Various countries across the world have implemented strategies and regulations intended to entice foreign direct investments.
The volatility associated with exchange rates is something investors just take seriously as the vagaries of currency exchange price fluctuations could have a direct effect on the 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 view the pegged exchange price being an crucial seduction for the inflow of FDI in to the region as investors do not need certainly to be concerned about time and money spent manging the forex risk. Another crucial advantage that the gulf has is its geographic location, located at the intersection of three continents, the region serves as a gateway towards the rapidly raising Middle East market.
To look at the viability regarding the Gulf as being a destination for foreign direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to promote direct investments. Among the important variables is political security. Just how do we assess a country or perhaps a region's stability? Political security will depend on to a large degree on the content of individuals. Citizens of GCC countries have actually plenty of opportunities to simply help them attain their dreams and convert them into realities, helping to make most of them satisfied and grateful. Furthermore, worldwide indicators of political stability reveal that there's been no major governmental unrest in in these countries, and also the incident of such an scenario is highly unlikely because of the strong governmental will and also the farsightedness of the leadership in these counties especially in dealing with crises. Furthermore, high rates of corruption can be extremely harmful to foreign investments as potential investors fear risks like the obstructions of fund transfers and expropriations. Nevertheless, when it comes to Gulf, economists in a study that compared 200 counties deemed the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes concur that the region is increasing year here by year in eradicating corruption.
Nations all over the world implement various schemes and enact legislations to attract international direct investments. Some nations such as the GCC countries are increasingly adopting flexible laws, while some have reduced labour expenses as their comparative advantage. Some great benefits of FDI are, of course, shared, as if the multinational business finds lower labour costs, it will be in a position to cut costs. In addition, if the host state can grant better tariffs and savings, the business could diversify its markets by way of a subsidiary. Having said that, the state should be able to develop its economy, cultivate human capital, enhance job opportunities, and provide access to expertise, technology, and skills. Thus, economists argue, that oftentimes, FDI has resulted in efficiency by transmitting technology and know-how to the country. However, investors consider a numerous aspects before deciding to invest in new market, but among the list of significant factors they think about determinants of investment decisions are geographic location, exchange volatility, political stability and government policies.