Learning about the risks of FDI in the Middle East and beyond

Learning about the risks of FDI in the Middle East and beyond

Blog Article

Risk studies have mainly concentrated on political risks, frequently overlooking the critical effect of social factors on investment sustainability.

Recent scientific studies on dangers associated with international direct investments in the MENA region offer fresh insights, trying to bridge the gap in empirical knowledge regarding the risk perceptions and administration strategies of Western multinational corporations active widely in the area. For instance, research project involving several major worldwide companies within the GCC countries revealed some interesting findings. It argued that the risks associated with foreign investments are much more complicated than just political or exchange rate risks. Cultural risks are regarded as more important than governmental, financial, or financial risks based on survey data . Moreover, the research unearthed that while aspects of Arab culture strongly influence the business environment, numerous foreign firms struggle to adapt to local traditions and routines. This difficulty in adapting constitutes a risk dimension that needs further investigation and a change in how multinational corporations run in the region.

Working on adjusting to local culture is essential yet not sufficient for successful integration. Integration is a loosely defined concept involving a lot of things, such as appreciating local values, learning about decision-making styles beyond a restricted transactional business viewpoint, and looking into societal norms that influence company practices. In GCC countries, successful business affairs tend to be more than just transactional interactions. What affects employee motivation and job satisfaction differ greatly across countries. Thus, to truly incorporate your business in the Middle East a few things are expected. Firstly, a business mind-set shift in risk management beyond financial risk management tools, as experts and attorneys such as Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely recommend. Secondly, methods that can be effortlessly implemented on the ground to convert this new mindset into action.

Although governmental uncertainty appears to take over news coverage on the Middle East, in recent times, the region—and particularly the Arabian Gulf—has seen a steady increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming increasingly attractive for FDI. Nevertheless, the existing research on how multinational corporations perceive area specific risks is scarce and often lacks depth, a well known fact solicitors and danger specialists like Louise Flanagan in Ras Al Khaimah would probably know about. Studies on dangers related to FDI in the region tend to overstate and mostly pay attention to governmental risks, such as government instability or policy modifications that may influence investments. But lately research has started to illuminate a crucial yet often overlooked factor, specifically the effects of cultural facets regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of companies and their administration teams somewhat overlook the effect of cultural differences, due mainly to a lack of understanding of these social variables.