Developing countries have often focused on venture capital to boost investment. Some Arab countries are proponents of that approach, launching many funds geared towards the promotion of investment in the ICT sector. While those initiatives are a step in the right direction, they cannot succeed without complementary measures.
There are five major determinants for the establishment of a competitive ICT sector at the national level, namely infrastructure, education, institutional quality, innovation and investment. Infrastructure must be solid, resilient and affordable. A high-quality secondary and tertiary education system, widespread e-skills and digital literacy are also needed. Furthermore, a competitive ICT sector requires a clear political vision, readiness to carry out regulatory reform and the rule of law.
After exploring the limitations of the ICT sector in the Arab region, this study focuses on the role of innovation and investment in the establishment of a competitive ICT sector. Innovation is conceptualized as an ecosystem that includes entrepreneurs, large and small companies, accelerators, venture capitalists, business angels and government intermediaries. Promoting investment requires an enabling business environment and a solid knowledge of the ICT sector. Arab Governments must promote the development of various financing modes and mechanisms which include debt financing, the establishment of primary and secondary capital markets. The banking sector must be more actively involved, and business angel networks and government support programmes must be established.