Assessing the suitability of Arab countries for foreign direct investment

Assessing the suitability of Arab countries for foreign direct investment

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The GCC countries are actively carrying out policies to draw in international investments.

The volatility regarding the exchange rates is something investors simply take into account seriously as the vagaries of currency exchange rate fluctuations might have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the United States dollar since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely view the fixed exchange rate as an important attraction get more info for the inflow of FDI in to the region as investors don't need certainly to be concerned about time and money spent manging the foreign exchange uncertainty. Another important advantage that the gulf has is its geographic position, located on the intersection of Europe, Asia, and Africa, the region serves as a gateway towards the quickly growing Middle East market.

Countries around the world implement various schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively embracing pliable laws and regulations, while some have cheaper labour expenses as their comparative advantage. The benefits of FDI are, of course, mutual, as if the international organization finds lower labour expenses, it will be in a position to reduce costs. In addition, if the host country can grant better tariffs and savings, the business enterprise could diversify its markets through a subsidiary. Having said that, the country will be able to grow its economy, develop human capital, increase employment, and provide access to expertise, technology, and abilities. Hence, economists argue, that in many cases, FDI has led to efficiency by transferring technology and know-how to the host country. Nonetheless, investors look at a many aspects before carefully deciding to move in a country, but one of the significant variables that they consider determinants of investment decisions are location, exchange volatility, governmental stability and government policies.

To look at the viability of the Persian Gulf as a location for foreign direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of the consequential criterion is governmental security. How can we assess a state or perhaps a area's security? Governmental security will depend on to a large extent on the satisfaction of individuals. People of GCC countries have a lot of opportunities to simply help them achieve their dreams and convert them into realities, which makes a lot of them satisfied and happy. Also, worldwide indicators of governmental stability reveal that there is no major political unrest in in these countries, as well as the incident of such a scenario is highly unlikely provided the strong political determination plus the farsightedness of the leadership in these counties particularly in dealing with political crises. Moreover, high levels of misconduct can be extremely detrimental to international investments as potential investors fear hazards including the obstructions of fund transfers and expropriations. However, regarding Gulf, experts in a study that compared 200 states classified the gulf countries being a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes make sure the GCC countries is improving year by year in eradicating corruption.

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