Assessing the suitability of Arab countries for foreign direct investment

Assessing the suitability of Arab countries for foreign direct investment

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As nations across the world make an effort to attract foreign direct investments, the Arab Gulf stands out as being a strong prospective destination.

To look at the viability of the Gulf being a location for foreign direct investment, one must assess if the Arab gulf countries give you the necessary and sufficient conditions to encourage direct investments. One of the consequential variables is governmental stability. How can we assess a state or even a area's security? Political stability depends up to a large level on the content of inhabitants. People of GCC countries have lots of opportunities to greatly help them attain their dreams and convert them into realities, helping to make many of them content and happy. Additionally, international indicators of governmental stability reveal that there's been no major political unrest in the region, and the occurrence of such an possibility is highly not likely given the strong governmental determination and also the prudence of the leadership in these counties specially in dealing with political crises. Furthermore, high levels of misconduct could be extremely detrimental to international investments as potential investors dread risks for instance the obstructions of fund transfers and expropriations. However, regarding Gulf, experts in a study that compared 200 counties categorised the gulf countries as being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes make sure the GCC countries is increasing year by year in cutting down corruption.

The volatility of the exchange prices is one thing investors simply take into account seriously due to the fact unpredictability of exchange rate changes could have an effect on their profitability. The currencies of gulf counties have all been fixed to the United States dollar 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 essential attraction for the inflow of FDI to the country as investors do not have to be concerned about time and money spent handling the currency exchange uncertainty. Another crucial advantage that the gulf has is its geographic position, situated at the crossroads of three continents, the region functions as a gateway to the rapidly raising Middle East market.

Countries all over the world implement various schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are increasingly implementing pliable regulations, website while others have reduced labour expenses as their comparative advantage. The many benefits of FDI are, needless to say, mutual, as if the international corporation discovers reduced labour costs, it will 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 by way of a subsidiary branch. Having said that, the country should be able to develop its economy, develop human capital, enhance employment, and provide access to expertise, technology, and skills. Therefore, economists argue, that in many cases, FDI has resulted in effectiveness by transmitting technology and knowledge towards the host country. However, investors look at a myriad of aspects before carefully deciding to invest in new market, but among the significant factors that they think about determinants of investment decisions are location, exchange fluctuations, political stability and government policies.

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