As countries around the world attempt to attract international direct investments, the Arab Gulf stands apart as being a strong prospective destination.
Countries all over the world implement various schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are here increasingly implementing flexible laws, while others have reduced labour expenses as their comparative advantage. The benefits of FDI are, of course, mutual, as if the international business discovers reduced labour costs, it will likely be able to minimise costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets via a subsidiary branch. On the other hand, the country should be able to grow its economy, cultivate human capital, increase employment, and provide usage of knowledge, technology, and abilities. Thus, economists argue, that oftentimes, FDI has led to efficiency by transmitting technology and know-how to the country. However, investors look at a myriad of factors before carefully deciding to invest in a state, but among the significant factors that they think about determinants of investment decisions are position on the map, exchange fluctuations, governmental stability and governmental policies.
The volatility regarding the currency rates is something investors just take seriously as the unpredictability of exchange rate changes might have a visible impact on the 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 would likely see the pegged exchange rate as an crucial seduction for the inflow of FDI in to the region as investors do not have to be concerned about time and money spent handling the currency exchange uncertainty. Another essential benefit that the gulf has is its geographic location, situated at the intersection of Europe, Asia, and Africa, the region serves as a gateway to the rapidly growing Middle East market.
To look at the suitableness regarding the Persian Gulf as a destination for foreign direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and adequate conditions to promote FDIs. Among the consequential aspects is political security. How can we evaluate a state or perhaps a area's security? Governmental stability depends to a significant extent on the satisfaction of individuals. Citizens of GCC countries have a good amount of opportunities to help them attain their dreams and convert them into realities, which makes most of them content and grateful. Furthermore, global indicators of governmental stability show that there's been no major political unrest in the region, plus the occurrence of such a scenario is extremely not likely provided the strong governmental determination and also the vision of the leadership in these counties specially in dealing with crises. Moreover, high rates of misconduct can be extremely detrimental to international investments as potential investors dread risks such as the blockages of fund transfers and expropriations. However, regarding Gulf, experts in a study that compared 200 states classified 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 make sure the region is increasing year by year in eliminating corruption.