Most of the Arabian countries are known for its oil reserves and varieties of agricultural products. A number of countries are ruled by Monarchs. They have their priorities for the upliftment of their citizens. The massive housing complexes, establishment of educational institutes and well-connected network of roads are testimony of their welfare work. Barring few countries where democratic movements have grown into replacing autocratic rulers, the financial and industrial activities are concentrated in the state apparatus. Few rulers encouraged individuals to undertake commercial and industrial activities. The petro-dollar boom of 70’s gave impetus to the economic activity in the Arab world in general and Middle East in particular. In the last four decades, economic activities generated employment and enhanced standard of living in these countries.
As the GDP rose up at higher level, the government as well as private enterprise jointly decided to undertake various social projects. Initially CSR was treated as western concept and underlying meaning of social responsibility was accepted as individual’s philanthropy. But over the years, CSR has been engraved in the financial circles of the Arab world. In 2006, a regional Institute for corporate governance was established in Dubai to advance corporate governance reform in the region.
Bahrain, Egypt, Jordan, Lebanon, Palestinian National Authority, Oman, United Arab Emirates, Morocco, Tunisia and Yemen are the ten countries that have chalked out National Investment Reform Agendas for improving investment environment.
These reform agendas highlight the role of corporate social responsibility and corporate governance in creating a healthy investment climate.
Middle East governments are engaging business to achieve environmental and social objectives through public-private partnerships (PPP). In Egypt, for example, as part of the government’s social goal of bolstering educational capacity, the Ministry of Investment’s online portal sets forth PPP investment opportunities in the construction and maintenance of 2200 new schools, with investment to the tune of EGP 4.7 billion. While the private sector invests in construction and maintenance, the Egyptian government will cover the teachers’ salaries, administrative staff, and the annual operational cost. In this way, the private sector’s core competencies can be harnessed to meet national social needs. Public private partnerships provide better distribution of risks, therefore, they are attractive to foreign investors. Because they offer an FDI entry point, state policy highly supports this type of partnership in the region, especially for environmental and social goals that can benefit from the private sector’s financial resources and results-driven approach.
In Arab countries, what may constitute CSR in a country or in one industry sector may not resonate or be applicable in another. For example, consumer, environmental, employee, governmental and community activism – hallmarks of Western society – are not typically observed in these countries. A World Bank report finds that CSR has different meanings from country to country in the Middle East region. The report revealed that CSR is currently best understood and manifested as external philanthropy of a company, and that CSR is driven primarily by either rational business choices or political choice instead of arising from or responding to pressures and demands from society.
In most countries, the actual society does not differentiate between ethical behavior and simply obeying the law when they evaluate business behavior.
In general, the Middle East as a whole is at a stage of trying to define CSR in their own context, map their stakeholders, and define their priority issues.
Combating bribery in business has now become integral to effective corporate social responsibility and corporate compliance programmes. Companies are now becoming conscious of the need for clean business practices, and contributing to a more ethical environment, boosting the country’s investment climate.
The sustainable growth of the Indian Economy depends to a large extent on the continuing success of its companies in international business, and in long term, that success depends on their good reputations globally.