The GCC countries are earnestly implementing policies to invite foreign investments.
To look at the suitability of the Arabian Gulf being a destination for foreign direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to promote direct investments. One of the consequential aspects is governmental security. How can we assess a state or even a region's security? Political security depends up to a large extent on the satisfaction of people. Citizens of GCC countries have actually a good amount of opportunities to aid them achieve their dreams and convert them into realities, making a lot of them satisfied and happy. Also, global indicators of governmental stability reveal click here that there has been no major political unrest in the region, as well as the incident of such a scenario is very unlikely because of the strong governmental will plus the prudence of the leadership in these counties particularly in dealing with political crises. Moreover, high rates of corruption could be extremely harmful to foreign investments as investors fear hazards for instance the obstructions of fund transfers and expropriations. Nevertheless, in terms of Gulf, experts in a study that compared 200 states categorised the gulf countries as being a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that a few corruption indexes confirm that the Gulf countries is enhancing year by year in eradicating corruption.
Nations across the world implement different schemes and enact legislations to attract foreign direct investments. Some nations for instance the GCC countries are increasingly implementing flexible legislation, while others have actually reduced labour expenses as their comparative advantage. The many benefits of FDI are, needless to say, mutual, as if the multinational company discovers lower labour costs, it's going to be able to cut costs. In addition, in the event that host country can grant better tariffs and savings, the company could diversify its markets through a subsidiary branch. On the other hand, the country should be able to grow its economy, cultivate human capital, enhance employment, and provide access to knowledge, technology, and skills. Thus, economists argue, that most of the time, FDI has generated efficiency by transferring technology and knowledge to the host country. Nevertheless, investors consider a many aspects before carefully deciding to invest in new market, but one of the significant variables they give consideration to determinants of investment decisions are geographic location, exchange volatility, political security and government policies.
The volatility associated with the exchange rates is something investors simply take seriously because the unpredictability of currency exchange rate changes could have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the United States currency 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 see the pegged exchange rate as an crucial seduction for the inflow of FDI into the region as investors don't have to be worried about time and money spent manging the foreign currency instability. Another important advantage that the gulf has is its geographic location, situated on the intersection of three continents, the region serves as a gateway to the rapidly raising Middle East market.