analysing GCC economic growth and foreign investments

analysing GCC economic growth and foreign investments

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Governments globally are adopting different schemes and legislations to attract international direct investments.

Nations around the world implement various schemes and enact legislations to attract international direct investments. Some nations such as 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, mutual, as if the international business finds reduced labour expenses, it will likely be able to cut costs. In addition, in the event that host country can grant better tariffs and savings, the business could diversify its markets by way of a subsidiary. On the other hand, the country will be able to develop its economy, develop human capital, enhance employment, and provide usage of expertise, technology, and abilities. Therefore, economists argue, that oftentimes, FDI has resulted in efficiency by transmitting technology and know-how to the host country. Nevertheless, investors look at a numerous aspects before making a decision to move in new market, but among the list of significant variables that they consider determinants of investment decisions are location, exchange volatility, governmental security and governmental policies.

To examine the suitability regarding the Gulf as 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 variables is political stability. Just how do we assess a state or even a area's stability? Governmental stability depends to a large degree on the satisfaction of citizens. Citizens of GCC countries have a lot of opportunities to simply help them achieve their dreams and convert them into realities, making most of them content and happy. Also, worldwide indicators of political stability show that there has been no major governmental unrest in in these countries, as well as the incident of such a scenario is highly not likely because of the strong governmental determination and the prudence of the leadership in these counties especially in dealing with crises. Moreover, high rates of misconduct can be extremely detrimental to foreign investments as potential investors dread risks like the obstructions of fund transfers and expropriations. Nevertheless, when it comes to Gulf, experts in a study that compared 200 states categorised the gulf countries being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that several corruption indexes concur that the region is enhancing year by year in reducing corruption.

The volatility regarding the currency prices is one thing investors just take into account seriously since the unpredictability of exchange rate fluctuations could have a direct effect on the profitability. The currencies of gulf counties have all been fixed to the US currency since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely view the pegged exchange rate being an crucial seduction for the inflow of FDI into the region as investors don't need certainly to worry about time and money spent manging the foreign currency risk. Another essential benefit that the gulf has is its geographic position, situated on the intersection of Europe, Asia, and Africa, the region functions as a gateway to the rapidly raising Middle East market.

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