Various nations around the globe have implemented schemes and regulations designed to entice foreign direct investments.
Countries across the world implement different schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively implementing flexible legislation, while others have cheaper labour costs as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the multinational organization discovers reduced labour costs, it will likely be able to minimise costs. In addition, in the event that host country can grant better tariffs and savings, business could diversify its markets through a subsidiary branch. Having said that, the state should be able to grow its economy, cultivate human capital, enhance job opportunities, and offer usage of knowledge, technology, and skills. Hence, economists argue, that most of the time, FDI has led to efficiency by transmitting technology and know-how to the host country. However, investors consider a myriad of aspects before making a decision to invest in read more new market, but among the significant factors they consider determinants of investment decisions are geographic location, exchange volatility, governmental stability and governmental policies.
To look at the suitableness of the Gulf as being a location for international direct investment, one must assess whether the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. Among the consequential criterion is governmental stability. How can we evaluate a country or even a area's security? Political security depends up to a significant level on the content of inhabitants. Citizens of GCC countries have a great amount of opportunities to simply help them attain their dreams and convert them into realities, helping to make a lot of them content and happy. Additionally, international indicators of political stability reveal that there is no major political unrest in the region, and also the incident of such a possibility is highly unlikely provided the strong political will and also the farsightedness of the leadership in these counties specially in dealing with crises. Furthermore, high levels of corruption could be extremely harmful to foreign investments as investors fear hazards for instance the blockages of fund transfers and expropriations. Nevertheless, in terms of Gulf, political scientists in a study that compared 200 states deemed the gulf countries as a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes make sure the GCC countries is enhancing year by year in reducing corruption.
The volatility regarding the currency rates is something investors just take seriously since the unpredictability of currency exchange rate fluctuations might have a visible impact on their 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 being an essential attraction for the inflow of FDI in to the region as investors do not need certainly to be worried about time and money spent handling the forex risk. Another important benefit that the gulf has is its geographical location, situated on the crossroads of three continents, the region serves as a gateway towards the rapidly raising Middle East market.