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 implementing policies to attract foreign investments.

Countries all over the world implement various schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are progressively adopting flexible laws and regulations, while some have actually cheaper labour costs as their comparative advantage. The advantages of FDI are, of course, mutual, as if the international company finds lower labour expenses, it will likely be able to cut costs. In addition, in the event that host state can give better tariffs and savings, the business enterprise could diversify its markets through a subsidiary branch. On the other hand, the state should be able to develop its economy, develop human capital, enhance employment, and offer usage of expertise, technology, and abilities. Hence, economists argue, that in many cases, FDI has generated efficiency by transmitting technology and knowledge towards the host country. However, investors consider a many aspects before making a decision to invest in a country, but among the list of significant factors they give consideration to determinants of investment decisions are geographic location, exchange fluctuations, governmental security and government policies.

The volatility of the currency rates is something investors just take into account seriously because the vagaries of currency exchange price fluctuations could have an impact on the profitability. The currencies of gulf counties have all been fixed to the United States currency from 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 see the pegged exchange price being an important attraction for the inflow of FDI into the country as investors do more info not need certainly to worry about time and money spent manging the foreign exchange risk. Another essential benefit that the gulf has is its geographic location, situated at the crossroads of three continents, the region functions as a gateway towards the rapidly growing Middle East market.

To examine the suitability regarding the Arabian Gulf as being a location for foreign direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage direct investments. Among the important aspects is governmental security. Just how do we assess a state or even a area's security? Political stability will depend on up to a significant extent on the satisfaction of people. Citizens of GCC countries have lots of opportunities to simply help them attain their dreams and convert them into realities, which makes many of them satisfied and happy. Also, worldwide indicators of governmental stability unveil that there has been no major governmental unrest in in these countries, plus the incident of such an eventuality is highly unlikely because of the strong governmental determination plus the prescience of the leadership in these counties particularly in dealing with political crises. Moreover, high levels of misconduct can be extremely detrimental to foreign investments as investors dread risks for instance the blockages of fund transfers and expropriations. But, regarding Gulf, specialists in a study that compared 200 states categorised the gulf countries as a low danger in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that a few corruption indexes concur that the region is improving year by year in eliminating corruption.

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