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The paper dwells upon positive and negative effects of globalisation on the Emirati economy and business environment. Thus, positive effects are associated with investment and development of new managerial strategies. Negative effects are involvement of governments and westernisation of the business environment. However, the UAE will still benefit from globalisation (if it successfully solves the issues mentioned above) as integration into the global market is beneficial in the modern world.
Globalisation is a reality for the world that has become truly globalized. One of the most common definitions of globalisation holds it that globalisation “is a process of integrating different world economies” (Akram, Faheem, Khyzer Bin Dost & Abdullah, p. 291). It is possible to expand the definition and to add that the process involves certain degree of integration of cultures and worldviews. Major causes of globalisation are technological development as well as development of markets. People got an opportunity to share ideas, travel and deliver goods irrespective of distance and time. The UAE is affected both positively and negatively. This paper deals with the way globalisation affects the UAE business environment.
Admittedly, globalisation has had a number of positive effects on the development of the UAE. One of these positive influences is extensive investment into the country. Many multinationals have been willing to invest funds into the rapidly developing Middle East, and especially in the UAE where those companies got various benefits (Bremmer, 2014). This investment led to rapid development of infrastructure in major centres of trade and international business: Abu Dhabi and Dubai.
Another important benefit of globalisation is development of new modern business strategies in the country. Thus, the UAE was not an innovative country in the twentieth century (Godwin, 2006). It was only at the end of the 20th century, when the UAE became a more open state where people from different countries could cooperate. Successful western experience in business and management was brought to the UAE.
Thus, Emirati people got an opportunity to gain the necessary experience and develop their country using innovative strategies. Unfortunately, the process of educating nationals to make them fit to enter the globalised economy and become competitive with expatriates started quite late. However, according to Mohammad and Sidaway (2012), at present, the UAE government pays significant attention to the issue and Emiratisation of the economy is one of the country’s priorities that can help the UAE become a truly globalised and innovative state.
At the same time, globalisation has also brought numerous challenges. Hence, it is important to address these issues; otherwise, the positive shifts in the country’s economy can have detrimental effects on its future. As far as negative effects of globalisation are concerned, it is possible to note that some multinational companies may employ “government-to-government relations to sort out problems” (Bremmer, 2014, p. 106). For instance, BP had some issues with its operations in the UAE in 2012. The British government criticised the UAE for “closing the offices of prodemocracy groups and arresting political activists” (Bremmer, 2014, p. 106). Eventually, the UAE government, which first excluded the company from bidding for onshore oil concessions, let BP bid for the concessions in another area.
As has been mentioned above, globalisation led to adoption of western managerial strategies. It has also been noted that this was associated with appearance of numerous expatriates in the country. Thus, according to data of the survey held in 2008, more than 75% of inhabitants of Abu Dhabi are foreign workers (Mohammad & Sidaway, 2012). The vast majority of managerial (especially when it comes to top management) jobs are occupied by expatriates as Emirati people cannot compete with them due to lack of the necessary skills and experience. This problem is being addressed through Emiratisation.
At the same time, another issue persists. Thus, westernisation of management strategies can have a negative effect on the Emirati business environment and development of its economy (Stephenson, Russell & Edgar, 2010). Excessive reliance on western ways can discourage Asian companies from entering the UAE market. Hence, companies as well as the UAE government have to focus on innovative and truly globalised strategies and ways of handling business.
On balance, it is possible to note that globalisation has both negative and positive effects on the UAE business environment and economy. Thus, it is associated with extensive investment and sharing experiences with other business cultures. At the same time, it can be associated with quite significant governmental control, which can discourage many companies from entering the market. Orientation on western business strategies can also be hazardous. Nonetheless, irrespective of these negative effects, the UAE will benefit from globalisation as it will be integrated into the global market. Of course, it is crucial to address the issues mentioned above to make the process successful.
Akram, M., Faheem, M.A., Khyzer Bin Dost, M., & Abdullah, I. (2011). Globalisation and its impacts on the world economic development. International Journal of Business and Social Science, 2(23), 291-297.
Bremmer, I. (2014, January-February). The new rules of globalization. Harvard Business Review, 103-107.
Godwin, S.M. (2006). Globalization, education and Emiratisation: A study of the United Arab Emirates. EJISDC, 27(1), 1-14.
Mohammad, R., & Sidaway, J.D. (2012). Spectacular urbanization amidst variegated geographies of globalization: Learning from Abu Dhabi’s trajectory through the lives of South Asian men. International Journal of Urban and Regional Research, 36(3), 606-627.
Stephenson, M.L., Russell, K.A., & Edgar, D. (2010). Islamic hospitality in the UAE: Indigenization of products and human capital. Journal of Islamic Marketing, 1(1), 9-24.