Exactly what are common risks associated with FDI in the MENA region

Exactly what are common risks associated with FDI in the MENA region

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

Working on adjusting to regional culture is necessary however sufficient for successful integration. Integration is a loosely defined concept involving several things, such as appreciating local values, learning about decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, effective business relationships are far more than just transactional interactions. What impacts employee motivation and job satisfaction differ greatly across countries. Hence, to truly integrate your business in the Middle East a couple of things are essential. Firstly, a corporate mind-set change in risk management beyond economic 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 the new approach into practice.

Recent studies on risks linked to foreign direct investments in the MENA region offer fresh insights, attempting to bridge the gap in empirical knowledge regarding the risk perceptions and administration strategies of Western multinational corporations active extensively in the region. As an example, research project involving several major international companies in the GCC countries revealed some interesting findings. It contended that the risks related to foreign investments are even more complex than just political or exchange price risks. Cultural risks are regarded as more crucial than political, financial, or financial dangers according to survey data . Furthermore, the study unearthed that while aspects of Arab culture strongly influence the business environment, many foreign organisations find it difficult to adapt to regional customs and routines. This difficulty in adapting is really a risk dimension that requires further investigation and a big change in just how multinational corporations run in the region.

Although political uncertainty seems to take over news coverage regarding the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a steady upsurge in foreign 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 risks is scarce and usually lacks depth, a well known fact attorneys and risk specialists like Louise Flanagan in Ras Al Khaimah would probably be familiar with. Studies on dangers related to FDI in the area have a tendency to overstate and mostly concentrate on governmental dangers, such as for instance government uncertainty or policy changes that may impact investments. But lately research has started to shed a light on a a critical yet often overlooked factor, particularly the effects of social facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies expose that lots of businesses and their management teams significantly underestimate the impact of cultural differences, due mainly to too little understanding of these cultural variables.