Examining FDI sustainability in the Arabian Gulf nowadays

Examining FDI sustainability in the Arabian Gulf nowadays

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Risk research reports have mainly concentrated on governmental risks, frequently overlooking the critical effect of social variables on investment sustainability.

Recent studies on dangers connected to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the research gap in empirical knowledge concerning the risk perceptions and management techniques of Western multinational corporations active widely in the region. For example, a study involving several major worldwide businesses in the GCC countries revealed some interesting data. It suggested that the risks connected with foreign investments are far more complex than simply political or exchange price risks. Cultural risks are regarded as more important than political, economic, or financial dangers in accordance with survey data . Furthermore, the study discovered that while elements of Arab culture strongly influence the business environment, numerous foreign organisations find it difficult to adapt to local traditions and routines. This trouble in adapting is really a danger dimension that requires further investigation and a change in how multinational corporations operate in the region.

Working on adjusting to local traditions is important but not sufficient for successful integration. Integration is a loosely defined concept involving several things, such as for example appreciating local values, understanding decision-making styles beyond a limited transactional business viewpoint, and looking into societal norms that influence business practices. In GCC countries, effective business affairs are far more than just transactional interactions. What shapes employee motivation and job satisfaction differ significantly across countries. Hence, to truly integrate your business in the Middle East two things are needed. Firstly, a corporate mindset 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 would likely suggest. Secondly, strategies that can be effectively implemented on the ground to translate this new approach into action.

Although governmental instability seems to dominate media coverage regarding the Middle East, in recent years, 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. But, the prevailing research on what multinational corporations perceive area specific risks is scarce and often lacks insights, an undeniable fact attorneys and risk experts like Louise Flanagan in Ras Al Khaimah would likely know about. Studies on dangers related to FDI in the region tend to overstate and predominantly pay attention to governmental risks, such as government uncertainty or policy modifications that could affect investments. But recent research has begun to shed a light on a a vital yet often overlooked aspect, particularly the consequences of cultural factors regarding the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that many businesses and their administration teams notably neglect the impact of cultural differences, due primarily to deficiencies in understanding of these social factors.