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 earnestly developing policies to invite foreign investments.

The volatility regarding the exchange rates is one thing investors just take into account seriously since the unpredictability of currency exchange price fluctuations might have an effect on their profitability. The currencies of gulf counties have all been fixed 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 may likely view the pegged exchange rate as an important attraction for the inflow of FDI to the region as investors do not need to be worried about time and money spent handling the foreign currency uncertainty. Another crucial advantage that the gulf has is its geographical position, situated at the intersection of Europe, Asia, and Africa, the region serves as a gateway towards the rapidly raising Middle East market.

Nations around the globe implement various schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are increasingly embracing pliable regulations, while others have actually lower labour costs as their comparative advantage. The benefits of FDI are, needless to say, mutual, as if the international firm discovers reduced labour expenses, it is able to reduce costs. In addition, if the host state can give better tariffs and savings, the business enterprise could diversify its markets by way of a subsidiary branch. On the other hand, the country should be able to grow its economy, cultivate human capital, increase employment, and provide access to knowledge, technology, and skills. Hence, economists argue, that oftentimes, FDI has generated efficiency by transferring technology and know-how towards the host country. Nevertheless, investors look at a many factors before making a decision to move in a country, but one of the significant factors which they consider determinants of investment decisions are location, exchange volatility, governmental stability and government policies.

To look at the suitability regarding the Arabian Gulf as a destination for foreign direct investment, one must assess whether the Arab gulf check here countries give you the necessary and sufficient conditions to encourage direct investments. One of many important factors is political security. Just how do we assess a state or perhaps a area's security? Governmental security will depend on to a large extent on the satisfaction of individuals. Citizens of GCC countries have a great amount of opportunities to aid them achieve their dreams and convert them into realities, helping to make many of them satisfied and grateful. Also, global indicators of governmental stability show that there is no major governmental unrest in in these countries, and the occurrence of such an scenario is highly not likely given 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 hugely harmful to international investments as investors dread risks including the blockages of fund transfers and expropriations. Nonetheless, regarding Gulf, political scientists in a study that compared 200 counties classified the gulf countries being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that several corruption indexes make sure the GCC countries is improving year by year in cutting down corruption.

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