The GCC countries are actively implementing policies to bring in international investments.
The volatility of the currency rates is something investors just take into account seriously since the unpredictability of currency exchange rate fluctuations might have a visible impact on the profitability. The currencies of gulf counties have all been fixed to the US currency from 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 fixed exchange price as an important attraction for the inflow of FDI into the region as investors don't need certainly to be concerned about time and money spent handling the foreign currency instability. Another crucial benefit that the gulf has is its geographic location, situated at the crossroads of Europe, Asia, and Africa, the region functions as a gateway to the quickly raising Middle East market.
To look at the viability of the Gulf being a destination 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 many consequential factors is political stability. How do we evaluate a state or even a region's stability? Political security will depend on to a significant degree on the content of individuals. Citizens of GCC countries have an abundance of opportunities to help them achieve their dreams and convert them into realities, making most of them content and grateful. Also, global indicators of governmental stability show that there has been no major governmental unrest in the area, and also the occurrence of such a eventuality is extremely not likely provided the strong political determination plus the vision of the leadership in these counties particularly in dealing with crises. Moreover, high levels of corruption could be extremely harmful to international investments as potential investors dread hazards for instance the blockages of fund transfers and expropriations. However, regarding Gulf, political scientists in a study that compared 200 counties classified the gulf countries as being a low danger in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes confirm that the GCC countries is increasing year by year in eradicating corruption.
Nations around the world implement different schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are increasingly embracing flexible regulations, while others have actually cheaper labour expenses as their comparative advantage. The advantages of FDI are, of course, shared, as if the multinational organization finds lower labour costs, it's going to be in a position to minimise costs. In addition, in the event that host country can give better tariffs and savings, the company could diversify its markets by way of a subsidiary. Having said that, the country should be able to grow its economy, cultivate human capital, increase employment, and provide access to knowledge, technology, and abilities. Therefore, economists argue, that in many cases, FDI has generated efficiency by transferring technology and know-how towards the country. However, investors consider a numerous aspects before carefully deciding to move in new market, but one of the significant variables which they think about determinants of investment decisions are position on the check here map, exchange volatility, political security and government policies.