Evaluating the suitability of Arab countries for FDI

Evaluating the suitability of Arab countries for FDI

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Different countries all over the world have implemented strategies and laws intended to invite foreign direct investments.

The volatility regarding the exchange prices is something investors simply take seriously because the unpredictability of currency exchange price changes might have an impact on their profitability. The currencies of gulf counties have all been fixed to the US 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 see the fixed exchange rate as an essential seduction for the inflow of FDI into the country as investors don't need certainly to be worried about time and money spent manging the foreign exchange uncertainty. Another important advantage that the gulf has is its geographic position, situated at the intersection of Europe, Asia, and Africa, the region serves as a gateway towards the rapidly growing Middle East market.

Nations across the world implement various schemes and enact legislations to attract foreign direct investments. Some nations for instance the GCC countries are progressively adopting flexible legislation, while others have cheaper labour costs as their comparative advantage. The benefits of FDI are, of course, shared, as if the international organization discovers lower labour costs, it will be in a position to reduce costs. In addition, if the host state can grant better tariffs and savings, the company could diversify its markets by way of a subsidiary branch. On the other hand, the state will be able to grow its economy, develop human capital, increase employment, and provide usage of expertise, technology, and skills. Thus, economists argue, that in many cases, FDI has resulted in effectiveness by transferring technology and knowledge towards the country. However, investors look at a many factors before making a decision to invest in a state, but among the significant variables they give consideration to determinants of investment decisions are position on the map, exchange fluctuations, political stability and government policies.

To examine the suitableness regarding the Persian Gulf as being a destination for foreign direct investment, one must evaluate whether the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of the important factors is governmental security. How do we assess a country or even a region's stability? Political more info security depends to a significant level on the satisfaction of people. People of GCC countries have actually plenty of opportunities to help them achieve their dreams and convert them into realities, which makes most of them satisfied and happy. Furthermore, international indicators of political stability reveal that there's been no major governmental unrest in the region, as well as the incident of such a possibility is extremely unlikely given the strong governmental determination plus the vision of the leadership in these counties particularly in dealing with political crises. Moreover, high rates of corruption can be extremely harmful to international investments as potential investors dread risks including the obstructions of fund transfers and expropriations. However, when it comes to Gulf, political scientists in a study that compared 200 counties classified the gulf countries being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes make sure the region is improving year by year in cutting down corruption.

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