Understanding the risks of FDI in the Middle East and beyond

Understanding the risks of FDI in the Middle East and beyond

Blog Article

While the Middle East turns into a more appealing location for FDI, understanding the investment dangers is increasingly important.

Focusing on adjusting to local culture is essential however sufficient for successful integration. Integration is a loosely defined concept involving a lot of things, such as for example appreciating regional values, understanding decision-making styles beyond a limited transactional business viewpoint, and looking at societal norms that influence company practices. In GCC countries, effective business relationships tend to be more than just transactional interactions. What impacts employee motivation and job satisfaction differ significantly across countries. Thus, to truly integrate your business in the Middle East a couple of things are expected. Firstly, a business mind-set change in risk management beyond financial risk management tools, as experts and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would probably suggest. Secondly, strategies that may be efficiently implemented on the ground to convert this new strategy 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 concerning the danger perceptions and administration methods of Western multinational corporations active widely in the region. As an example, research project involving a few major worldwide businesses within the GCC countries unveiled some fascinating data. It contended that the risks connected with foreign investments are a great deal more complicated than simply political or exchange price risks. Cultural risks are regarded as more crucial than governmental, economic, or economic risks according to survey data . Furthermore, 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 difficulty in adapting constitutes a danger dimension that requires further investigation and a big change in exactly how multinational corporations run in the region.

Although political uncertainty generally seems to take over news coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming increasingly appealing for FDI. Nonetheless, the present research on what multinational corporations perceive area specific risks is scarce and usually does not have depth, a fact solicitors and danger professionals like Louise Flanagan in Ras Al Khaimah may likely be aware of. Studies on dangers connected with FDI in the region tend to overstate and mostly focus on political dangers, such as for example government uncertainty or policy changes that could influence investments. But lately research has started to shed a light on a a vital yet often overlooked aspect, particularly the consequences of cultural facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous businesses and their management teams significantly overlook the effect of cultural differences, mainly due to too little knowledge of these cultural factors.