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 implementing policies to bring in foreign investments.

The volatility associated with exchange rates is one thing investors simply take into account seriously because the vagaries of exchange rate fluctuations may have a visible impact on their 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 see the fixed exchange rate as an important attraction for the inflow of FDI in to the region as investors do not have to be concerned about time and money spent handling the foreign exchange instability. Another essential advantage that the gulf has is its geographical location, situated at the intersection of three continents, the region functions as a gateway to the rapidly raising Middle East market.

To look at the suitableness regarding the Arabian Gulf as being a destination for foreign direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to encourage direct investments. One of many important criterion is political stability. How do we evaluate a country or even a area's stability? Political security depends to a significant degree on the satisfaction of residents. Citizens of GCC countries have actually a good amount of opportunities to help them achieve their dreams and convert them into realities, helping to make most of them satisfied and grateful. Also, global indicators of political stability show that there has been no major political unrest in the region, as well as the incident of such a possibility is very not likely provided the strong political will plus the prescience of the leadership in these counties particularly in dealing with political crises. Furthermore, high rates of corruption could be extremely detrimental to foreign investments as investors fear hazards including the blockages of fund transfers and expropriations. Nevertheless, in terms of Gulf, political scientists in a study that compared 200 states deemed the gulf countries as being a low hazard in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would check here probably attest that several corruption indexes concur that the Gulf countries is enhancing year by year in eradicating corruption.

Nations across the world implement various schemes and enact legislations to attract international direct investments. Some countries like the GCC countries are progressively adopting pliable laws and 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 organization finds reduced labour costs, it is in a position to minimise costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets by way of a subsidiary. Having said that, the country will be able to develop its economy, develop human capital, increase employment, and provide usage of knowledge, technology, and skills. Therefore, economists argue, that most of the time, FDI has led to effectiveness by transferring technology and knowledge towards the host country. However, investors consider a numerous aspects before making a decision to invest in a state, but one of the significant variables they consider determinants of investment decisions are geographic location, exchange fluctuations, governmental stability and governmental policies.

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