Assessing the suitability of Arab countries for foreign direct investment

Assessing the suitability of Arab countries for foreign direct investment

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Different countries around the globe have actually implemented strategies and regulations designed to attract international direct investments.

The volatility regarding the exchange rates is one thing investors simply take into account seriously as the unpredictability of currency exchange rate changes could have an effect on their profitability. The currencies of gulf counties have all been pegged to the US currency since 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 see the fixed exchange price as an important attraction for the inflow of FDI into the country as investors don't need to be worried about time and money spent handling the foreign exchange uncertainty. Another essential advantage that the gulf has is its geographic position, located at the intersection of three continents, the region serves as a gateway towards the rapidly growing Middle East market.

Countries around the world implement different schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are progressively adopting pliable legislation, while others have lower labour costs as their comparative advantage. The many benefits of FDI are, needless to say, shared, as if the multinational firm discovers reduced labour costs, it's going to be able to minimise costs. In addition, if the host country website can grant better tariffs and savings, business could diversify its markets through a subsidiary branch. Having said that, the state will be able to develop its economy, develop human capital, enhance job opportunities, and provide access to expertise, technology, and skills. Hence, economists argue, that most of the time, FDI has led to effectiveness by transferring technology and knowledge towards the country. However, investors consider a many aspects before deciding to move in a country, but among the list of significant variables that they consider determinants of investment decisions are geographic location, exchange fluctuations, political security and government policies.

To examine the suitability of the Persian Gulf as being a location for international direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage direct investments. One of the consequential variables is governmental stability. How can we evaluate a state or even a area's security? Political security depends to a large level on the content of individuals. Citizens of GCC countries have a lot of opportunities to aid them attain their dreams and convert them into realities, making many of them satisfied and happy. Additionally, worldwide indicators of governmental stability show that there has been no major political unrest in in these countries, and the incident of such an scenario is very unlikely given the strong political determination as well as the prudence of the leadership in these counties particularly in dealing with political crises. Moreover, high rates of corruption could be extremely harmful to foreign investments as investors fear risks such as the obstructions of fund transfers and expropriations. Nevertheless, in terms of 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 likely testify that several corruption indexes concur that the Gulf countries is improving year by year in eradicating corruption.

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