As nations around the world make an effort to attract international direct investments, the Arab Gulf stands out being a strong possible destination.
To examine the suitableness regarding the Arabian Gulf being a location for foreign direct investment, one must evaluate whether the Arab gulf countries provide the necessary and adequate conditions to encourage direct investments. One here of the important factors is political stability. Just how do we assess a country or even a area's stability? Governmental stability depends up to a large degree on the satisfaction of citizens. People of GCC countries have plenty of opportunities to simply help them achieve their dreams and convert them into realities, which makes many of them content and grateful. Also, international indicators of political stability unveil that there's been no major political unrest in in these countries, as well as the occurrence of such an possibility is highly not likely provided the strong governmental determination and the vision of the leadership in these counties especially in dealing with crises. Furthermore, high rates of corruption could be extremely harmful to foreign investments as potential investors dread hazards like the blockages of fund transfers and expropriations. Nonetheless, in terms of Gulf, specialists in a study that compared 200 counties deemed the gulf countries as a low hazard in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes concur that the GCC countries is improving year by year in eliminating corruption.
Countries across the world implement different schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively implementing pliable laws, while others have actually lower labour costs as their comparative advantage. Some great benefits of FDI are, of course, shared, as if the international corporation discovers lower labour expenses, it's going to be in a position to minimise costs. In addition, in the event that host country can give better tariffs and savings, the business could diversify its markets through a subsidiary branch. Having said that, the state will be able to grow its economy, develop human capital, enhance employment, and provide access to expertise, technology, and abilities. Hence, economists argue, that in many cases, FDI has generated effectiveness by transferring technology and know-how to the host country. Nonetheless, investors look at a numerous factors before deciding to invest in a country, but among the list of significant variables that they give consideration to determinants of investment decisions are geographic location, exchange volatility, political stability and governmental policies.
The volatility of the currency rates is something investors just take into account seriously due to the fact unpredictability of exchange price changes may have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the US currency from the late 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 fixed exchange rate being an essential attraction for the inflow of FDI to the country as investors don't have to be concerned about time and money spent manging the forex uncertainty. Another crucial benefit that the gulf has is its geographical position, located on the crossroads of Europe, Asia, and Africa, the region serves as a gateway towards the quickly growing Middle East market.