WOMEN'S ENTREPRENEURSHIP: DO INSTITUTIONS MATTER? EVIDENCE FROM MIDDLE EAST AND NORTH AFRICA COUNTRIES

In this study, we examine relations between women entrepreneurship and institutions in the Middle East and North Africa (MENA57). Indeed, one of the main issues for MENA governments is the increase of women's labor participation rate. During the last years, MENA region has had improvements to women's education and health. However, women's labor has shown no progress. Female labor participation rate is around 26%, the lowest rate of any other region (World Bank, WDI, 2010). As a consequence, women's human capital is underused. Yet, many studies highlight connections between female labor participation rate and GDP level, in particular for the MENA. Women entrepreneurship could be a way to address several issues: increasing employment and female employment in particular, having a better economic growth and development level. But, in MENA countries, women-owned firms are only 13% of all enterprises on average (World Bank, Enterprise Surveys, 2009). However, in a previous study (Ducellier-Liebeaux, Diana International Conference 2010) we demonstrated that women-owned companies have very interesting features: they are larger, older, they are more export-oriented, they use more new technologies and they employ more skilled women than men-owned firms. As a consequence, it is very important to determine the factors of women entrepreneurship to develop it. Among macroeconomic determinants of women entrepreneurship, quality of institutions seems to be very promising but also not very much studied. What are institutions exactly? D. North (1990) offers the following definition: "Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction". Institutions influence economic environment and, certainly, entrepreneurship. As a consequence, the purpose of this study is to highlight relations between quality of institutions and women entrepreneurship in MENA. We want to ascertain if this relation exits, if institutions have the same importance for men and women entrepreneurs in the MENA. We also want to know if this relation between institutions and MENA women's entrepreneurship exits in other developing countries and in the same proportions. Thanks to this study, we will have a better understanding of women entrepreneurship and we will be able to suggest public policies to spread out women-owned companies. In a first section, a review of literature is presented. We highlight the fact that few researches get onto this issue. We can found a large literature about institutions and economic growth, few about institutions and entrepreneurship, almost none about institutions and women's entrepreneurship. In the second section, the empirical model is introduced. Data from Laborsta (ILO) and the World Bank's World Governance Indicators (WGI) are used. These data are available for almost all developing countries. These data are employed to perform series of regressions. In these regressions, the dependent variable is the rate of women entrepreneurship in a country. Several measures as a proxy of women entrepreneurship of this rate (such as the share of women entrepreneurs among active women) are tested. The independent variables represent the quality of institutions. We use 6 independent variables which are the six World Governance Indicators defined by Kaufmann, Kraay and Mastruzzi (2009) in order to measure different aspects of institutions: "Government Effectiveness" and "Regulatory Quality" summarize the ability of the government to formulate and implement sound policies. The respect of citizens and the state for the institutions which govern their interactions is categorized as "Rule of Law" and "Control of Corruption". "Political Stability and Absence of Violence" measure perceptions of likelihood that the government in power will not be destabilized and indicate the continuity of policies. "Voice and Accountability" captures the process by which citizens of a country are able to participate in the selection of their government. Some control variables such as GDP per capital (PPP) are introduced in addition. Using polled data, we present the specificities of this kind of regression. In a third section, the main results are introduced. They indicate that the quality of institutions is a relevant factor to understand the level of MENA women's entrepreneurship. In a last section, we conclude with limitations of this study, implications for public policy and future directions for research.