Governments worldwide are adopting different schemes and legislations to attract international direct investments.
To look at the suitability of the Persian Gulf being a location for foreign direct investment, one must assess whether the Arab gulf countries give you the necessary and adequate conditions to promote FDIs. Among the important elements is governmental security. How can we assess a country or even a region's security? Political security depends to a large degree on the content of individuals. Citizens of GCC countries have a great amount of opportunities to aid them attain their dreams and convert them into realities, which makes most of them satisfied and happy. Also, worldwide indicators of political stability unveil that there has been no major governmental unrest in the area, as well as the occurrence of such a eventuality is highly unlikely given the strong governmental determination and the prescience of the leadership in these counties especially in dealing with crises. Furthermore, high levels of corruption could be extremely detrimental to foreign investments as potential investors dread risks like the blockages of fund transfers and expropriations. However, when it comes to Gulf, political scientists in a study that compared 200 states deemed the gulf countries as a low danger in both categories. website Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes confirm that the GCC countries is increasing year by year in eliminating corruption.
Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some nations for instance the GCC countries are progressively implementing flexible legislation, while others have actually cheaper labour expenses as their comparative advantage. The many benefits of FDI are, of course, shared, as if the international corporation discovers lower labour costs, it is able to cut costs. In addition, if the host state can grant better tariffs and savings, the company could diversify its markets through a subsidiary. On the other hand, the country will be able to grow its economy, develop human capital, enhance employment, and provide access to expertise, technology, and abilities. Hence, economists argue, that most of the time, FDI has generated efficiency by transferring technology and knowledge to the country. Nevertheless, investors look at a numerous aspects before carefully deciding to invest in new market, but among the significant variables that they think about determinants of investment decisions are position on the map, exchange volatility, governmental security and government policies.
The volatility associated with exchange rates is one thing investors simply take into account seriously because the vagaries of currency exchange price fluctuations might have a direct effect on the profitability. The currencies of gulf counties have all been pegged 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 would likely see the fixed exchange rate as an essential seduction for the inflow of FDI to the region as investors don't need to worry about time and money spent handling the foreign exchange uncertainty. Another important advantage that the gulf has is its geographic position, situated at the crossroads of Europe, Asia, and Africa, the region serves as a gateway towards the rapidly growing Middle East market.