Evaluating the suitability of Arab countries for FDI

Evaluating the suitability of Arab countries for FDI

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The GCC countries are earnestly developing policies to bring in foreign investments.

The volatility associated with exchange rates is one thing investors simply take seriously due to the fact vagaries of exchange rate fluctuations could have an effect on the profitability. The currencies of gulf counties have all been fixed to the United States 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 would likely view the pegged exchange rate as an important attraction for the inflow of FDI into the country as investors don't need to be concerned about time and money spent handling the foreign exchange instability. Another important advantage that the gulf has is its geographical position, located at the crossroads of Europe, Asia, and Africa, the region serves as a gateway to the quickly raising . Middle East market.

To examine the suitableness regarding the Gulf being a location for foreign direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and adequate conditions to encourage FDIs. One of the consequential aspects is governmental security. How can we evaluate a state or even a area's security? Governmental stability depends to a significant level on the satisfaction of citizens. Citizens of GCC countries have plenty of opportunities to greatly help them attain their dreams and convert them into realities, helping to make many of them content and happy. Furthermore, worldwide indicators of governmental stability reveal that there has been no major governmental unrest in the region, and the occurrence of such a possibility is extremely unlikely given the strong political will plus the vision of the leadership in these counties specially in dealing with political crises. Moreover, high rates of corruption can be hugely harmful to international investments as potential investors dread risks such as the blockages of fund transfers and expropriations. But, regarding Gulf, economists in a study that compared 200 states deemed the gulf countries as being a low danger in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that several corruption indexes make sure the region is enhancing year by year in eliminating corruption.

Countries around the globe implement various schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively adopting pliable laws and regulations, while others have actually lower labour expenses as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the international firm discovers reduced labour costs, it will be able to reduce costs. In addition, if the host state can give better tariffs and savings, business could diversify its markets by way of a subsidiary. On the other hand, the country should be able to develop its economy, develop human capital, enhance employment, and provide access to expertise, technology, and abilities. Thus, economists argue, that oftentimes, FDI has resulted in effectiveness by transmitting technology and know-how to the country. Nevertheless, investors look at a myriad of factors before carefully deciding to move in a country, but one of the significant variables which they consider determinants of investment decisions are position on the map, exchange volatility, governmental stability and governmental policies.

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