Evaluating the suitability of Arab countries for foreign direct investment

Evaluating the suitability of Arab countries for foreign direct investment

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Governments around the world are implementing various schemes and legislations to attract international direct investments.

The volatility regarding the exchange prices is something investors simply take seriously because the unpredictability of exchange price changes may have a direct impact on the profitability. The currencies of gulf counties have all been fixed to the US dollar 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 price as an crucial attraction for the inflow of FDI into the region as investors don't need certainly to be worried about time and money spent manging the forex uncertainty. Another crucial benefit that the gulf has is its geographic position, situated on the intersection of three continents, the region serves as a gateway towards the quickly raising Middle East market.

Nations all over the world implement various schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are progressively adopting pliable legislation, while some have cheaper labour costs as their comparative advantage. The many benefits of FDI are, of course, shared, as if the multinational company finds lower labour costs, it is in a position to reduce costs. In addition, in the event that host state can give better tariffs and savings, the company could diversify its markets through a subsidiary branch. On the other hand, the state should be able to grow its economy, develop human capital, increase job opportunities, and offer access to knowledge, technology, and skills. Thus, economists argue, that most of the time, FDI has generated effectiveness by transferring technology and know-how to the host country. However, investors think about a myriad of factors before deciding to invest in a state, but one of the significant variables they think about determinants of investment decisions are geographic location, exchange fluctuations, governmental security and governmental policies.

To look at the suitableness regarding the Persian Gulf as a location for foreign direct investment, one must assess if the Arab gulf countries provide the necessary and adequate conditions to encourage FDIs. One of many consequential factors is governmental security. How can we evaluate a state or even a region's security? Governmental security will depend on up to a significant level on the satisfaction of individuals. Citizens of GCC countries have plenty of opportunities to greatly help them attain their dreams and convert them into realities, which makes most of them satisfied and grateful. Also, international indicators of political stability reveal that there has been no major political unrest in the area, plus the occurrence of such an eventuality is very unlikely provided the strong political determination as well as the prudence of the leadership in these counties especially in dealing with crises. Furthermore, high levels more info of misconduct can be hugely harmful to international investments as potential investors fear hazards including the blockages of fund transfers and expropriations. However, regarding Gulf, political scientists in a study that compared 200 states categorised the gulf countries as a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that several corruption indexes make sure the Gulf countries is enhancing year by year in cutting down corruption.

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