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 implemented strategies and laws designed to entice international direct investments.

Countries around the world implement various schemes and enact legislations to attract international direct investments. Some nations like the GCC countries are increasingly implementing pliable laws and regulations, while others have reduced labour costs as their comparative advantage. The many benefits of FDI are, needless to say, shared, as if the multinational organization finds reduced labour expenses, it will be in a position to cut costs. In addition, if the host country can give better tariffs and savings, the business could diversify its markets by way of a subsidiary branch. On the other hand, the state will be able to grow its economy, cultivate human capital, enhance employment, and provide access to expertise, technology, and abilities. Thus, economists argue, that oftentimes, FDI has led to effectiveness by transferring technology and knowledge towards the country. However, investors think about a many aspects before carefully deciding to move in a country, but one of the significant variables which they consider determinants of investment decisions are location, exchange fluctuations, political security and government policies.

The volatility associated with exchange rates is one thing investors simply take seriously as the vagaries of currency exchange price fluctuations may have a direct effect on the profitability. The currencies of gulf counties have all been pegged to the United States dollar 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 view the pegged exchange price as an crucial attraction for the inflow of FDI in to the country as investors don't need certainly to be worried about time and money spent manging the foreign currency uncertainty. Another important advantage that the gulf has is its geographical position, located on the crossroads of three continents, the region serves as a gateway to the rapidly raising Middle East market.

To look at the suitability of the Arabian Gulf as a destination for international direct investment, one must assess if the Arab gulf countries give you the necessary and sufficient conditions to encourage FDIs. One of many important criterion is governmental stability. How do we evaluate a country or perhaps a region's stability? Governmental security depends to a large extent on the content of residents. Citizens of GCC countries have a great . amount of opportunities to greatly help them achieve their dreams and convert them into realities, helping to make a lot of them satisfied and happy. Moreover, worldwide indicators of political stability unveil that there has been no major political unrest in in these countries, plus the incident of such a scenario is extremely unlikely provided the strong political will and the vision of the leadership in these counties specially in dealing with political crises. Furthermore, high levels of corruption can be hugely harmful to foreign investments as potential investors dread risks for instance the blockages of fund transfers and expropriations. However, in terms of Gulf, experts in a study that compared 200 states classified the gulf countries being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that a few corruption indexes confirm that the region is increasing year by year in cutting down corruption.

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