An American Expat's Framework for Moving Overseas
By Brandon Ray JGSM '10
Issue date: 9/9/09 Section: Perspectives
But Dubai has hit a wall in this recession. The headiest estimates predict 80% declines in property values there, and even conservative estimates expect declines similar to bubble-busted Las Vegas and Miami. A sign of the times, thousands of cars have been found over the last year abandoned at Dubai International Airport, the remnants of expats fleeing the country rather than facing debtor's prison.
What I learned this summer in the glitzy Emirate, besides a handful of Arabic phrases and a shameful appreciation for shisha, was that there are three obstacles hindering a developing economy from transforming into developed one: 1) institutional reform, 2) educational reform, and 3) social reform. Leave it to a consultant to condense a summer of experience into one framework. Leave it to a Nate Peck Consulting Focus trained consultant to make sure the framework has three parts.
Institutional Reform: Businesses and investors make decisions by carefully weighing and managing risks, but without legitimate institutions collecting and managing business information, the problem of quantifying risks is intractable. The mass of business intelligence housed in such mundane repositories as the Bureau of Labor Statistics and the SEC databases makes business relatively easy in the US. These institutions are either absent or nascent in much of the Middle East, making risk averse investors (read: most investors) look elsewhere for opportunity.
Educational Reform: During Dubai's heyday, 80% of the workforce was made up of expat labor. My colleagues surmised that speaking Urdu or Hindi would be far more valuable than Arabic in the UAE. In large part, this is due to the fact that the domestic labor force in much of the Middle East is undereducated, unmotivated, or both. Until domestic education advances to a point where locals, people with a vested interest in their economy's long-term success, can staff the consulting firms and investment banks, you will always have a workforce that evaporates when the going gets tough.
Social Reform: Though Dubai stands out as a beacon of tolerance in the Middle East, many outsiders find it hard to call much of the Arab world home. Riyadh is ranked the third worst place in the world to work in BusinessWeek's Hardship rankings (though with an admitted Western bias), and most of the Arab world falls in the lower half of Transparency International's corruption index. Until social reform pervades the Arab world, economic diversification will likely remain tenuous.
So, when considering the question of whether to relocate or invest in a quick-growing corner of the world, I implore you to consider not only the tax benefits and high salaries that are creating the short-term growth but also the institutional, educational, and social reforms necessary to sustain such growth.
What I learned this summer in the glitzy Emirate, besides a handful of Arabic phrases and a shameful appreciation for shisha, was that there are three obstacles hindering a developing economy from transforming into developed one: 1) institutional reform, 2) educational reform, and 3) social reform. Leave it to a consultant to condense a summer of experience into one framework. Leave it to a Nate Peck Consulting Focus trained consultant to make sure the framework has three parts.
Institutional Reform: Businesses and investors make decisions by carefully weighing and managing risks, but without legitimate institutions collecting and managing business information, the problem of quantifying risks is intractable. The mass of business intelligence housed in such mundane repositories as the Bureau of Labor Statistics and the SEC databases makes business relatively easy in the US. These institutions are either absent or nascent in much of the Middle East, making risk averse investors (read: most investors) look elsewhere for opportunity.
Educational Reform: During Dubai's heyday, 80% of the workforce was made up of expat labor. My colleagues surmised that speaking Urdu or Hindi would be far more valuable than Arabic in the UAE. In large part, this is due to the fact that the domestic labor force in much of the Middle East is undereducated, unmotivated, or both. Until domestic education advances to a point where locals, people with a vested interest in their economy's long-term success, can staff the consulting firms and investment banks, you will always have a workforce that evaporates when the going gets tough.
Social Reform: Though Dubai stands out as a beacon of tolerance in the Middle East, many outsiders find it hard to call much of the Arab world home. Riyadh is ranked the third worst place in the world to work in BusinessWeek's Hardship rankings (though with an admitted Western bias), and most of the Arab world falls in the lower half of Transparency International's corruption index. Until social reform pervades the Arab world, economic diversification will likely remain tenuous.
So, when considering the question of whether to relocate or invest in a quick-growing corner of the world, I implore you to consider not only the tax benefits and high salaries that are creating the short-term growth but also the institutional, educational, and social reforms necessary to sustain such growth.
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