As countries around the world make an effort to attract international direct investments, the Arab Gulf stands out as being a strong possible destination.
Countries all over the world implement various schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are progressively adopting pliable laws and regulations, while some have actually lower labour costs as their comparative advantage. Some great benefits of FDI are, needless to say, shared, as if the multinational company discovers reduced labour expenses, it is in a position to minimise costs. In addition, if the host country can give better tariffs and savings, the company could diversify its markets via a subsidiary. On the other hand, the country should be able to grow its economy, cultivate human capital, increase employment, and offer access to knowledge, technology, and skills. Hence, economists argue, that oftentimes, FDI has led to efficiency by transferring technology and know-how to the host country. Nevertheless, investors look at a many factors before making a decision to move in a state, but one of the significant factors that they consider determinants of investment decisions are geographic location, exchange volatility, governmental stability and government policies.
To look at the suitability regarding the Arabian Gulf being a destination for international direct investment, one must evaluate whether or not the Arab gulf countries give you the necessary and sufficient conditions to promote direct investments. One of the important elements is political security. How can we evaluate a state or perhaps a region's stability? Governmental security will depend on up to a large degree on the content of individuals. Citizens of GCC countries have plenty of opportunities to help them attain their dreams and convert them into realities, helping to make many of them content and happy. Also, worldwide indicators of political stability unveil that there has been no major political unrest in the area, and the incident of such an eventuality is highly not likely provided the strong governmental determination as well as the farsightedness of the leadership in these counties specially in dealing with crises. Moreover, high levels of corruption can be hugely harmful to international investments more info as potential investors fear risks like the obstructions of fund transfers and expropriations. But, regarding Gulf, economists in a study that compared 200 states classified the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that several corruption indexes make sure the GCC countries is improving year by year in reducing corruption.
The volatility of the exchange prices is one thing investors just take into account seriously due to the fact vagaries of exchange price changes may have an effect on the profitability. The currencies of gulf counties have all been pegged to the US dollar from 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 view the pegged exchange rate as an crucial seduction for the inflow of FDI in to the country as investors don't need to be worried about time and money spent handling the foreign exchange instability. Another crucial benefit that the gulf has is its geographical position, located on the crossroads of Europe, Asia, and Africa, the region serves as a gateway to the rapidly raising Middle East market.