looking at GCC economic growth and foreign investments

Governments worldwide are implementing various schemes and legislations to attract foreign direct investments.

Nations around the globe implement various schemes and enact legislations to attract international direct investments. Some nations such as the GCC countries are increasingly implementing flexible regulations, while others have cheaper labour expenses as their comparative advantage. The advantages of FDI are, needless to say, mutual, as if the multinational business finds reduced labour costs, it is able to minimise costs. In addition, if the host country can grant better tariffs and savings, the company could diversify its markets via a subsidiary. Having said that, the country should be able to grow its economy, cultivate human capital, increase job opportunities, and provide access to knowledge, technology, and skills. Thus, economists argue, that oftentimes, FDI has led to efficiency by transferring technology and know-how to the country. Nevertheless, investors think about a numerous factors before deciding to invest in a state, but among the list of significant variables they think about determinants of investment decisions are position on the map, exchange volatility, political stability and government policies.

The volatility of the exchange rates is one thing investors simply take into account seriously as the vagaries of currency exchange rate changes might have a direct effect on the profitability. The currencies of gulf counties have all been pegged to the United States 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 would likely see the fixed exchange rate being an essential seduction for the inflow of FDI into the region as investors don't need certainly to be worried about time and money spent handling the foreign exchange uncertainty. Another essential advantage that the gulf has is its geographical location, located on the crossroads of three continents, the region serves as a gateway to the rapidly growing Middle East market.

To examine the suitableness regarding the Persian Gulf being a location for foreign direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. Among the consequential variables is governmental stability. How can we assess a state or even a area's stability? Political security depends to a significant level on the satisfaction of individuals. People of GCC countries have actually a good amount of opportunities to simply help them achieve their dreams and convert them into realities, making many of them satisfied and happy. Furthermore, global indicators of governmental stability show that there has been no major political unrest in the area, and the occurrence of such an scenario is highly not likely given the strong governmental determination plus the farsightedness of the leadership in these counties especially in dealing with crises. Moreover, high levels of corruption can be hugely detrimental to foreign investments as investors dread risks including the obstructions of fund transfers and expropriations. Nonetheless, when it comes to Gulf, political scientists in a study that compared 200 states classified the gulf countries being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, website a prominent investor would likely testify that a few corruption indexes make sure the GCC countries is enhancing year by year in cutting down corruption.