The GCC countries are earnestly developing policies to attract international investments.
The volatility of the exchange prices is one thing investors simply take into account seriously because the vagaries of currency exchange rate changes may have a direct impact on their profitability. The currencies of gulf counties have all been fixed to the US currency since the mid 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 fixed exchange rate as an essential attraction for the inflow of FDI to the region as investors do not need to be worried about time and money spent handling the currency exchange uncertainty. Another crucial advantage that the gulf has is its geographic location, situated on the intersection of three continents, the region functions as a gateway towards the rapidly growing Middle East market.
Countries around the world implement different schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are increasingly implementing pliable laws and regulations, while some have actually cheaper labour expenses as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the international business finds reduced labour expenses, it'll be able to cut costs. In addition, if the host country can grant better tariffs and savings, the company could diversify its markets through a subsidiary branch. On the other hand, the state will be able to grow its economy, develop human capital, enhance employment, and provide usage of knowledge, technology, and skills. Thus, economists argue, that most of the time, FDI has led to effectiveness by transferring technology and know-how towards the host country. Nevertheless, investors consider a many factors before making a decision read more to invest in a country, but among the significant variables they think about determinants of investment decisions are position on the map, exchange fluctuations, political stability and government policies.
To examine the suitability of the Gulf as being a destination for international direct investment, one must evaluate whether or not the Arab gulf countries give you the necessary and adequate conditions to encourage FDIs. One of the important criterion is political security. How can we evaluate a state or perhaps a region's security? Governmental stability depends to a large extent on the satisfaction of residents. Citizens of GCC countries have actually lots of opportunities to greatly help them achieve their dreams and convert them into realities, making most of them content and grateful. Furthermore, worldwide indicators of governmental stability show that there has been no major political unrest in the region, and the occurrence of such an scenario is extremely unlikely provided the strong governmental will and also the farsightedness of the leadership in these counties specially in dealing with political crises. Furthermore, high levels of misconduct could be extremely harmful to foreign investments as investors fear risks for instance the obstructions of fund transfers and expropriations. However, regarding Gulf, economists in a study that compared 200 counties deemed the gulf countries being a low danger in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that a few corruption indexes make sure the Gulf countries is improving year by year in reducing corruption.