Arsenal need to “gamble” in the summer transfer market and spend beyond their budget, says Ray Parlour.
Another quiet window is said to be on the cards at Emirates Stadium and it has been suggested that Unai Emery will be given around £45 million ($57m) to spend by the Gunners board.
That figure falls some way short of the funding expected to be invested by a number of Premier League rivals.
Parlour believes Arsenal need to loosen the purse strings and scrap their frugal approach to recruitment, with the north London outfit in danger of being left behind.
“You see what Liverpool did – they needed a centre-back and in comes Virgil van Dijk. Nobody mentions how much he cost now. The same with Alisson in goal.
“It’s all about investment. As much as I hate to say that money is everything, but it’s always gone that way.
“Sometimes you have to go beyond your budget, absolutely.
“If you can attract a player and you know he is very keen to go, sometimes you have to push the boat out a little bit further and take the gamble.”
Arsenal are being linked with a number of players as they seek to bolster their ranks.
Rumours of interest in the likes of Belgium international Yannick Carrasco, who is currently on the books of Chinese Super League side Dalian Yifang, and Bournemouth forward Ryan Fraser continue to rage.
The Gunners are also said to be looking at Celtic left-back Kieran Tierney.
They have, however, faced criticism for tabling a reported £15m ($19m) bid for the Scotland star, with that offer considered to be another indication of the “cheap” approach being favoured.
While Emery is seeing his hands tied, Manchester United have already made their intentions clear as they prepare to complement the £15m addition of Daniel James with a £55m ($70m) swoop for Crystal Palace defender Aaron Wan-Bissaka.