Page 80 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

64 Dubai & Co.

has even announced plans to move its headquarters to Dubai. No
one denies that the GCC is glittering. The question, though, is
whether the glitter is merely a flash in the pan or whether the GCC
will remain an economic powerhouse in the years ahead. Might the
Gulf capitals, rapidly expanding today and competing to create
the sleekest offices and most attractions, become ghost towns with
the bursting of an economic bubble?
Our analysis suggests otherwise. Afundamental assessment of
the GCC economies indicates that they will remain strong and
important into the foreseeable future. The reasons for the region’s
economic attractiveness are rooted in basic economic trends: sus-
tained prosperity and growth, attractive demographic shifts, and
ongoing regulatory reform. These three fundamental factors give
the region lasting appeal to multinational companies. In addition to
its inherent appeal, the GCC is attractive for the linkages it enjoys
with the Far East, South Asia, and the broader Middle East—all of
which are expected to be engines of growth for the global economy
for decades to come.
The GCC, however, does possess significant risks and
drawbacks. Chief among these risks is overdependence on oil,
without which the Gulf economies would collapse. Despite the cur-
rent stability of the regimes of the GCC countries, the region is
exposed to geopolitical risk related to conflict in the broader Middle
East (especially Iran). Regimes in the GCC states must also continue
to curb religious extremism and terrorist threats—threats that
become more dangerous if unemployment and the frustration asso-
ciated with joblessness grow. And even though the Gulf is quite
comfortable, social issues such as the continuing restrictions on
social freedoms (for women and men), a dearth of political
discourse, and the prevalence of racism are real drawbacks. By no
means is life in the GCC countries perfect.
Overall, however, the GCC represents a meaningful business
opportunity rooted in solid economic fundamentals. Savvy leaders
of multinational corporations will recognize the region’s opportu-
nities while acknowledging the material risks and drawbacks
associated with doing business there. Our view is that the GCC’s
economic importance will endure: global leaders should recognize
this and craft strategies that capture growth while judiciously
navigating the risks.