The GCC countries are actively adopting policies to entice foreign investments.
To examine the suitability regarding the Gulf being a location for international direct investment, one must evaluate whether the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of the important elements is political security. Just how do we assess a country or even a area's stability? Political security will depend on to a large level on the content of residents. People of GCC countries have an abundance of opportunities to greatly help them achieve their dreams and convert them into realities, which makes a lot of them satisfied and grateful. Additionally, worldwide indicators of governmental stability reveal that there's been no major political unrest in the area, as well as the occurrence of such an possibility is very not likely provided the strong governmental determination and also the vision of the leadership in these counties specially in dealing with political crises. Moreover, high rates of misconduct can be hugely detrimental to international investments as potential investors dread risks like the obstructions of fund transfers and expropriations. However, in terms of Gulf, experts 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 testify that several corruption indexes make sure the region is enhancing year by year in reducing corruption.
The volatility associated with the exchange rates is one thing investors simply take seriously since the unpredictability of currency exchange rate changes might have an effect on the profitability. The currencies of gulf counties have all been fixed to the US dollar since 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 rate being an crucial attraction for the inflow of FDI into the country as investors do not need to be worried about time and money spent manging the forex instability. Another essential advantage that the gulf has is its geographic position, situated on the crossroads of Europe, Asia, and Africa, the region serves as a gateway to the quickly raising Middle East market.
Countries across the world implement different schemes and enact legislations to attract international direct investments. Some nations like the GCC countries are progressively embracing flexible regulations, while some have cheaper labour expenses as their comparative advantage. The many benefits of FDI are, of course, shared, as if the international firm finds lower labour expenses, it will be in a position to reduce costs. In addition, in the event that host state can give better tariffs and savings, business could diversify its markets via 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. Thus, economists argue, that most of the time, FDI has generated efficiency by transferring technology and know-how to the country. However, investors think about a many factors before carefully deciding to invest in a country, but one of . the significant factors they consider determinants of investment decisions are geographic location, exchange fluctuations, political stability and governmental policies.