Evaluating the suitability of Arab countries for FDI

Evaluating the suitability of Arab countries for FDI

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Different countries around the world have implemented schemes and laws intended to invite foreign direct investments.

The volatility associated with the currency rates is one thing investors simply take seriously since the vagaries of currency exchange price changes may have a visible impact on the 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 more info view the pegged exchange rate being an important attraction for the inflow of FDI to the country as investors do not have to be worried about time and money spent handling the foreign exchange uncertainty. Another essential advantage that the gulf has is its geographical position, situated on the intersection of Europe, Asia, and Africa, the region serves as a gateway towards the quickly raising Middle East market.

Nations across the world implement various schemes and enact legislations to attract international direct investments. Some countries like the GCC countries are increasingly implementing flexible laws, while others have reduced labour costs as their comparative advantage. The advantages of FDI are, needless to say, mutual, as if the international company finds reduced labour expenses, it's going to be able to cut costs. In addition, in the event that host country can grant better tariffs and savings, business could diversify its markets through a subsidiary. Having said that, the country should be able to develop its economy, cultivate human capital, enhance job opportunities, and provide access to knowledge, technology, and skills. Hence, economists argue, that most of the time, FDI has generated efficiency by transmitting technology and knowledge towards the host country. However, investors consider a many factors before deciding to invest in a country, but among the list of significant factors that they think about determinants of investment decisions are geographic location, exchange fluctuations, governmental stability and governmental policies.

To examine the suitability of the Persian Gulf being a destination for international direct investment, one must assess if the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. Among the important variables is governmental security. How do we assess a country or even a region's security? Political security will depend on up to a large degree on the content of residents. People of GCC countries have a great amount of opportunities to greatly help them attain their dreams and convert them into realities, making most of them content and grateful. Furthermore, global indicators of political stability show that there's been no major political unrest in in these countries, and also the occurrence of such a scenario is very not likely given the strong political determination and also the vision of the leadership in these counties especially in dealing with political crises. Moreover, high rates of corruption could be extremely harmful to international investments as investors dread hazards like the blockages of fund transfers and expropriations. Nevertheless, regarding Gulf, specialists in a study that compared 200 states categorised the gulf countries as a low hazard in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the GCC countries is increasing year by year in eradicating corruption.

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