What are common risks associated with FDI in the Arab world

What are common risks associated with FDI in the Arab world

Blog Article

The Middle East, specially the Arabian Gulf, has experienced a notable boost in foreign direct investment. Check out the potential risks that companies might encounter.

Focusing on adjusting to local culture is essential however enough for successful integration. Integration is a loosely defined concept involving a lot of things, such as for instance appreciating regional values, learning about decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence business practices. In GCC countries, successful business connections are far more than just transactional interactions. What shapes employee motivation and job satisfaction vary greatly across cultures. Therefore, to genuinely incorporate your business in the Middle East a few things are expected. Firstly, a business mind-set change in risk management beyond financial risk management tools, as consultants and lawyers such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely recommend. Next, methods which can be effortlessly implemented on the ground to convert this new mindset into action.

Pioneering scientific studies on dangers connected to international direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge about the danger perceptions and management techniques of Western multinational corporations active extensively in the area. For example, a study involving several major international businesses within the GCC countries unveiled some fascinating data. It contended that the risks related to foreign investments are a lot more complex than just political or exchange rate risks. Cultural risks are perceived as more important than governmental, monetary, or financial dangers based on survey data . Moreover, the study found that while elements of Arab culture strongly influence the business environment, numerous foreign businesses find it difficult to adapt to local customs and routines. This trouble in adapting is really a risk dimension that requires further investigation and a change in exactly how multinational corporations run in the region.

Although political instability generally seems to take over media coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady increase in international direct investment (FDI). The Middle East and Arab Gulf markets have become extremely attractive for FDI. However, the existing research how multinational corporations perceive area specific dangers is scarce and often lacks insights, an undeniable fact lawyers and danger professionals like Louise Flanagan in Ras Al Khaimah may likely be aware of. Studies on dangers related to FDI in the region tend to overstate and mostly focus on political dangers, such as for instance government instability or policy modifications which could affect investments. But lately research has begun to illuminate a crucial yet often overlooked factor, namely the consequences of cultural factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many businesses and their administration teams dramatically undervalue the effect of cultural differences, due mainly to a lack of comprehension of these cultural factors.