Assessing the suitability of Arab countries for foreign direct investment

Assessing the suitability of Arab countries for foreign direct investment

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Various countries throughout the world have actually implemented strategies and laws designed to attract foreign direct investments.

To examine the viability regarding the Arabian Gulf being a destination for foreign direct investment, one must assess whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage direct investments. One of many important criterion is political stability. Just how do we assess a state or even a area's stability? Governmental security will depend on up to a large extent on the content of residents. Citizens of GCC countries have a great amount of opportunities to simply help them attain their dreams and convert them into realities, making many of them satisfied and grateful. Moreover, global indicators of governmental stability reveal that there is no major political unrest in in these countries, as well as the occurrence of such an scenario is very not likely provided the strong political will and the prescience of the leadership in these counties specially in dealing with crises. Moreover, high levels of corruption could be extremely harmful to international investments as investors dread risks for instance the blockages of fund transfers and expropriations. Nonetheless, when it comes to Gulf, specialists in a study that compared 200 counties deemed the gulf countries being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the Gulf countries is improving year by year in eradicating corruption.

The volatility of the currency rates is one thing investors simply take into account seriously as the vagaries of currency exchange rate changes might have a direct impact on their profitability. The currencies of gulf counties have all been pegged to the United States currency since 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 pegged exchange rate as an important attraction for the inflow of FDI in to the region as . investors don't need certainly to be concerned about time and money spent manging the currency exchange uncertainty. Another important benefit that the gulf has is its geographic position, located at the crossroads of Europe, Asia, and Africa, the region functions as a gateway to the rapidly raising Middle East market.

Countries around the globe implement various schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are progressively embracing flexible legislation, while some have cheaper labour expenses as their comparative advantage. The many benefits of FDI are, needless to say, shared, as if the international firm discovers reduced labour expenses, it will likely be able to minimise costs. In addition, in the event that host state can grant better tariffs and savings, the company could diversify its markets through a subsidiary branch. Having said that, the country will be able to develop its economy, develop human capital, enhance job opportunities, and provide access to knowledge, technology, and abilities. Therefore, economists argue, that in many cases, FDI has led to effectiveness by transferring technology and knowledge towards the host country. However, investors think about a numerous aspects before making a decision to invest in new market, but one of the significant factors they consider determinants of investment decisions are geographic location, exchange volatility, political security and governmental policies.

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