As countries around the globe make an effort to attract foreign direct investments, the Arab Gulf stands apart as a strong possible destination.
To examine the viability of the Arabian Gulf as being a destination for foreign direct investment, one must assess whether or not the Arab gulf countries give you the necessary and adequate conditions to encourage FDIs. One of the important variables is governmental security. How can we evaluate a state or even a area's stability? Governmental stability depends up to a significant degree on the content of residents. Citizens of GCC countries have actually a great amount of opportunities to greatly help them attain their dreams and convert them into realities, making most of them content and happy. Furthermore, global indicators of governmental stability unveil that there is no major political unrest in in these countries, and the occurrence of such an scenario is very not likely because of the strong governmental determination plus the prudence of the leadership in these counties particularly in dealing with crises. Moreover, high levels of corruption can be extremely harmful to international investments as potential investors dread risks including the blockages of fund transfers and expropriations. Nonetheless, when it comes to Gulf, specialists in a study that compared 200 states classified the gulf countries being a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that a few corruption indexes confirm that the region is website increasing year by year in eradicating corruption.
The volatility regarding the exchange prices is something investors just take seriously because the unpredictability of currency exchange price changes might have an effect on their profitability. The currencies of gulf counties have all been fixed 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 fixed exchange rate as an important attraction for the inflow of FDI to the country as investors don't have to be worried about time and money spent handling the foreign currency risk. Another crucial advantage that the gulf has is its geographic position, located at the intersection of Europe, Asia, and Africa, the region functions as a gateway to the quickly raising Middle East market.
Nations around the globe implement different schemes and enact legislations to attract international direct investments. Some countries like the GCC countries are increasingly embracing flexible regulations, while some have cheaper labour costs as their comparative advantage. The advantages of FDI are, needless to say, shared, as if the multinational firm finds reduced labour expenses, it is able to cut costs. In addition, in the event that host state can give better tariffs and savings, the company could diversify its markets via a subsidiary branch. Having said that, the country will be able to grow its economy, develop human capital, enhance job opportunities, and offer usage of knowledge, technology, and skills. Thus, economists argue, that oftentimes, FDI has generated effectiveness by transferring technology and knowledge towards the host country. Nonetheless, investors think about a many aspects before making a decision to invest in new market, but one of the significant factors which they give consideration to determinants of investment decisions are position on the map, exchange volatility, political stability and government policies.