Lebanon has been facing an unparalleled situation for the past 2 years. Since the October uprising in 2019, it has been a steep downhill for the Lebanese Economy. Looking at the country’s GDP, we notice that the Lebanese economy was flourishing prior to 2017. However, since 2018, the GDP annual rate has decreased exponentially to reach a rate of 25%. These trends can also be seen in the Lebanese unemployment rate, where the rate decreased slightly prior to 2017, but then dramatically increased to reach 40% by the end of 2020.
Obama once said, “Small businesses are the backbone of our nation’s economy…”. Therefore, we will be monitoring the effects of new businesses and startups on the unemployment rate and GDP.
Studying the situation in the United Kingdom, for example, we see that as the number of new businesses registered increases, the unemployment rate decreases. Similarly, looking at the effect on GDP, we see that new businesses have a positive influence on the countries GDP. Looking at the global trends of the time to start new businesses, we see that there is a global positive change in trying to decrease the amount of time required for new businesses to get up and running, which doubles down on the importance of new businesses and ventures. However, unlike the global trends, in Lebanon, the time to start a business has been constant at 15 days for the past 12 years.
Now that we have seen that startups decrease unemployment and stimulate GDP growth, and there is a global positive shift to ease starting new businesses, the Lebanese government plan of action should be:
1) Reduce time to have startups active and running
2) Provide easy availability of loans for new businesses
3) Reduce taxes on new businesses
to provide an environment that attracts startups and in turn improve the Lebanese economy.