Assessing the suitability of Arab countries for FDI

Assessing the suitability of Arab countries for FDI

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Different countries throughout the world have implemented schemes and regulations made to invite international direct investments.

Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are increasingly adopting flexible legislation, read more while some have actually lower labour expenses as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the multinational firm finds lower labour costs, it will likely be able to cut costs. In addition, if the host country can grant better tariffs and savings, the business enterprise could diversify its markets by way of a subsidiary. On the other hand, the state will be able to grow its economy, cultivate human capital, increase employment, and provide access to knowledge, technology, and skills. Hence, economists argue, that in many cases, FDI has led to efficiency by transferring technology and knowledge to the host country. Nonetheless, investors think about a myriad of factors before making a decision to move in new market, but among the significant factors that they think about determinants of investment decisions are position on the map, exchange fluctuations, governmental security and governmental policies.

The volatility of the exchange prices is one thing investors just take into account seriously because the unpredictability of currency exchange rate fluctuations might have an impact on the profitability. The currencies of gulf counties have all been fixed to the United States currency from 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 view the fixed exchange price as an important seduction for the inflow of FDI to the region as investors do not need to be concerned about time and money spent manging the foreign currency uncertainty. Another crucial advantage that the gulf has is its geographic location, situated at the intersection of three continents, the region serves as a gateway to the quickly growing Middle East market.

To look at the suitableness of the Persian Gulf as a location for foreign direct investment, one must assess if the Arab gulf countries provide the necessary and adequate conditions to promote direct investments. One of the consequential aspects is governmental stability. How can we evaluate a country or even a area's security? Political security depends up to a large extent on the content of residents. Citizens of GCC countries have plenty of opportunities to help them achieve their dreams and convert them into realities, helping to make most of them satisfied and happy. Also, worldwide indicators of political stability unveil that there is no major political unrest in the area, plus the occurrence of such an scenario is very not likely because of the strong governmental will and the prudence of the leadership in these counties especially in dealing with political crises. Furthermore, high levels of misconduct can be hugely detrimental to international investments as potential investors dread hazards including the blockages of fund transfers and expropriations. But, regarding Gulf, political scientists in a study that compared 200 states classified the gulf countries as being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that several corruption indexes concur that the Gulf countries is enhancing year by year in eradicating corruption.

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