Different countries around the globe have implemented strategies and regulations made to invite foreign direct investments.
The volatility regarding the exchange prices is something investors just take into account seriously since the unpredictability of currency exchange rate fluctuations might have an impact on the profitability. The currencies of gulf counties have all been pegged to the US dollar 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 rate being an important seduction for the inflow of FDI into the region as investors do not have to be concerned about time and money spent handling the forex uncertainty. Another important benefit that the gulf has is its geographical location, situated at the intersection of Europe, Asia, and Africa, the region functions as a gateway towards the rapidly raising Middle East market.
To examine the suitability of the Arabian Gulf as being a location for international direct investment, one must assess if the Arab gulf countries give you the necessary and sufficient conditions to promote FDIs. One of many consequential check here criterion is governmental security. Just how do we evaluate a state or even a area's security? Governmental stability depends up to a large level on the satisfaction of inhabitants. Citizens of GCC countries have lots of opportunities to aid them attain their dreams and convert them into realities, which makes a lot of them satisfied and happy. Also, global indicators of political stability show that there is no major political unrest in the area, and the occurrence of such an eventuality is extremely unlikely because of the strong governmental will and also the vision of the leadership in these counties specially in dealing with political crises. Moreover, high levels of corruption can be extremely harmful to international investments as investors fear hazards for instance the blockages of fund transfers and expropriations. Nevertheless, when it comes to Gulf, experts in a study that compared 200 states categorised the gulf countries being a low danger in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that several corruption indexes confirm that the Gulf countries is improving year by year in eliminating corruption.
Nations around the globe implement different schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are progressively adopting flexible laws, while some have lower labour expenses as their comparative advantage. The advantages of FDI are, needless to say, shared, as if the multinational company discovers lower labour costs, it is in a position to cut costs. In addition, if the host country can grant better tariffs and savings, the business could diversify its markets via a subsidiary branch. Having said that, the country should be able to grow its economy, cultivate human capital, increase employment, and offer usage of knowledge, technology, and skills. Hence, economists argue, that oftentimes, FDI has generated efficiency by transferring technology and knowledge towards the host country. Nonetheless, investors consider a numerous aspects before making a decision to move in a country, but one of the significant factors which they give consideration to determinants of investment decisions are location, exchange fluctuations, political stability and government policies.