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 attract foreign investments.

The volatility of the currency prices is one thing investors just take seriously since the vagaries of currency exchange price changes might have an impact on the profitability. The currencies of gulf counties have all been fixed to the United States dollar from the mid 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 being an crucial attraction for the inflow of FDI check here to the region as investors don't need to be concerned about time and money spent handling the foreign currency instability. Another crucial benefit that the gulf has is its geographical location, located on the intersection of Europe, Asia, and Africa, the region functions as a gateway to the rapidly growing Middle East market.

To look at the viability regarding the Arabian Gulf being a location for international direct investment, one must assess whether the Arab gulf countries give you the necessary and sufficient conditions to encourage direct investments. Among the important aspects is governmental security. Just how do we evaluate a state or perhaps a area's security? Governmental security depends to a significant degree on the content of people. People of GCC countries have actually plenty of opportunities to help them achieve their dreams and convert them into realities, which makes many of them satisfied and happy. Additionally, global indicators of governmental stability show that there has been no major political unrest in the area, plus the occurrence of such an eventuality is highly unlikely provided the strong governmental will and also the farsightedness of the leadership in these counties specially in dealing with political crises. Moreover, high rates of misconduct could be extremely harmful to international investments as potential investors dread hazards like the obstructions of fund transfers and expropriations. However, when it comes to 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 would probably attest that several corruption indexes confirm that the Gulf countries is increasing year by year in cutting down corruption.

Countries around the globe implement different schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are progressively adopting flexible laws and regulations, while some have actually lower labour costs as their comparative advantage. Some great benefits of FDI are, needless to say, shared, as if the international firm finds reduced labour costs, it is able to cut costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets through a subsidiary. On the other hand, the state will be able to grow its economy, cultivate human capital, increase job opportunities, and provide access to expertise, technology, and abilities. Thus, economists argue, that oftentimes, FDI has generated efficiency by transferring technology and knowledge to the country. Nonetheless, investors consider a myriad of factors before making a decision to invest in new market, but among the list of significant variables that they consider determinants of investment decisions are location, exchange fluctuations, governmental stability and government policies.

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