Examining GCC economic growth and FDI

The GCC countries are actively adopting policies to invite international investments.

The volatility of the currency rates is one thing investors just take seriously since the unpredictability of exchange rate fluctuations may have a direct impact on the profitability. The currencies of gulf counties have all been fixed to the US 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 view the fixed exchange price being an crucial attraction for the inflow of FDI into the region as investors do not have to be worried about time and money spent handling the foreign exchange uncertainty. Another important benefit that the gulf has is its geographical position, located on the intersection of Europe, Asia, and Africa, the region serves as a gateway towards the rapidly growing Middle East market.

To examine the suitability of the Arabian Gulf being a destination for foreign direct investment, one must evaluate if the Arab gulf countries give you the necessary and sufficient conditions to promote direct investments. Among the consequential criterion is governmental security. How can we assess a state or even a region's security? Governmental security depends to a significant degree on the satisfaction of people. People of GCC countries have actually an abundance of opportunities to greatly help them achieve their dreams and convert them into realities, making many of them satisfied and grateful. Also, international indicators of political stability unveil that there has been no major political unrest in in these countries, plus the occurrence of such a eventuality is very unlikely given the strong political will and the vision of the leadership in these counties especially in dealing with political crises. Furthermore, high levels of corruption can be extremely detrimental to international investments as potential investors dread hazards like the blockages of fund transfers and get more info expropriations. However, when it comes to Gulf, economists in a study that compared 200 states deemed the gulf countries as a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes concur that the Gulf countries is increasing year by year in cutting down corruption.

Nations around the world implement various schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are increasingly embracing pliable laws and regulations, while some have actually lower labour expenses as their comparative advantage. Some great benefits of FDI are, needless to say, mutual, as if the multinational corporation discovers reduced labour costs, it will be able to minimise costs. In addition, if the host country can grant better tariffs and savings, the company could diversify its markets through a subsidiary branch. On the other hand, the country should be able to develop its economy, develop human capital, increase job opportunities, and provide access to expertise, technology, and abilities. Hence, economists argue, that oftentimes, FDI has generated effectiveness by transmitting technology and know-how to the country. However, investors look at a numerous aspects before carefully deciding to invest in a state, but among the significant factors that they give consideration to determinants of investment decisions are location, exchange fluctuations, political security and governmental policies.