Assessing the suitability of Arab countries for FDI

Assessing the suitability of Arab countries for FDI

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The GCC countries are earnestly adopting policies to invite international investments.

The volatility associated with exchange prices is one thing investors just take into account seriously because the vagaries of exchange rate fluctuations might have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the US 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 view the fixed exchange rate being an essential attraction for the inflow of FDI into the country as investors don't have to worry about time and money spent handling the forex uncertainty. Another essential advantage that the gulf has is its geographical position, situated on the crossroads of Europe, Asia, and Africa, the region functions as a gateway towards the quickly growing Middle East market.

Nations around the globe implement various schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are progressively adopting flexible laws, while others have reduced labour costs as their comparative advantage. Some great benefits of FDI are, needless to say, shared, as if the multinational firm discovers lower labour costs, it's going to be able to minimise costs. In addition, if the host country can grant better tariffs and savings, the company could diversify its markets by way of a subsidiary. On the other hand, the country will be able to grow its economy, cultivate human capital, increase job opportunities, and offer usage of expertise, technology, and skills. Therefore, economists argue, that oftentimes, FDI has resulted in effectiveness by transmitting technology and knowledge towards the host country. Nevertheless, investors look at a myriad of factors before deciding to invest in new market, but among the significant factors which they consider determinants of investment decisions are geographic location, exchange volatility, political security and governmental policies.

To look at the suitability of the Arabian Gulf as a location 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 aspects is political stability. How do we assess a state or even a area's security? Governmental stability depends up to a large degree on the satisfaction of inhabitants. Citizens of GCC countries have a good amount of opportunities to help them attain their dreams and convert them into realities, which makes a lot of them content and grateful. Furthermore, international indicators of governmental stability reveal that there has been no major political unrest in the area, and the incident of such a eventuality is highly unlikely because of the strong governmental determination as read more well as the vision of the leadership in these counties specially in dealing with crises. Furthermore, high levels of corruption could be extremely detrimental to foreign investments as investors dread risks for instance the obstructions of fund transfers and expropriations. Nonetheless, in terms of Gulf, experts in a study that compared 200 counties categorised the gulf countries as a low danger in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the GCC countries is increasing year by year in cutting down corruption.

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