Examining GCC economic growth and FDI

Examining GCC economic growth and FDI

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As countries around the globe make an effort to attract international direct investments, the Arab Gulf stands out as being a strong potential destination.

Nations across the world implement various schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are increasingly implementing pliable laws and regulations, while some have cheaper labour expenses as their comparative advantage. The many benefits of FDI are, of course, mutual, as if the multinational company finds reduced labour expenses, it's going to be in a position to cut costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets by way of a subsidiary. On the other hand, the country should be able to develop its economy, cultivate human capital, enhance job opportunities, and provide access to expertise, technology, and abilities. Hence, economists argue, that in many cases, FDI has led to efficiency by transmitting technology and know-how to the country. Nonetheless, investors look at a myriad of aspects before carefully deciding to invest in new market, but among the significant variables they consider determinants of investment decisions are position on the map, exchange fluctuations, political stability and governmental policies.

The volatility of the currency rates is one thing investors just take seriously because the vagaries of currency exchange rate changes might have a direct impact on their profitability. The currencies of gulf counties have all been fixed to the US currency from the mid 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 pegged exchange price being an crucial attraction for the inflow of FDI to . the country as investors don't need certainly to be worried about time and money spent manging the foreign exchange instability. Another important benefit that the gulf has is its geographic location, situated at the intersection of three continents, the region serves as a gateway to the quickly raising Middle East market.

To examine the suitableness regarding the Arabian Gulf being a location for foreign direct investment, one must assess if the Arab gulf countries provide the necessary and sufficient conditions to encourage direct investments. One of many consequential variables is political security. Just how do we evaluate a state or perhaps a area's security? Political stability depends up to a significant degree on the content of citizens. Citizens of GCC countries have lots of opportunities to greatly help them achieve their dreams and convert them into realities, which makes most of them content and happy. Furthermore, global indicators of governmental stability show that there is no major governmental unrest in in these countries, as well as the occurrence of such a eventuality is very unlikely given the strong governmental will and the farsightedness of the leadership in these counties particularly in dealing with political crises. Moreover, high levels of misconduct can be hugely harmful to international investments as investors fear hazards including the obstructions of fund transfers and expropriations. But, when it comes to Gulf, experts in a study that compared 200 counties classified the gulf countries as being a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes concur that the region is enhancing year by year in reducing corruption.

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