Evaluating the suitability of Arab countries for foreign direct investment

Evaluating the suitability of Arab countries for foreign direct investment

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Various countries across the world have implemented schemes and laws intended to attract foreign direct investments.

The volatility associated with exchange rates is something investors simply take seriously because the unpredictability of exchange rate fluctuations might have a visible impact on the profitability. The currencies of gulf counties have all been fixed 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 fixed exchange rate being an important attraction for the inflow of FDI to the country as investors don't need to be concerned about time and money spent handling the foreign exchange risk. Another crucial benefit that the gulf has is its geographical location, located on the intersection of three continents, the region serves as a gateway to the quickly raising Middle East market.

To examine the suitability of the Gulf being a location for international direct investment, one must evaluate if the Arab gulf countries give you the necessary and sufficient conditions to encourage FDIs. One of many important factors is political stability. How do we assess a country or perhaps a region's security? Political stability will depend on to a significant extent on the satisfaction of residents. People of GCC countries have a lot of opportunities to help them achieve their dreams and convert them into realities, helping to make most of them satisfied and happy. Furthermore, international indicators of governmental stability unveil that there has been no major political unrest in the area, plus the incident of such a scenario is highly not likely because of the strong governmental determination and also the prudence of the leadership in these counties specially in dealing with crises. Moreover, high levels of corruption can be hugely harmful to international investments as investors fear risks like the obstructions of fund transfers and expropriations. Nonetheless, in terms of Gulf, specialists in a study that compared 200 states deemed the gulf countries as being a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes confirm that the Gulf countries is increasing year by year in eradicating corruption.

Countries all over the world implement various schemes and enact legislations to attract international direct investments. Some nations like the GCC countries are progressively embracing pliable laws, while some have reduced labour expenses as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the multinational organization discovers reduced labour expenses, it will likely be able to minimise costs. In addition, in the event that host country can give better tariffs and savings, the business could diversify its markets through a subsidiary branch. Having said that, the country should be able to grow its economy, develop human capital, increase employment, and offer access to expertise, technology, and skills. Thus, economists argue, that in many cases, FDI has resulted in efficiency by transferring technology and knowledge towards the host country. However, investors consider a myriad of aspects before deciding to invest in a state, but among the list of significant factors they consider determinants of investment decisions are geographic location, exchange volatility, governmental stability and read more government policies.

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