An Arab Opening.(teaching teenagers to be entrepreneurs by Injaz al-Arab)(Cover story)

Byline: Stefan Theil (With Mandi Fahmy and Gameela Ismail in Cairo and Zvika Krieger in Beirut.

Theil, NEWSWEEK's European economics editor, is a fellow at the German Marshall Fund.)

Mohamad Hodeib speaks passionately about global expansion, stock options and the long, Red Bull-fueled nights spent drawing up the business plan for B-Com, his half-year-old start-up company that makes clothes with witty slogans. It's not something you'd expect to hear from a 17-year-old high-school student from Deir al-Zahrani, Lebanon, a poor village in the Hizbullah-dominated south--nor, for that matter, anywhere else in the Arab world. Hodeib says he caught the business bug from a school project run by Injaz al-Arab, an organization that sends volunteers into schools to teach kids about entrepreneurship. His regular classes are too boring, Hodeib complains: "All we ever do is memorize facts for the exams."

If the Middle East is to have any shot of making up for decades of past stagnation, it's going to need many more kids like Hodeib, eager to build new companies and create new jobs. That's the rationale behind a small but growing movement of educators and CEOs, Western aid agencies and multinationals, royals and even Islamists, who are now trying to inject the entrepreneurial virus into the region's youth. From the Maghreb to the gulf, the Arab world is abuzz with a new form of activity, taking shape in student entrepreneurship programs, business-plan competitions and brand-new engineering schools set up to teach Arab techies how to build a better start-up. These new programs have one goal in common: to improve the region's abysmal rate of business creation and diversify its economy away from oil and the public sector.

More than anything, these efforts are being driven by demographics. Up to 70 percent of the population in the Arab world is under 25 years old. Employing them will take the creation of 80 million new jobs by 2020, according to the World Bank. Getting there means achieving twice the job-creation rate the United States managed during the go-go 1990s. "The public sector isn't going to create these jobs; big companies aren't going to create these jobs," says Fadi Ghandour, CEO of the Jordan-based express courier Aramex and a leading educational philanthropist. "The stability and future of the region is going to depend on our teaching our young people how to go out and create companies."

That's a tall order anywhere, but especially here. Many Arab states still struggle with a culture that looks down on capitalism, and schools that focus on religion. With a few exceptions such as Jordan, Arab countries rank near the bottom in international student-achievement tests. At the center of the problem, says Hassan Bealawy, adviser to the Egyptian minister of Education, is the region's preference for teaching methods that emphasize mind-numbing memorization and deference. Mona Mourshed, author of a recent McKinsey report on Arab education, recalls seeing signs that read be silent, mind your work, keep tidy, don't speak up, in a gulf-region classroom. No wonder Soraya Salti, the Jordanian businesswoman running Injaz, concludes that "our ...