analysing GCC economic growth and FDI

analysing GCC economic growth and FDI

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As nations around the globe strive to attract foreign direct investments, the Arab Gulf stands out as being a strong potential destination.

To examine the suitability regarding the Gulf being a location for foreign direct investment, one must evaluate if the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of many important aspects is governmental stability. How can we assess a country or even a area's security? Political stability will depend on up to a large extent on the satisfaction of inhabitants. Citizens of GCC countries have actually a lot of opportunities to aid them attain their dreams and convert them into realities, which makes many of them satisfied and grateful. Furthermore, international indicators of political stability reveal that there is no major political unrest in the region, plus the incident of such an scenario is very unlikely given the strong political determination as well as the prudence of the leadership in these counties especially in dealing with crises. Moreover, high rates of corruption could be extremely detrimental to foreign investments as potential investors dread hazards including the obstructions of fund transfers and expropriations. Nevertheless, regarding Gulf, experts in a study that compared 200 states categorised the gulf countries as a low danger in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that a few corruption indexes make sure the region is enhancing year by . year in cutting down corruption.

The volatility associated with the currency prices is something investors simply take into account seriously because the unpredictability of exchange rate fluctuations may have a direct effect on their profitability. The currencies of gulf counties have all been fixed 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 would likely see the fixed exchange rate being an crucial seduction for the inflow of FDI in to the region as investors don't need to worry about time and money spent handling the foreign exchange uncertainty. Another crucial benefit that the gulf has is its geographic location, situated on the crossroads of three continents, the region functions as a gateway towards the quickly growing Middle East market.

Countries around the world implement different schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are increasingly embracing pliable legislation, while some have actually cheaper 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 will likely be in a position to minimise costs. In addition, if the host country can grant better tariffs and savings, the business enterprise could diversify its markets through a subsidiary branch. Having said that, the country will be able to grow its economy, cultivate human capital, enhance employment, and provide usage of knowledge, technology, and skills. Thus, economists argue, that most of the time, FDI has led to efficiency by transferring technology and knowledge to the host country. However, investors consider a myriad of aspects before deciding to move in a country, but one of the significant factors that they think about determinants of investment decisions are location, exchange fluctuations, governmental stability and government policies.

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