An investigation into the impact of continuing Middle East conflict on business development of SMEs throughout Middle East

by

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

Background of the research1

Aims of the study6

Research question7

CHAPTER 2: LITERATURE REVIEW8

The importance of SMEs in a global economy9

The impossible peace in the Middle East10

The future of the oil industry11

CHAPTER 3: METHODOLOGY13

The Research Process13

Search Technique15

Literature Search15

Inclusion and exclusion criteria16

Additional Online searches16

Search rationale17

Critical Appraisal tool17

CHAPTER 4: ANTICIPATED RESULT18

CHAPTER 5: CONCLUSION19

REFERENCES20

CHAPTER 1: INTRODUCTION

Background of the research

Small and medium sized enterprises, or SMEs, are widely recognised as being the major contributors to economic growth, job creation and economic activity in most developed nation countries. As such, encouraging the growth and success of SMEs is vital to the success of the Middle Eastern countries and their industries. However, in the aftermath of the various conflicts, which swept the world in the wake of the world recession and war on terror crisis, many SMEs have faced a highly challenging business environment. In particular, large amounts of the state aid that was previously used to support SMEs has been diverted to keeping banks and larger businesses afloat in the difficult environment; the reductions in the flow of credit have severely impaired supply of finance to SMEs; and several important economic development projects have been put on hold or cancelled due to a lack of finance (Kalantaridis2004, pp. 245).

SMEs considerably add to business, financial, technical and local growth in all financial systems, whether they are developed or developing. Although, the definitions of Small and Medium scale Enterprises may contrast.

It is believed that over 1.4 million SMEs operate in the Middle East, out of which around 30% are related to production. Small and Medium scale Enterprise segment consists of about 40% of total business manufacturing, 35-40% of total overseas sales and a major contribution to employment (about 2.5 million) and makes around 8% of GDP . Nonetheless, Small and Medium scale Enterprises are going through a change which includes reformation of plans and services since the new guidelines were declared in 1991.

The principal risks that threaten the professional sector

The political instability experienced by the countries located in the Middle East means that the elements of confidence will weaken the investment climate in the short term (Fletcher2004, pp. 289). If countries such as Egypt have pledged to abide by international agreements and trade, the departure of Mubarak's sense of "unknown territory", which is currently prevailing in the country will certainly have implications for investors who are looking for professional opportunities. The ability of countries in the Middle East to be bound by other contracts and agreements will depend on the way out of the current crises. While Egypt has a relatively formal administrative structure (albeit corrupt), countries such as Libya face the impact of the powerful tribes. The resort of many of these tribes is to take advantage of the chaos in enhancing its influence and interests.

Effects of global recession

The effects of global recession on the real economy are strongly felt in many countries of the Middle East ...