In less than a decade, the Middle East became a major global investment destination. In 2000, Foreign Direct Investment (FDI) inflows to the Middle East were US$3 billion, but this grew to US$78 billion by 2008.
A.T. Kearney’s recent FDI Confidence Index confirms the importance of the region. The most attractive Middle Eastern destination is the United Arab Emirates (UAE), which ranks 11th. Egypt also is an up-and-coming destination.
Dubai ranked 1st place in the Middle East region closely followed by Abu Dhabi at 2nd place.
The study revealed global investors’ recognition of Dubai’s unique location, best-in-class infrastructure, advanced logistics facilities, safe environment and value proposition as a hub to access the regional market, as well as its strong economic foundation with a unique ability to rebound. Much like Hong Kong for mainland China and Singapore in Southeast Asia, Dubai may maintain its position as gateway destination to the region. Dubai is a hub for the region ranging from North Africa, Middle East, Central Asia all the way to Pakistan, encompassing more than 500 million consumers.
The Middle East is experiencing a major transition, from an economy predominantly driven by natural resources to one that is more diversified. The Index results are a testament to its success at diversification.
The Middle East still has its challenges – ranging from geopolitical concerns to cultural issues. The investors with regional experience pointed to several challenges for further FDI growth, such as cross cultural challenges, corporate governance, transparency and availability of business data, which are all sign of the region’s economic maturity and globalization.
