Assessing the suitability of Arab countries for foreign direct investment

Assessing the suitability of Arab countries for foreign direct investment

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Different nations across the world have actually implemented strategies and regulations intended to invite foreign direct investments.

The volatility associated with currency prices is something investors simply take into account seriously because the vagaries of currency exchange price changes might have an impact on the profitability. The currencies of gulf counties have all been fixed to the United States dollar since the late 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 price as an crucial seduction for the inflow of FDI to the region as investors don't need certainly to be worried about time and money spent manging the foreign currency risk. Another important benefit that the gulf has is its geographical position, situated at the crossroads of three continents, the region serves as a gateway towards the rapidly growing Middle East market.

To look at the suitableness regarding 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 promote direct investments. One of the consequential criterion is governmental stability. How can we evaluate a country or perhaps a area's stability? Political stability depends to a large extent on the satisfaction of people. Citizens of GCC countries have an abundance of opportunities to aid them achieve their dreams and convert them into realities, helping to make many of them satisfied and happy. Moreover, global indicators of political stability reveal website that there is no major political unrest in the region, as well as the incident of such an scenario is highly not likely given the strong governmental will and the prudence of the leadership in these counties specially in dealing with political crises. Furthermore, high levels of misconduct can be hugely detrimental to international investments as potential investors dread risks like the blockages of fund transfers and expropriations. But, regarding Gulf, experts in a study that compared 200 counties classified the gulf countries as a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes make sure the region is increasing year by year in reducing corruption.

Countries all over the world implement different schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are progressively embracing flexible laws, while others have cheaper labour costs as their comparative advantage. The benefits of FDI are, needless to say, mutual, as if the international organization discovers lower labour costs, it'll be able to cut costs. In addition, in the event that host state can give better tariffs and savings, the business could diversify its markets via a subsidiary. Having said that, the country will be able to grow its economy, cultivate human capital, enhance job opportunities, and offer access to knowledge, technology, and skills. Hence, economists argue, that oftentimes, FDI has led to efficiency by transferring technology and knowledge to the host country. Nevertheless, investors look at a many factors before deciding to invest in new market, but among the significant variables which they give consideration to determinants of investment decisions are position on the map, exchange volatility, political security and government policies.

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