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Financial Markets, Insurance and Entrepreneurship in the Countries of the Middle East and North Africa (Mena) Region

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Financial Markets, Insurance and Entrepreneurship in the countries of the Middle East and North Africa (MENA) region

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February 27, 2013

1. Introduction

The goal of the paper is to focus on the countries of the Middle East and North Africa (MENA) region and particularly those of the of the South of the Mediterranean, and examine the relationship between insurance – defined as the capability of covering the cost of future harmful events-and entrepreneurship broadly defined as the capability to start independent businesses activities and possibly introduce new combinations of productive factors.
The analysis is based on the distinction between uncertainty and risk that Knight unveiled (Knight, 2012) arguing that risk involves situations where a decision maker face unknown outcomes but known ex-ante probability distributions, while uncertainty is characterized by situations in which the probability distribution of a random outcome is unknown. Consequently, while risk can be covered by insurance, uncertainty normally is not. The other pillar of this research is the role of entrepreneurship; a factor that the economic literature has not considered for long time and that in the last 20 years has become the center of any strategy for economic growth in emerging and advanced economies. The discovery of the role of entrepreneurs dates back to Schumpeter (Schumpeter, 1982a) who regards entrepreneurs as the engine of economic growth. Schumpeter (Schumpeter, 1982a) has a view of the entrepreneur as the one who introduces innovation, but does not bear the risk.
The study intends to investigate on two main aspects: whether insurance and entrepreneurship interact; and whether the widespread availability of insurance leads to a reduction of uncertainty and support the deployment of entrepreneurship.
The considerations related to these two

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