Evaluating the suitability of Arab countries for foreign direct investment

Governments all over the world are adopting different schemes and legislations to attract international direct investments.

To look at the suitableness regarding the Persian Gulf as being a location for international direct investment, one must assess whether the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of many consequential factors is political security. Just how do we evaluate a state or perhaps a area's stability? Political stability depends to a large degree on the content of individuals. Citizens of GCC countries have actually a lot of opportunities to aid them achieve their dreams and convert them into realities, helping to make many of them content and happy. Also, global indicators of political stability show that there's been no major governmental unrest in in these countries, and also the occurrence of such an possibility is very unlikely provided read more the strong political determination plus the vision of the leadership in these counties especially in dealing with crises. Furthermore, high levels of misconduct can be extremely harmful to foreign investments as potential investors fear risks for instance the obstructions of fund transfers and expropriations. However, when it comes to Gulf, specialists in a study that compared 200 states deemed the gulf countries as being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes confirm that the GCC countries is improving year by year in eradicating corruption.

The volatility regarding the currency prices is one thing investors just take seriously since the vagaries of currency exchange price fluctuations may have an impact on their profitability. The currencies of gulf counties have all been fixed 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 would likely see the fixed exchange rate being an crucial attraction for the inflow of FDI into the country as investors don't have to be worried about time and money spent handling the foreign exchange instability. Another essential benefit that the gulf has is its geographic position, located at the intersection of three continents, the region functions as a gateway towards the rapidly growing Middle East market.

Countries all over the world implement various schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are increasingly implementing flexible laws, while some have lower labour expenses as their comparative advantage. Some great benefits of FDI are, of course, shared, as if the international firm discovers reduced labour costs, it will likely be able to minimise costs. In addition, in the event that host state can give better tariffs and savings, the company could diversify its markets by way of a subsidiary. On the other hand, the state should be able to grow its economy, develop human capital, increase employment, and provide usage of knowledge, technology, and abilities. Hence, economists argue, that in many cases, FDI has generated effectiveness by transmitting technology and knowledge to the host country. However, investors consider a numerous aspects before carefully deciding to invest in a country, but among the list of significant factors which they consider determinants of investment decisions are geographic location, exchange fluctuations, governmental security and government policies.