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Middle East Effect on Global Trade Report


Although the Middle East is considered to be a developing region, it has been a hub for global trade for many centuries. There are several factors that make the Middle East one of the most competitive and promising regions across the globe as far as trade is concerned. First and foremost, it is rich in natural resources, which maintain its rapid growth. Moreover, government leaders have recently introduced a number of structural reforms to decrease excessive reliance on oil and promote economic and industrial diversification. Second, the region has a favorable geographic location at the crossroads of Africa, Asia, and Europe, which allows it to be in the center of international trade. The third factor can be attributed to the 21st century as it is connected with an e-commerce boom (increased popularity of technologies), which brings new investors. Finally, the Middle East has always attracted a lot of tourists, which also makes it stay afloat in the global market.

However, there are numerous concerns, problems, and challenges that hinder the process of trade development in the region. Despite all the aforementioned advantages, the economic performance of the Middle East is rather weak, mainly owing to high rates of population growth and low productivity. The public sector of the majority of counties is large and costly, while financial markets are underdeveloped (often characterized by inappropriate exchange rate policies). Besides, there are ongoing armed conflicts that hinder progress and lead to eroding public finances, crippled tourism sector, the volatility of commodity prices, falling revenue, supply chain disruptions, and general uncertainty.

Although these problems may have a considerable negative impact on businesses in the Middle East, its position is considerably improved due to abundant natural resources, which attract global industrial leaders. More than 60% of the petroleum produced all over the world originates from this region. Despite the fact that oil deposits serve as the major driver of the economy of the region, human resources should not be neglected either. Education in the Middle East is highly valued, which accounts for the fact that the majority of business people are educated up to or even beyond the university level. There are plenty of educational programs launched by the government that is aimed to prepare future leaders.

There are also other factors that companies should take into consideration before doing business in the Middle East. Since labor policies there are rather liberal, it is much more cost-effective to recruit locals than to opt for the company’s original workforce. Yet, companies must be aware of cultural and social differences since they are closely related to business practices. It typically takes a long time for locals to develop trust in foreigners since personal and business relationships are not separated. This implies that negotiations may require a protracted amount of time. Anyhow, there is no other way to establish lasting business relationships with Middle Easterners. It is crucial to respect their traditions and culture.

Despite the fact that the prospect for developing a localized business framework for the region seems rather vague, regionalization is still possible and should begin by creating tangible benefits for each separate country. Sanctity of state boundaries is required to ensure non-intrusion of political interests and conflicts into trade and other business matters. The region may also consider stepping away from its charismatic leadership to innovative leadership practices, thereby ensuring a close connection between the public and the private sectors, which is likely to attract new trade partners and investors.

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IvyPanda. (2020, October 2). Middle East Effect on Global Trade. Retrieved from https://ivypanda.com/essays/middle-east-effect-on-global-trade/

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"Middle East Effect on Global Trade." IvyPanda, 2 Oct. 2020, ivypanda.com/essays/middle-east-effect-on-global-trade/.

1. IvyPanda. "Middle East Effect on Global Trade." October 2, 2020. https://ivypanda.com/essays/middle-east-effect-on-global-trade/.


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IvyPanda. "Middle East Effect on Global Trade." October 2, 2020. https://ivypanda.com/essays/middle-east-effect-on-global-trade/.

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IvyPanda. 2020. "Middle East Effect on Global Trade." October 2, 2020. https://ivypanda.com/essays/middle-east-effect-on-global-trade/.

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IvyPanda. (2020) 'Middle East Effect on Global Trade'. 2 October.

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