Assessing the suitability of Arab countries for foreign direct investment

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Governments around the world are adopting various schemes and legislations to attract foreign direct investments.

The volatility associated with the exchange rates is something investors simply take seriously since the vagaries of currency exchange rate changes could have an effect 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 may likely view the fixed exchange rate being an essential seduction for the inflow of FDI to the country as investors do not have to be worried about time and money spent manging the currency exchange uncertainty. Another essential benefit that the gulf has is its geographic position, situated at the intersection of three continents, the region more info serves as a gateway towards the rapidly raising Middle East market.

Countries around the globe implement different schemes and enact legislations to attract foreign direct investments. Some countries for instance the GCC countries are progressively embracing pliable laws and regulations, while others have actually 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 likely be in a position to cut costs. In addition, if the host state can grant better tariffs and savings, business could diversify its markets through a subsidiary branch. On the other hand, the state will be able to grow its economy, cultivate human capital, enhance job opportunities, and provide access to expertise, technology, and skills. Hence, economists argue, that oftentimes, FDI has resulted in efficiency by transmitting technology and know-how towards the country. Nevertheless, investors consider a myriad of factors before making a decision to move in a state, but among the significant factors which they think about determinants of investment decisions are position on the map, exchange volatility, political security and governmental policies.

To look at the suitability of the Gulf being a destination for international direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to promote FDIs. One of many consequential criterion is political stability. Just how do we evaluate a state or perhaps a region's stability? Political security will depend on to a significant degree on the satisfaction of people. Citizens of GCC countries have actually a good amount of opportunities to greatly help them attain their dreams and convert them into realities, making a lot of them content and happy. Furthermore, global indicators of political stability reveal that there has been no major governmental unrest in the area, as well as the incident of such an possibility is highly unlikely because of the strong political will plus the prudence of the leadership in these counties specially in dealing with political crises. Furthermore, high levels of corruption can be hugely harmful to foreign investments as investors dread risks for instance the blockages of fund transfers and expropriations. Nonetheless, when it comes to Gulf, specialists in a study that compared 200 states categorised the gulf countries being a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that several corruption indexes concur that the GCC countries is increasing year by year in reducing corruption.

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