As nations around the globe make an effort to attract foreign direct investments, the Arab Gulf stands out as being a strong prospective destination.
To examine the suitability regarding the Arabian Gulf as a destination for foreign direct investment, one must evaluate if the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of many important aspects is political stability. Just how do we evaluate a country or even a region's stability? Governmental security depends to a large extent on the content of individuals. People of GCC countries have an abundance of opportunities to simply help them achieve their dreams and convert them into realities, making most of them content and grateful. Moreover, worldwide indicators of political stability reveal that there's been no major political unrest in the region, as well as the occurrence of such a possibility is very not likely provided the strong political will plus the prescience of the leadership in these counties particularly in dealing with political crises. Furthermore, high rates of misconduct could be extremely harmful to international investments as investors fear risks including the blockages of fund transfers and expropriations. However, when it comes to Gulf, specialists in a study that compared 200 states deemed the gulf countries as a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that a few corruption indexes confirm that the Gulf countries is improving year by year in reducing corruption.
Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are progressively adopting flexible laws, while some have actually lower labour expenses as their comparative advantage. The advantages of FDI are, needless to say, mutual, as if the international firm finds lower labour costs, it will likely be able to reduce costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets through a subsidiary branch. Having said that, the country should be able to grow its economy, develop human capital, enhance job opportunities, and provide access to expertise, technology, and abilities. Thus, economists argue, that most of the time, FDI has resulted in effectiveness by transmitting technology and know-how to the host country. Nevertheless, investors think about a many aspects before making a decision 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 security and governmental policies.
The volatility associated with the exchange prices is something investors simply take seriously due to the fact unpredictability of currency exchange price changes may have an impact on their profitability. The currencies of gulf counties have all been pegged to the United States dollar 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 see the pegged exchange price as an essential seduction for the inflow of FDI to the region as investors do not need certainly to worry about time and money spent handling the currency exchange risk. Another important advantage that the gulf has is its geographical position, situated on the crossroads of three continents, the region serves as a gateway towards the rapidly growing Middle website East market.