Examining GCC economic growth and FDI
As nations around the world strive to attract international direct investments, the Arab Gulf stands out as being a strong prospective destination.
To look at the suitableness of the Gulf as a destination for international direct investment, one must assess whether or not the Arab gulf countries give you the necessary and sufficient conditions to encourage direct investments. One of the consequential factors is political stability. How do we evaluate a country or perhaps a region's stability? Political security will depend on to a significant degree on the satisfaction of inhabitants. Citizens of GCC countries have actually a lot of opportunities to simply help them attain their dreams and convert them into realities, making a lot of them satisfied and grateful. Additionally, worldwide indicators of political stability reveal that there has been no major political unrest in in these countries, and the occurrence of such an scenario is extremely not likely given the strong political will as well as the vision of the leadership in these counties particularly in dealing with political crises. Moreover, high rates of corruption could be extremely detrimental to foreign investments as potential investors fear risks for instance the obstructions of fund transfers and expropriations. Nonetheless, regarding Gulf, political scientists in a study that compared 200 states classified the gulf countries as being a low hazard in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes concur that the Gulf countries is enhancing year by year in cutting down corruption.
Countries around the world implement different schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are progressively embracing flexible laws, while some have actually reduced labour costs as their comparative advantage. The many benefits of FDI are, of course, shared, as if the international business finds lower labour costs, it will be able to minimise costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets through a subsidiary branch. On the other hand, the state will be able to develop its economy, develop human capital, enhance job opportunities, and offer usage of expertise, technology, and skills. Hence, economists argue, that in many cases, FDI has generated effectiveness by transmitting technology and know-how to the country. However, investors look at a many aspects before carefully deciding to invest in a country, but one of the significant variables that they consider determinants of investment decisions are position on the map, exchange volatility, political stability and government policies.
The volatility of the exchange rates is one thing investors simply take into account seriously since the vagaries of currency exchange rate fluctuations might have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the US currency since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah website may likely see the pegged exchange rate being an important attraction for the inflow of FDI to the country as investors don't have to be concerned about time and money spent handling the foreign currency uncertainty. Another essential advantage that the gulf has is its geographic location, located at the crossroads of three continents, the region functions as a gateway to the quickly growing Middle East market.