in local purchasing power created a horizon for the ambitions of these entrepreneurs, leading them to target that purchasing power through an easily attainable business case that attracts local cash flow generated by the rent of oil exports. If the price of a barrel of oil falls and the state enters a period of austerity, this will inevitably affect the viability of consumer-oriented projects that the state had previously supported in the name of contributing to the economy’s transition toward sustainability. Where, then, is sustainability if that occurs?

If the state’s vision in providing this support is to create a market that contributes to job creation and plays a fundamental role in moving the economy from rentierism to sustainability, then the objectives of that vision must consider whether the target market is local or external. Those objectives must recognize the importance of the projects’ impact on increasing exports and reducing imports. On that basis, eligibility criteria should be established for financing and incentives provided by state institutions assigned to support entrepreneurial projects.

Is it rational or logical for three projects built on the same level of profitability to receive equal support? The first targets local cash flow, the second targets the Gulf market, and the third targets the global market. Or should incentives distinguish the third more strongly, because it is the least affected by any negative turn in the region’s rentier economy? It is the project whose activity is not directly affected by a decline in oil prices. It is the project whose operators continue receiving salaries and hiring others. It is the project that competes with global competencies in a manner that raises the efficiency of the region’s human capital. And it is the project that contributes to increasing gross domestic product by raising exports, reducing imports, or both.

We agree with the noble vision, but the shortcoming is clear in the formulation of objectives that produced the strategy through which that vision is to be achieved. And because this is a state of bureaucratic institutions in which entrepreneurial cultures are passed down, continuing along this strategy carries consequences more severe than those in institutions governed by centralized decision-making. Thus, support for entrepreneurship remains — still — rentier in nature.

Abdullah Al-Salloum
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kuwaiti-economy
Answers
How can economic visions move from a general idea to something measurable?
A serious vision reveals the cost of transition, assigns responsibility, and measures results; otherwise it remains a general promise without executive force. When accountability is ignored, the idea becomes a limited procedure that does not change the wider path.
How can exports move from a general idea to something measurable?
Exports reduce fragility because they widen income sources and force the private sector to test its capacity in markets not protected by the state. When accountability is ignored, the idea becomes a limited procedure that does not change the wider path.
How can economic development move from a general idea to something measurable?
Development becomes sustainable when it builds productivity, skills, institutions, and exports capable of generating renewable value. When accountability is ignored, the idea becomes a limited procedure that does not change the wider path.
How does entrepreneurship support and export-oriented ventures affect Kuwait?
Its effect appears in how costs, incentives, and resources are managed, and in Kuwait's ability to turn decisions into sustainable value. The direct context is kuwait’s entrepreneurship support, arguing that incentives should favor export-driven ventures over rentier consumer projects.
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