Regional spending power carries clout

The Life: Book review: Vijay Mahajan's 'Arab World Unbound: Tapping into the Power of 350 Million Consumers' talks about the Arab Spring in the private sector.

Vijay Mahajan, the author of The Arab World Unbound: Tapping into the Power of 350 Million Consumers. Christopher Pike / The National

A corner store selling cans of the Austrian-made Red Bull in a Hizbollah-dominated neighbourhood of south Beirut took Professor Vijay Mahajan by surprise.

"It was because of the perception I had like everyone else," Prof Mahajan, a marketing professor at the University of Texas, says of the experience in 2008.

The young abaya-clad woman buying a can "did not bother to know whether it is a western brand or a Lebanese brand", he says. "Consumers are consumers."

A strong vein of optimism for the Arab world's economic potential, drawn from the global connectivity of the region, diversity of consumer preferences, large population of Arab youth and the entrepreneurial activities in the region, runs through Mr Mahajan's new book Arab World Unbound: Tapping into the Power of 350 Million Consumers. And he calls for a further integration of the region in the global marketplace.

"The whole objective was to show how vibrant the consumer markets are here," Prof Mahajan said at the book's launch in Dubai this month. From 2008 until November 2010, he travelled across 22 countries within the Arab League to conduct research for the book.

Two indicators were important: household consumption and size of the middle class in each country.

In this region, half of the US$2 trillion (Dh7.34tn) economy is driven by household consumption.

"That shows this is a very vibrant economy," Prof Mahajan says.

As a comparison, household consumption in the United States accounts for 70 per cent of the economy. The size of the middle class varied from the region's highest - 70 per cent in Qatar - to an average of 60 per cent in the UAE and the region's lowest, 30 per cent in Mauritania.

Challenges, however, remain, such as political instability and the trend of risk avoidance by corporates.

There is also a sense in the region of grappling with the perceived notions about itself.

The "struggle [is] to tell its true story, correcting the misunderstandings and stereotypes of the broader global community", Prof Mahajan writes.