Assessing the suitability of Arab countries for FDI

Assessing the suitability of Arab countries for FDI

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Different countries across the world have implemented schemes and laws made to invite international direct investments.

The volatility of the currency rates is one thing investors just take seriously as the vagaries of exchange rate fluctuations might have a direct effect on their profitability. The currencies of gulf counties have all been pegged to the United States currency from 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 view the fixed exchange price as an essential seduction for the inflow of FDI into the country as investors don't need to worry about time and money spent manging the foreign currency uncertainty. Another essential advantage that the gulf has is its geographic location, located on the intersection of three continents, the region functions as a gateway towards the rapidly growing Middle East market.

Countries across the world implement different schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are increasingly adopting pliable laws and regulations, while others have actually cheaper labour expenses as their comparative advantage. The many benefits of FDI are, needless to say, mutual, as if the multinational corporation discovers reduced labour expenses, it is able to minimise costs. In addition, in the event that host country can give better tariffs and savings, the business enterprise could diversify its markets via a subsidiary. Having said that, the state will be able to grow its economy, develop human capital, enhance job opportunities, and . provide access to expertise, technology, and abilities. Hence, economists argue, that oftentimes, FDI has generated effectiveness by transmitting technology and knowledge to the host country. Nevertheless, investors look at a myriad of aspects before making a decision to move in a state, but among the list of significant factors they give consideration to determinants of investment decisions are position on the map, exchange volatility, political security and governmental policies.

To examine the suitableness of the Gulf as being a destination for international 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 criterion is political stability. Just how do we evaluate a country or even a region's stability? Governmental security depends to a significant extent on the satisfaction of people. Citizens of GCC countries have plenty of opportunities to help them achieve their dreams and convert them into realities, making a lot of them satisfied and grateful. Also, international indicators of governmental stability show that there is no major political unrest in the region, and the incident of such an possibility is very unlikely provided the strong governmental determination and the prescience of the leadership in these counties particularly in dealing with crises. Moreover, high rates of misconduct can be extremely detrimental to foreign investments as investors fear hazards such as the obstructions of fund transfers and expropriations. However, regarding Gulf, economists in a study that compared 200 states categorised the gulf countries as being a low hazard in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes concur that the Gulf countries is improving year by year in reducing corruption.

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