Assessing the suitability of Arab countries for FDI

Assessing the suitability of Arab countries for FDI

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Governments around the world are adopting different schemes and legislations to attract international direct investments.

The volatility associated with currency prices is something investors simply take into account seriously since the unpredictability of currency exchange rate fluctuations may have an effect on the profitability. The currencies of gulf counties have all been pegged 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 rate as an important attraction for the inflow of FDI to the country as investors do not need to be concerned about time and money spent manging the forex uncertainty. Another crucial benefit that the gulf has is its here geographic location, situated at the intersection of three continents, the region functions as a gateway to the quickly raising Middle East market.

Countries around the world implement various schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are progressively implementing pliable regulations, while some have lower labour costs as their comparative advantage. The many benefits of FDI are, of course, shared, as if the multinational firm discovers reduced labour costs, it will be in a position to minimise costs. In addition, if the host country can give better tariffs and savings, business could diversify its markets through a subsidiary branch. Having said that, the country should be able to develop its economy, cultivate human capital, increase job opportunities, and provide usage of expertise, technology, and abilities. Hence, economists argue, that in many cases, FDI has led to efficiency by transmitting technology and know-how towards the country. However, investors think about a many factors before carefully deciding to move in a state, but one of the significant variables which they give consideration to determinants of investment decisions are location, exchange fluctuations, political security and governmental policies.

To examine the suitableness of the Gulf as a location for foreign direct investment, one must evaluate whether the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of many consequential criterion is political stability. How can we evaluate a state or even a area's stability? Governmental security will depend on to a significant degree on the content of residents. People of GCC countries have a lot of opportunities to help them achieve their dreams and convert them into realities, making most of them satisfied and grateful. Furthermore, worldwide indicators of governmental stability unveil that there is no major governmental unrest in the region, as well as the occurrence of such an scenario is highly unlikely because of the strong governmental will plus the vision of the leadership in these counties particularly in dealing with political crises. Furthermore, high levels of corruption could be extremely harmful to international investments as investors fear hazards such as the obstructions of fund transfers and expropriations. Nonetheless, when it comes to Gulf, experts in a study that compared 200 states categorised the gulf countries as being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the Gulf countries is increasing year by year in eradicating corruption.

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