Assessing the suitability of Arab countries for FDI

Different nations around the world have implemented schemes and more info regulations intended to entice foreign direct investments.

The volatility of the currency prices is one thing investors just take into account seriously since the unpredictability of currency exchange rate fluctuations may have an effect on their profitability. The currencies of gulf counties have all been pegged 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 see the pegged exchange price being an important seduction for the inflow of FDI into the country as investors do not need to be concerned about time and money spent manging the foreign exchange uncertainty. Another crucial advantage that the gulf has is its geographical location, situated on the crossroads of three continents, the region serves as a gateway towards the quickly raising Middle East market.

To examine the suitableness regarding the Persian Gulf as a destination for international direct investment, one must evaluate whether the Arab gulf countries give you the necessary and sufficient conditions to promote FDIs. Among the important elements is governmental security. Just how do we assess a state or perhaps a region's security? Political security will depend on to a significant degree on the content of individuals. Citizens of GCC countries have lots of opportunities to help them achieve their dreams and convert them into realities, helping to make most of them content and grateful. Moreover, global indicators of governmental stability show that there is no major governmental unrest in the region, and the occurrence of such an eventuality is highly unlikely given the strong political determination as well as the prescience of the leadership in these counties especially in dealing with political crises. Furthermore, high levels of misconduct could be extremely detrimental to foreign investments as investors dread hazards including the blockages of fund transfers and expropriations. But, regarding Gulf, specialists in a study that compared 200 states categorised the gulf countries as being a low danger in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes confirm that the Gulf countries is increasing year by year in cutting down corruption.

Countries around the world implement various schemes and enact legislations to attract international direct investments. Some nations such as the GCC countries are increasingly adopting flexible regulations, while some have lower labour costs as their comparative advantage. The many benefits of FDI are, of course, shared, as if the multinational corporation finds lower labour costs, it will be able to reduce costs. In addition, in the event that host state can give better tariffs and savings, business could diversify its markets via a subsidiary. On the other hand, the country should be able to develop its economy, develop human capital, enhance job opportunities, and provide usage of expertise, technology, and skills. Hence, economists argue, that in many cases, FDI has resulted in efficiency by transferring technology and knowledge towards the host country. Nevertheless, investors consider a many factors before making a decision to move in a country, but one of the significant variables they think about determinants of investment decisions are geographic location, exchange volatility, governmental stability and government policies.