The GCC countries are actively implementing policies to invite foreign investments.
The volatility regarding the exchange rates is something investors simply take into account seriously since the vagaries of exchange price changes may 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 would likely see the fixed exchange price as an crucial seduction for the inflow of FDI to the country as investors do not have to be concerned about time and money spent manging the forex risk. Another important benefit that the gulf has is its geographic position, situated on the intersection of three continents, the region serves as a gateway to the rapidly growing Middle East market.
Countries around the world implement various schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are increasingly adopting pliable regulations, while some have actually reduced labour expenses as their comparative advantage. The benefits of FDI are, needless to say, shared, as if the international company finds lower labour costs, it's going to be able to minimise costs. In addition, if the host country can grant better tariffs and savings, business could diversify its markets via a subsidiary branch. Having said that, the country should be able to grow its economy, cultivate human capital, enhance employment, and provide access to knowledge, technology, and abilities. Therefore, economists argue, that oftentimes, FDI has resulted in effectiveness by transferring technology and know-how towards the country. However, investors look at a numerous aspects before deciding to move in a country, but one of the significant variables they give consideration to determinants of investment decisions are location, exchange fluctuations, governmental security and government policies.
To look at the suitability regarding the Gulf being a location for international direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of many consequential criterion is political security. How can we assess a state or perhaps a region's stability? Political security will depend on up to a significant degree on the content of inhabitants. People of GCC countries have actually plenty of opportunities to aid them achieve their here dreams and convert them into realities, making most of them content and grateful. Additionally, global indicators of governmental stability reveal that there has been no major governmental unrest in the region, and the occurrence of such a eventuality is extremely not likely given the strong governmental determination and the vision of the leadership in these counties especially in dealing with political crises. Furthermore, high rates of corruption can be hugely harmful to international investments as investors fear hazards for instance the obstructions of fund transfers and expropriations. However, regarding Gulf, experts in a study that compared 200 states classified the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes make sure the Gulf countries is increasing year by year in reducing corruption.