Assessing the suitability of Arab countries for foreign direct investment

As countries around the world attempt to attract international direct investments, the Arab Gulf stands out being a strong prospective destination.

The volatility associated with the currency rates is one thing investors simply take seriously because the unpredictability of currency exchange price fluctuations may have an effect on the profitability. The currencies of gulf counties have all been fixed to the US currency since the mid 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah may likely see the fixed exchange rate being an important seduction for the inflow of FDI in to the region as investors don't need to worry about time and money spent handling the currency exchange uncertainty. Another crucial benefit that the gulf has is its geographical position, located at the intersection of three continents, the region serves as a gateway to the rapidly growing Middle East market.

Countries around the world implement various schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are progressively adopting flexible regulations, while others have cheaper labour expenses as their comparative advantage. The benefits of FDI are, of course, shared, as if the international organization finds reduced labour expenses, it will be in a position to minimise costs. In addition, in the event that host state can give better tariffs and savings, the business enterprise could diversify its markets through a subsidiary. On the other hand, the country should be able to develop its economy, develop human capital, increase job opportunities, and provide usage of expertise, technology, and skills. Hence, economists argue, that most of the time, FDI has resulted in efficiency by transmitting technology and knowledge to the country. Nevertheless, investors look at click here a many factors before carefully deciding to invest in new market, but one of the significant variables which they consider determinants of investment decisions are location, exchange fluctuations, governmental stability and governmental policies.

To examine the suitableness regarding the Persian Gulf as being a location for foreign direct investment, one must assess whether the Arab gulf countries give you the necessary and adequate conditions to promote FDIs. One of the consequential criterion is political security. Just how do we assess a state or even a area's stability? Governmental security depends to a large level on the satisfaction of residents. Citizens of GCC countries have a good amount of opportunities to aid them achieve their dreams and convert them into realities, making many of them content and grateful. Moreover, global indicators of governmental stability reveal that there's been no major political unrest in in these countries, and also the occurrence of such an possibility is very not likely because of the strong governmental will and also the prescience of the leadership in these counties particularly in dealing with crises. Furthermore, high rates of corruption can be hugely harmful to international investments as investors fear risks for instance the blockages of fund transfers and expropriations. However, when it comes to Gulf, political scientists in a study that compared 200 counties categorised the gulf countries as a low hazard in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes make sure the Gulf countries is enhancing year by year in cutting down corruption.